Although at one point, Microsoft focused solely on software and relied on OEM partners such as
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to produce the hardware, this all changed recently when Microsoft decided to build its Surface tablet in an effort to compete with Apple's iPad dominance. However, Surface sales have not taken off as expected -- at least not according to initial sales figures.
However, with Dell's strength in hardware and Microsoft's software dominance, all of this can change. It is not farfetched to think that Microsoft could then produce a unified system that could take on Apple. But will it be strong enough to save a dying PC industry? While I that should not be the focus, Surface has proved that Microsoft is capable.
However, that the company has resisted supplying specific sales figures for Surface is not encouraging. But if we are left to our own assumptions, the results are mixed with a slight bias toward the negative side. But there's hope -- especially since Microsoft said it sold 60 million Windows 6 licenses in the quarter.
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new Kindle Fire also continues to be a top seller on the market. At an attractive $199 price point, this only increases the pressure on Surface to be more than advertised. Right now, it's not off to the market-shaking fury that the company hoped.
The good news is that Microsoft understands what it is up against. And the company seems eager to morph out of what it is traditionally known for. In the process, if it can buy itself some time by investing in Dell, what's the problem with that? What else is it going to do with its cash after having just raised the dividend? Sit on it?
The PC industry is dying. And if Microsoft feels that it can keep it on life support a little bit longer while it figures out its mobile strategy, then investing in Dell is as good of a venture as any. On that basis, I would continue to accumulate the stock at current levels. Despite the pessimism, this is a company that still generates tons of cash flow and also pays a great yield.
At the time of publication, the author was long AAPL.
This article was written by an independent contributor, separate from TheStreet's regular news coverage.