As Microsoft (MSFT) - Get Report continues to expand its business beyond the dead-end growth market of personal computers, the software giant finds itself fighting battles on several different technology fronts.
This week, several skirmishes are erupting for the company in that war, as well as in Wall Street's trenches.
On Tuesday, the company said that its MSN Web page would become the default home page on a new browser developed by handheld computer maker
, thus claiming an important piece of real estate on the handheld computing terrain. But it also puts a tighter bond between Microsoft and Handspring, a move that only seems to intensify Microsoft's rivalry with Handspring competitor
. Both Microsoft and Palm make operating systems for handheld computers, two-thirds of which use the Palm OS.
Because Handspring's browser is written for the Palm operating system, it would be possible for a Palm Pilot handheld computer user to access the Internet through the Handspring browser, and land on the Microsoft MSN homepage. While Microsoft has already developed the Windows CE operating system for handheld computers, Handspring recently signed a deal to license the Palm OS over the next seven years.
But that deal isn't exclusive, and the cuddling up that Microsoft and Handspring displayed Tuesday could signal a closer relationship between the companies. Such a relationship could only help Microsoft, especially if it persuaded Handspring to also use Mister Softee's Windows CE operating system down the road.
Meanwhile, on the gaming-console front, two competitors fired shots across the bow of Microsoft's forthcoming Xbox gaming console.
AOL Time Warner
struck a deal to let users of Sony's popular PlayStation 2 game console access oh-so-addictive AOL features such as instant messaging, chat and email. For Sony, the deal gives it access to AOL's 29 million users.
Only problem is, users will have to buy extra gear for the PS2 for the AOL features to work, including a keyboard, hard drive, mouse and LCD monitor. Microsoft's Xbox will have a hard drive and high-speed modem built in.
All the same, though, the Sony-AOL deal comes just as Microsoft is preparing to release pricing and availability information Wednesday for Xbox at the gaming industry's big Electronic Entertainment Expo conference in Los Angeles. In a style that is so Microsoft, the company has managed to build up a ton of buzz in front of that announcement.
Separately, Microsoft struck a deal with
, a unit of
, that will highlight the carrier across Microsoft's network of MSN Web sites and will push services on the MSN network to United customers.
Microsoft's shares were off slightly in recent trading, down 9 cents, or 0.13%, to $68.63.
But while Microsoft was battling it out in your hand, in your kid's game-playing head and in the air,
Henry Blodget released a research report downplaying the software company's prospects for its June-ending quarter because of the same ol' thing in the company's core business: slowing PC sales.
"Over the last two weeks, additional data points have surfaced that suggest the PC demand picture has gotten even worse," wrote Blodget, who has an accumulate rating on the stock. "We remain comfortable with our estimate of $6.5
billion in revenue, which we recently raised to consensus. We believe it will be difficult for Microsoft to deliver meaningful upside, however." (His firm hasn't done recent underwriting for the company.)
The analyst said that while lots of investors are focused on the release of Xbox, as well as upcoming releases of Microsoft's new Windows and Office programs, those releases won't necessarily translate into big gains, initially, in Microsoft's business.
"We are also concerned that the impact of upcoming product launches (Windows/Office XP, Xbox) on fundamentals will not match their impact on sentiment," Blodget wrote.
In other words, focus on the bottom line, not the multifront hoopla.