Can Microsoft Finally Break Free?

NEW YORK (TheStreet) -- With a single verdict in its patent infringement case against South Korean tech giant Samsung, Apple (AAPL), the world's largest company was able to widen its lead by immediately crippling two of its rivals -- the other being search giant Google (GOOG). However, in an interesting twist of irony, it opened the door for Microsoft (MSFT), a company marred in the shadows of all three giants.

The angle is, since Microsoft is a "non-Android" platform, it stands to reason that developers will now consider it a worthy alternative -- one that is absent of the mess and clutter created by the verdict. It seems for "Mr. Softy," stars are now aligning and you might say "Windows are opening." The only question is, will it seize the opportunity?

Some might suggest that Microsoft has already taken some risks, having alienated its previous model by jumping into hardware with its Surface tablet. At this point failure is not an option. Rivals waiting for it to fall flat on its face. It's hard not to imagine that perhaps even its once proud partners in Dell ( DELL) and Hewlett-Packard ( HPQ) are not secretly rooting for it to fail.

The fact is, a Microsoft win in hardware may ultimately seal those rivals' already shadowed fate. On the other hand, failure just might do the same to Microsoft itself.

Many investors will claim it all hinges on Windows 8. The product has yet to hit the shelves, but that hasn't stopped naysayers from declaring it a massive failure. But is that really what's important at the moment -- particularly when considering the value that the company's current share price presents?

The launch may not be as crucial as some might think. At least not as important to how the company maneuvers over the long haul in its attempt to engage the consumer while maintaining its enterprise presence.

The fact is, if investors are unable to see value in Microsoft ahead of these product launches, the stock may meet some downward pressure. With a paltry forward price-to-earnings ratio of 9 it is not unreasonable to think that there is a huge bet being made that the company will indeed fail. At $30, the stock is up 19% on the year. While not a horrible premium, it pales in comparison to Apple's 60%.

Comparing the potential of shares in MSFT and Apple, together with the fact that Google and Samsung both might suffer losses in market share, it is possible to think Windows 8 just might be able to add $8 to Microsoft's share price -- representing an additional premium of 26%. And that's being conservative.

Absent a crystal ball, it's hard to say how successful Windows 8 will be, but the idea that we can call it a colossal failure without having seen it is misguided.

There is evidence to support the thinking that this just might be Microsoft's best Windows iteration since Windows 95, which revolutionized the user experience. Even if it falls short of that, I have to think that demand will be higher than most anticipate.

The RIMM Shot

Although Apple and Google continue to get all of the press coverage, Microsoft has been working hard to expand Windows outside the chassis of the traditional PC and into the realm of mobility which includes tablets and smartphones -- all of which makes it a prime candidate to acquire a company such as Research in Motion ( RIMM) since a shift to mobile has been its biggest challenge.

I think RIM just might be a value alternative to overcoming what has been Microsoft's biggest roadblock since it decided it was interested in phones. However, this much is certain, with a weakened Google and Samsung, Microsoft has an opportunity to reinvent itself in a manner that once highfliers such as AOL ( AOL) or Yahoo! ( YHOO) wish they had. The company has no choice but to get it right -- and I believe it will.

Who would have ever thought this gift would have come from Apple?

At the time of publication, the author was long AAPL and held no position in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Saintvilus is a private investor with an information technology and engineering background and has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.

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