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NEW YORK (
Microsoft(MSFT - Get Report) faces significant risks with the transition to Windows 8.
In case you miss the disclosure at the bottom, I am short Microsoft stock. That's because I think it's more likely than not that Microsoft will take a beating from
Google(GOOG - Get Report) and
Apple(AAPL - Get Report) in the wake of the Windows 8 launch.
That said, as a consumer who uses multiple Windows PCs and multiple Windows phones, I would like Microsoft to succeed, both for the sake of the products and as a check on the increasing competitive dominance of Google and Apple.
First, let's look at the three versions of Windows 8 that Microsoft is expected to launch on or around Oct. 26:
1. Windows 8 for x86 computers: This is the traditional PC version for desktops, laptops and tablets. Intel is the main chip supplier here, and
AMD(AMD) presumably is the second source.
2. Windows 8 for
ARM(ARMH) processors: This new version will look a lot like the x86 version and will initially be available for tablets, some of which will be "convertible" into laptop-style devices with detachable keyboards. In February Microsoft said it will make this version, which is known as "RT," available for traditional laptops and desktops, but it now appears that this iteration will come later than the initial launch. The chip vendors for this version are
3. Windows Phone 8: The first phones from
Samsung were shown recently, although not with final or working software. The only chip vendor, at least initially, is Qualcomm, although one might surmise that Nvidia and Texas Instruments may be added in 2013 or 2014.
I have a "backdrop" theory as to how the market is geared up for Windows 8.
I estimate there are close to 1 billion people around the world who either have a Microsoft PC, a Microsoft phone or some other non-Google/Apple device. They're all potential future Microsoft customers.
Many of these people are frustrated users who have been watching friends, family and co-workers switch to Apple and Google products including Android smartphones, Chrome OS PCs, Apple Mac PCs and of course Apple iOS devices such as the iPhone and the iPad.