Microsoft (MSFT) has been so busy writing-off rancid investments and unfurling Apple (AAPL) iPad challengers that traders have overlooked the possible implications of a bumptious move: the software overlord will be selling the new version of Windows on the cheap.
Anyone running Windows XP or an operating system more modern can upgrade to Windows 8 Pro for comparative chump change: 40 bucks. This is considerably less than in the past-or expected. The cheapest upgrade to Windows 7 used to run you about three times that.
It is also a big break from the past, aligning Microsoft with Apple, which sells upgrades for a similar pittance.
That said: anytime a company lowers prices, it has to give traders pause. Discounting hurts margins and is a symptom of weakness. Also, high prices can create their own level of desire. Back when he was a bouncing baby media mogul, Michael Bloomberg once famously said that when he had a product that wasn't selling, he-very counterintuitively-raised the price, to great effect.
But Microsoft, selling an operating system for a fading product, can't risk the increase stunt. And their former level of pricing simply wasn't getting the job done. Nearly half of PCs running Windows are still using Windows XP, which is more than a dozen years old.
That is why, though you should usually avoid the "they have nothing to lose," convention when weighing a shift in corporate strategy, it holds here.
It would be nearly metaphysically impossible for Microsoft's level of upgrade adoption to sink any lower. If this new strategy-proven effective by Apple in selling without losing face in the public's eye-works to an even moderate degree, it will boost Microsoft's prospects.
And we'd be hard pressed to sketch out a scenario in which it works any worse. That's why traders should sift through all this recent Microsoft news about write-offs and tablets and grab hold of this.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
