The announcement of Microsoft's (MSFT) investment of $300 million dollars in Barnes and Noble's (BN) Nook subsidiary caught the market by surprise. This comes on the back of Microsoft's tieup with Nokia (NOK) last year and the launch of the new version of Windows and Office later this year.
In the past I have been bearish on Microsoft for a number of reasons. One of which is the ill timed launch of the Lumia in the United States over Easter weekend. Add in disappointing product launches from Vista, Mango, and the online business continuing to lose significant amounts of money made the case for me.
The introduction of the iPhone and iPad, two products which revolutionized their respective product categories, allowed Apple (AAPL) to finally break into the enterprise market an area long dominated by Microsoft.
However with the purchase of a stake in the Nook Microsoft has filled out a product portfolio badly in need of and upgrade. Now Microsoft has a toehold in these areas and will be looking to build upon their investments in the near future.
The online area appears to be showing some interesting developments as well with Microsoft rumored to be offering Bing to Facebook (FB).
Online has been a source of much consternation to Microsoft as they continue to lose money hand over fist despite many attempts to restructure and retool the business line. In the nine months so far this year Online's losses totaled a little more than seventeen cents per share.
It appears as though Microsoft is working diligently to move into new areas while shoring up the weak areas ahead of the launch of Windows and Office later this year.
The skeptic in me has said that the launches of previous products never went as expected but with the addition of the Nook to complement the Lumia Microsoft is well positioned to grab market share in the smartphone and tablet areas.
The key now will be execution across different platforms but now that Microsoft has put some muscle into the battle for smartphone and tablet OS market share we may just have a solid third entry into the battle between Apple and Google (GOOG) along with a new growth story.
Disclaimer: Communications are intended solely for informational purposes. Statements made should not be construed as an endorsement, either expressed or implied. Before making any type of investment, one should consult with an investment professional to consider whether the investment is appropriate for the individuals risk profile. This is not intended to be investment advice or a solicitation to purchase any of the securities listed here. I will not be held liable or responsible for any losses or damages, monetary or otherwise that result from the content of this article.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in MSFT over the next 72 hours.
