Microsoft: A Compelling Candidate Now

Apr. 5.12 | About: Microsoft Corporation (MSFT)

While Apple (AAPL) can't blink without inspiring an absolute riot, savvy investors have not forgotten about the older brother and wiser sage that is Microsoft (MSFT). The company quietly sits atop new 52-week highs while trumpeting a plethora of new product launches, tech partners, acquisitions and marketing tie-ins.

Analysts at UBS and Evercore Partners maintain their buy rating on the stock and join a host of others predicting a $34 to $40 target by year's end. Microsoft shares have risen 24% year-to-date and shares closed Tuesday at $32.

In a well-executed play to get on the tastemakers radar in the digital gaming space - Microsoft has teamed up with the brand incubator and accelerator giant, TechStars, to pick 11 start-ups out of 500 applicants to participate in Microsoft's Kinect Accelerator Program. The accelerator is based in Seattle and will run from April to June. Start-ups get $20,000, free office space for three months and other tools and assistance from Microsoft mentors.

Microsoft has never really been associated with tech hipsters in the start-up space and some of the finalists in the Kinect Accelerator program look like true fire starters. Of the 11 finalists, one group, Freak'n Genius, lets anyone animate using Kinect while another team, Manctl, allows users to make a cheap 3D scanner using Kinect.

The Kinect Accelerator Program arrives just in time, as technology insiders believe that Microsoft may be making the Xbox, the game console, the new primary focus of the company. It's no surprise that many users already tap the Xbox to stream Netflix to their TVs, and it's only a matter of time before all media as we know it funnels through this portal. In fact, Apple has openly announced its hopes and dreams to "own the living room" although its underwhelming product release like Apple TV don't actually show a leadership position in this arena just yet. And as for Hewlett-Packard (HPQ), the company has all but given up on the PC race and its leadership position in the printing business is tenuous at best as new technologies make paper and ink obsolete.

On the digital hub front, the next level Xbox 720 that throngs of fans expect from Microsoft could be marketed as a true media center, not just a gaming console, and if this is done with gusto, look out. Microsoft is so committed to this platform that it recently moved its operating system genius David Cutler to the Xbox division. Cutler is the person responsible for Windows 2000.

On the mobile side of the fence, Microsoft has been busy in Finland. To drive innovation and business opportunities in Finland's mobile ecosystem, Microsoft and Nokia will each invest up to 9 million euros into a newly established mobile application development program at Aalto University during the next three years. The AppCampus program will foster the creation of innovative mobile applications for the Windows Phone ecosystem.

Microsoft may have missed the dash to tablet computing dominance, but a first-mover advantage in the gaming tie-in space could spark the next buzz-worthy marketing channel. Starting today, 7-Eleven stores will promote specially marked bottles of Pepsi's (PEP), Brisk Iced Tea that carry a special M-tag that can be scanned using the Xbox 360's Kinect motion sensor.

Scanning the M-tag provides Xbox 360 players with an exclusive Anakin Skywalker podracer in the new Kinext Star Wars game out today. The promotion marks the first time that M-tags have been used for a video game tie-in and with partners like Pepsi and Star Wars - Microsoft is not going quietly into this uncharted space. As Microsoft continues to get nudged out of the hip young adult space, a highly publicized Brisk + Star Wars promo is aimed squarely at young urban males, ages 18 to 29.

The operating system that started it all (Windows) is quickly gearing up for a Windows8 official release near the end of this year and early testers have been lighting up the technology blogs with high praise. The big thinking behind Windows8 is a single OS (operating system) to rule both the tablet and the desktop. Windows8 is currently in the Consumer Preview phase as all of the loose threads are being sewed up.

On the acquisition front, Microsoft currently lords over a cash hoard of just under $50 billion. While Skype is probably the company's most hyped deal in recent memory, several other related tech players sit squarely in the company's sights. Research in Motion (RIMM) and China Unicom (CHU) lead a powerful group of potential extensions to the Microsoft empire.

While followers of Microsoft tend to get wrapped up in music player disasters and tablet missteps - lets not forget the crusty maverick that is the web browsing old guard, Internet Explorer. After close to a year of decline, it appears that Microsoft's Internet Explorer's (IE) share of the browser market is finally on the upswing again. According to Net Applications, IE registered an uptick in users during the month of March, its first increase since the beginning of 2011.

IE captured a 53.83 percent share of the worldwide browser market in March stealing eyeballs from both Firefox and Google's Chrome browser. In addition to IE climbing the correct side of the mountain these days - Google's Chrome market share has now declined for 3 straight months. Apple's Safari browsing is still barely clinging to life with a meager 5.2% share of the market.

Thinking on a global scale, Microsoft has been contemplating its next moves in coordinated efforts around the world. Earlier this week the company announced plans to increase its focus on Israel. It will send 25 senior officials to its Israel Research and Development center led by Richard Rashid, Microsoft's chief research officer. The company will also be unveiling new products at a Be Next conference in Tel Aviv later this month.

With its hands in every matter of 'next big thing' cookie jars, Microsoft has also ramped up efforts to fight financial cybercrime on a much bigger stage. Microsoft has partnered with the Financial Services Information Sharing and Analysis Center and NACHA, The Electronic Payments Association and Kyrus Tech. These partners have aligned themselves with Microsoft's Digital Crimes Unit to combat cybercrime operations and stop some of the most notorious cybercrime operations that fuel online fraud and identity theft. With some big wins recently in thwarting new underground efforts, these building blocks of the next wave of digital security measures could have enormous potential for online consumers and Microsoft investors alike.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.