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In fact, if I based the decision to hold the stock solely on the company's ability to execute, I would take profits now. I stay long because forthcoming, albeit hollow, catalysts should drive MSFT higher.
For example, Windows Phone will overtake
Research in Motion's(RIMM) BlackBerry in the U.S. by November, according to
But once Q1 2013 hits, we'll see different numbers. We'll see that Microsoft's mobile efforts failed. Hopes will fade, taking its stock as well as
Nokia's(NOK - Get Report) down.
Despite lofty iPhone 5 expectations, if I had to bank on anybody delivering strong holiday-quarter 2012 results, it would be
Apple(AAPL - Get Report), not Microsoft.
We could spend hours on the reasons why. Here are two that do not receive much press but help illustrate the fundamental wall that blocks Microsoft:
Office for iPad
We hear very little about Microsoft releasing Office for iPad. Most people think it will happen this fall.
Advocates argue that Office, not Windows, propels Microsoft's future, therefore the company must offer it across not only many desktop, but many mobile platforms.
I disagree. If Microsoft relinquishes the one meaningful advantage it actually has over Apple and
Google(GOOG - Get Report), why enter the tablet space at all?
If Google did not provide Android to anybody willing to run it, Microsoft might stand a chance. Apple, however, has real, product-based advantages over Microsoft.
Outside of Office and its Xbox-driven living room success, Microsoft simply cannot compete from a consumer standpoint. Granted, we have not seen full-fledged versions of Windows 8 yet, but it's not likely to chip away at Apple's design, utilitarian and coolness advantages.
In enterprise, Apple already crushed RIM. If Apple can pitch iPads with Office to business, what can Microsoft tout to set the Surface tablet apart? The keyboard? That didn't stop IT departments from abandoning BlackBerry. The ability to sync the Surface tablet with the Windows Phone you don't own and your company will likely never adopt? Enough said.
Windows Phone Apps Are Awful
I own a Nokia Lumia. The Windows Phone 7.5 software it runs is impressive. I assume 7.8 will be better. Windows 8.0 will be even better. In fact, it has to be beyond impressive. It requires an attention to detail we only really see from Apple. At Microsoft, that precise focus on the platform does not exist. At least not yet.