Microsoft has seen its ups and downs over the last few years, and is now in a precarious position; while its partnership with Yahoo is certain to increase its share of the search engine world, numerous failures to produce hot-selling devices have made skeptics out of more than one investor. Its lackluster performance could be a continuing trend, as a major global investment group predicts a challenging 2011 for the company.
As reported by Tech Flash, the global investing firm Goldman Sachs has dropped its stance on Microsoft from “Buy” to “Neutral,” citing a failure to break fully into the tablet market as the primary reason.
According to Sarah Friar, Goldman Sachs analyst, Microsoft’s attempts to date in both the mobile phone and tablet markets have been insufficient. It is noted that there simply isn’t a Windows tablet on the market today, and even ones scheduled for future release (such as those expected to be showcased at CES 2011) are not expected to take a significant bite out of the market, currently dominated by Apple’s iPad.
This isn’t just an issue of non-expansion into a popular market. This is what Friar terms “the newer threat of notebook cannibalization from tablets.” As many are transitioning from laptops to tablet alternatives, Microsoft is losing product opportunities at several levels.
Friar also notes issues with the Windows presence in the mobile market, including the lackluster performance of the Windows Phone 7. “Windows Phone 7 has not yet changed our view that Microsoft’s share in mobile OSes will remain at only the single-digit level,” she reports.
Goldman Sachs has made annual predictions on Microsoft that show a predicted growth of seven percent, down from twelve percent from earlier predictions. While these figures aren’t tragic, they’re a significant decrease that leaves Microsoft out of the highly ranked circle of stocks to invest in.