The Day Microsoft Gave Up World Domination and Settled For Relevance
waffle.wootest.net
waffle.wootest.net
I suspect parts of Redmond are still Windows uber alles, but, Microsoft has been doing non-Windows products for 30+ years.
http://finance.yahoo.com/q/bc?s=MSFT&t=5y&l=on&z=l&q=l&c=%5E...
If you were to solely depend on S&P500 as the index for performance, I guess investments in Lockheed Martin would be a waste.[1]
[1]http://finance.yahoo.com/q/bc?s=LMT&t=5y&l=on&z=l&q=l&c=%5EG...
Person A has 100k to invest, and puts it all into Microsoft. He's betting MSFT will outperform the rest of the industry, and likely all industries. Presumably he spent some time and effort to research this decision, seeing as investing in a single stock is risky.
Person B wastes no time, makes no predictions, and just puts 100k in the general market. He gets the average appreciation and average dividend returns along the way.
Person B ends up ahead: less risk (one vs. many), better returns, and zero time in research.
You made some flawed assumptions:
[1] All companies in the index pay dividends.
[2] MSFT is not one of the companies in the index.
[3] There is only one industry in the index or all industries in the index are somehow complementary (ie. a loss/gain in one will see a similar loss/gain in another)
[4] Most industry are related to Technology (Only 62 out of the 500 companies are in the Technology sector)
Using your example, if the Technology industry outperforms all other industry within a given period, Person A would enjoy a profit whereas Person B might walk away with a loss.
Market indices shouldn't be used as the benchmark for the true reflection of a company's performance/worth. Lockheed Martin is the key example, its one of the most desired stocks that has been growing steadily and pays one of the highest dividends, yet it underperforms the market.
Taking a job to work at McDonalds is a bad decision when the alternative (picking a random job available to you, essentially) pays more. Even if you "get paid" while working at McDonalds, it wasn't a worthwhile decision.
(By the way, stocks are absolutely compared against the average market to see if they are a worthwhile decision. Why do you want to invest in an underperformer when you can invest randomly and do better? It's like testing a drug against a placebo.)
There's an argument that dividend payers outperform the index over the long haul, but that's something different.
If the broader market returns 10%, you can't say, "But I got a 3% dividend, that's apples to oranges." In the end it's all part of the total return.
I'm not arguing that dividends don't matter - on the contrary they matter a lot. But a stock with low total returns over time isn't saved just because the dividend portion of that is high.
2) You can make a judgment that in the future this will change. What's the basis of this, when most stock pickers are wrong as often as they are right?
Do you see Windows' slice of the pie getting larger anytime soon?
Should Android and Windows be in the same category? Should Windows and Blackberry be in the same category? Is an Android device going to be loaded with thousands of dollars of software and hardware and used for CAD?
But besides that, Windows also used to be used for loading tens of dollars of software and be used for email, word processing, surfing the web, etc. That use of Windows is shrinking. What's taking it? Android and iOS. So yes, this is all one big market. And nobody can say for certain whether that would eventually extend to the market of software that costs thousands of dollars per license either. Especially if software continues to move towards SaaS models.
When we see this graph I foam at the mouth, thinking that a Windows x86 computer and cell phone are on the same level. But is that how it being used? Is that how it is being used in 2005, is that how it is being used in 2012?
Ironically the recent spike in x86 Windows tablet sales (now priced at $200) might actually unite these form factors - under MS's terms.
My point is that these lines are rather arbitrary, and are today a poor indicator of computing market share weighted by margins - which was indisputably how MS makes it money. I wonder if they have to replace each-other or do they augment or compete on a different playing field. Although strongly agree that a disproportionate amount of investment in SF is going toward the Android side.
> Settled for relevance would indicate they are
> currently not relevant
We can argue on the effectiveness of those strategies but that is the strategy here.
Did you know that Google Maps was released for Windows Mobile before iOS? That was when Windows Mobile had market share.
How does this prove they're the new Microsoft?
Getting office on the iPad isn't an example of Microsoft fighting for relevance, it's an example of them ensuring market domination at the office.
If anything MS is actually doing better in the emerging markets especially with Nokia smartphones.
>Their attempt at creating tablets, smartphones, music players, etc have all flopped.
What? Given the amount of Windows 8 devices being released, its nowhere close to being flopped. I wonder what your opinion would then be about Firefox and Ubuntu OS.
While Windows 8 is successful, its surface range haven't grabbed significant marketshare from Apple/Android. Windows 8 in comparison to 7/XP has been a monumental failure however, forcing 8.1 to backtrack to a more classic desktop.
Ok, sure, they are not totally dominating but they went from zero to neck-and-neck with Sony in, what, 1.5 console cycles?