Microsoft's (MSFT) Retail Expansion a Good Idea?

Microsoft (NASDAQ:MSFT) is reportedly prepared to expand its retail sales presence beyond its current eight stores, according to a source close to the situation.

Evidently Microsoft CEO Steve Ballmer and COO Kevin Turner have a goal of growing the number of its retail shops beyond the 300 Apple (NASDAQ:AAPL) now has.

The problem for Microsoft retail will be the availability of its products everywhere else, depending on the focus of the store.

Would they cater more to gamers with Xbox and cool products like Kinect, or would they be focused more on the business products they offer. It could even be a combination of both.

Either way, they would have to adopt some type of strategy of giving customers a reason to come into the stores. They could do it, but it's not clear what avenue that would take.

Microsoft was trading at $26.12, down $0.03, or 0.11 percent, as of 2:25 PM EDT.

Microsoft (MSFT) Sexes Up 2011 Kinect

Microsoft's (NASDAQ:MSFT) GM for sales and marketing in the UK, Neil Thompson, said in an interview in trade mag MCV, that the company will "really deliver on Kinect" in 2011.

Thompson said, "We're constantly looking at what we're doing as a platform. I think people are excited about Kinect, that's what we're focusing on and that's what you're going to see us really deliver on as we go through this calendar year, both in terms of what we're doing with that platform and the different types of gaming experiences that we're bringing to market."

"With Kinect Sports winning [the BAFTA for] Best Family Game, you could argue Xbox is moving to a broader audience in terms of its market appeal," he added.

"And as the install base grows, more publishers will seek success because the range of consumers we're attracting to the platform is becoming more diverse every day. I think people will see that success and love it."

Microsoft closed Monday at $25.41, falling $0.21, or 0.82 percent.

Microsoft (MSFT) Missing Kinect Opportunity?

Now that Kinect has become the fastest growing device in gaming history, the question is whether or not Microsoft (NASDAQ:MSFT) is taking advantage of the situation to generate its fullest revenue potential. It appears they're leaving a lot of money on the table.

Motley Fool noted, "When Microsoft presents a list of upcoming attractions for the platform, Mr. Softy's own game-publishing arm makes just a token appearance in the Avatar Kinect social-entertainment app. No, it's not really a game. For that, Microsoft leans on titles from French powerhouse Ubisoft, indie developer Twisted Pixel Games, and rivals including Take-Two Interactive (Nasdaq: TTWO) and THQ (Nasdaq: THQI). Moreover, Avatar is free to Xbox Live Gold pass holders, creating approximately zero dollars in additional sales. Whoop-de-doo.

"You can beat that with a stick If my company had developed a winning hardware platform, I'd make sure that the software wing of my house piled on, stat. Microsoft is missing a major opportunity here. In general, this lack of opportunistic killer instinct is what keeps Microsoft's gaming operations down to a mere hobby -- and an expensive one at that, with high manufacturing costs.

"If Microsoft wants to make real money on the Kinect, it had better sit its gaming-software division down for a serious talk. Hardware-plus-software synergies create the real smash hits in this business, and when was the last time you got more excited over Sony's hardware-based results than those of exclusive software shops such as Activision or Take-Two?

"It's not too late to whip this sorry state of affairs into shape, but the real opportunity may have passed with the high-profile Kinect launch and its first holiday season already in the rear-view mirror. Sorry, Ballmer -- you'll just have to settle for a record-breaking launch of expensive hardware followed by a modest uptick in the truly profitable software sales."

Microsoft closed Friday at $25.68, up $0.27, or 1.06 percent.




Source

Microsoft's (MSFT) Kinect Reaches 10 Million in Sales

Microsoft Corp (NASDAQ:MSFT) announced its Kinect has become the fastest-selling consumer device in history, racking up 10 million in sales in a little over four months.

Not only has the Kinect sold robustly, but stand-alone Kinect games have also reached over 10 million in sales, adding significantly to the bottom line of the company in the last quarter, with no real competitors challenging them at this time. Sony's (NYSE:SNE) rival product has done little against the device.

Kinect is an infrared motion-sensing game system which allows to use to interact without any handheld aid.

The Xbox game console add-on is normally priced at about $150, although can be purchased online for less than that.

Microsoft (NYSE:MSFT) Saved by Kinect?

Behind Kinect, the computer game device that recognizes gestures and voice commands, lies a far larger agenda for Microsoft.

The Kinect technology, according to Craig Mundie, Microsoft’s chief research and strategy officer, is the beginning of a new way of communicating with computers. For the past quarter of a century, computing has mainly meant typing on a keyboard and using a computer mouse to point and click on graphic icons on the screen — the graphical user interface, or GUI (“gooey”).

Kinect, a $150 add-on to the Xbox game console, points the way to a different model, a natural user interface, or NUI, said Mr. Mundie. Increasingly, he insists, the computers that surround us will understand our speech and hand gestures. The machines, in essence, will become a bit more human.

Kinect, Mr. Mundie said, was “the first incarnation of the next big thing in computing.”

One more thing, while the vast majority are looking down at the deal by Microsoft with Nokia (NYSE:NOK), the truth is it could be an extraordinary play by both companies, and as for the smartphone wars, they're aren't near to maturing, and have only just begun.

With the extraordinary potential of Kinect and smartphones, Microsoft may have found the growth solution for the company for the next decade, or maybe even more, depending on how the products evolve.





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Microsoft's (MSFT) Xbox Sales Up 15 Percent on Kinect Demand

The overall videogame segment suffered a dismal January, as sales were down and no company but Microsoft (NASDAQ:MSFT) with their Xbox was able to grow console sales year-over-year.

Microsoft said Thursday they sold 381,000 Xbox units in January, a 15 percent boost over January 2010. The company claims theirs was the only console showing growth for the month.

They could have sold a lot more consoles except for shortages driven by continuing demand for Kinect. Microsoft said that should show improvement throughout February.

According to NPD Group the only positive news for the overall sector was in accessories, which includes Microsoft's Kinect, which obviously was the story there as well.

Sale for accessories in January jumped to $235.1 percent, a six percent gain for the industry over last year.

The bad news in January for videogame software was sales dropped to $576 million, down 5 percent from last January. Hardware sales were worse, falling to $324 million, an eight percent plunge.

The top five selling games in January were Activision Blizzard’s (ATVI) Call of Duty: Black Ops, Ubisoft’s Just Dance 2, Electronic Arts’ (ERTS) Dead Space 2, Sony’s (SNE) Little Big Planet 2, and Majesco’s (COOL) Zumba Fitness.

Nokia (NYSE:NOK), Microsoft (NASDAQ:MSFT) Need To Move Quickly

All the analyzing and comments - pro and con - about the decision by Nokia (NYSE:NOK) to use Windows Phone 7 as their flagship smartphone platform are irrelevant. Both companies need to take an aggressive approach and operate with a sense of urgency if they want to have the deal be successful.

Nokia has the foundation in place, and Microsoft has a good platform available, and could make it much better in a relatively short period of time.

If they could introduce a "wow" factor into the phones, they could definitely become a long-term player in the market.

They need to, for the most part, ignore the endless paralyzing analysis and just do it.

While Microsoft has rightly - in some segments - been considered a company holding onto the past while having little momentum heading into the future, they can still come up with products like Kinect, which exploded into the marketplace and generated tremendous, positive buzz.

If they can do it with the Xbox they should also be able to do it with Nokia's smartphones.

Assuming they can innovate in a compelling manner and throw out an array of products as quickly as possible, they could do some significant damage and become a real player in the field and turn things around.

When everyone has pretty much ruled you out of the game, that's the time to go on the defensive. None of the talk about it being too late should be a part of the mindset of the two companies.

Consumers are fickle, and even when many think it's cool to castigate Microsoft, that doesn't stop them from buying products like Xbox and Kinect, let alone their business software products.

In other words, if Nokia and Microsoft can start an ongoing number of product launches which draw attention to the smartphones and deliver on their promises, this could be a very powerful competitive combination.

While some say the high-end smartphone market is locked up by Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG), that's not a given, as pricing at the top are already pressuring margins, especially with Apple, which is expected to drop prices.

Apple and Google aren't going to stand still of course, and Nokia faces challenges on the lower end of the pricing spectrum from Chinese companies.

It won't be easy, but Nokia and Microsoft have a legitimate chance to succeed, even with all the naysayers.

Speed, execution and delivering on their promises could catapult them into the fight in a long-term meaningful way. It'll be very interesting to watch them to see if they take advantage of the fantastic opportunity, or squander it.

Nokia closed Friday at $9.36, dropping $1.52, or 13.97 percent. Microsoft closed at $27.25, falling $0.25, or 0.91 percent.

JDSU (NASDAQ:JDSU) Shares Explode As They Blast Past Earnings Expectations

JDS Uniphase (NASDAQ:JDSU) turned things around in their latest quarter, surging to a profit after a big loss in the same quarter last year, as they handily beat analysts' expectations.

Investors rewarded the company, pushing up the share price by over 22 percent in mid-day trading, at point reaching over 24 percent.

Part of the big turnaround is the huge success of Microsoft's (NASDAQ:MSFT) Kinect device, which exploded in sales for the software giant, and of which JDSU supplies two of the components for.

With Microsoft sure to enhance and expand Kinect, JDSU is positioned to ride the Kinect success going forward.

Also of note was the demand for JDSU testing products in relationship to the burgeoning traffic on the Internet, as telecommunications companies grow their networks.

Net income for the second fiscal quarter reached $23.6 million, or 10 cents a share, up from the loss of $19.5 million, or 9 cents a share, in the same quarter last year. Revenue came in at $473.5 million, a big gain over the $342.9 million in revenue generated last year.

After adjustments, income was 29 cents a share, far above the 19 cents a share analysts had estimated. Analysts were looking for revenue to reach $438.4 million for the quarter.

Guidance for the current quarter from JDSU was for revenue to come in at a range of $400 million to $460 million.

JDS Uniphase was trading at $22.00, gaining $4.07, or 22.70 percent, as of 12:23 PM EST.

Microsoft's (NASDAQ:MSFT) Tablet Threat Overblown? We Don't Know Yet

Bypassing all the usual media hype, the question of investors concerning Microsoft (NASDAQ:MSFT) is have they met a real PC market disruptor in the tablet, and is the tablet a fad or a trend.

With mobility being a strong part of technology focus at this time, it's apparent the tablet is more than just a fad, but a trend that should last for some time.

In the short term, it seems the threat to Microsoft if being dragged from future possibilities into an attempt to make it a present reality. That isn't the case.

with Microsoft having over 300 million Windows 7 licenses sold, the relatively paltry sales of 7 million tablets in the last quarter by Apple (NASDAQ:AAPL) doesn't seem so scary.

But, that doesn't mean the long-term threat isn't real, as it is, and Microsoft will have to respond to that threat before it gets too far out of hand.

I don't think they have the type of response this time that they've had in the past, where the have lumbered along in response to potential threats, as this one is outside their PC and Office strength, and bypasses them directly. In other words, tablets are legitimate disruptors which will change the computer landscape very quickly.

Microsoft has been expanding into cloud services, as well as still being able to release a hot product, as Kinect has proven in 2010.

But an assault upon their core business must be taken seriously, and quickly. Short term the threat has been overstated by hype, but in the long term it's real, and the longer Microsoft waits to respond, the more precarious the situation will become.

They have time, but not as much as they've had in the past, and the potential threat is much more dire.

Microsoft's (NASDAQ:MSFT) Kinect Connects, Windows Doesn't

For the first time in its history, Microsoft (NASDAQ:MSFT) has a serious contender to its core desktop business, and it appears it's not going to go away anytime soon. We're talking about tablets of course, which should be a major disruptor in Microsoft's universe.

FBR says, "We maintain our MP rating as we (1) remain skeptical about a strong enterprise PC refresh cycle, 2) believe the emergence of tablets will adversely affect the company's core desktop franchise, and (3) evaluate the company's last legitimate effort to becoming a meaningful player in the vital mobile market.

"We are raising our F3Q11 (Mar) revenue and EPS estimates to $16.5 billion and $0.59 from $16.1 billion and $0.54. We are raising our FY11 revenue and EPS estimates to $70.1 billion and $2.62 from $68.5 billion and $2.43. We are raising our FY12 revenue and EPS estimates to $73.9 billion and $2.84 from $73.1 billion and $2.67."

FBR reiterated their "Market Perform" on Microsoft (MSFT), which closed Friday at $27.75, down $1.12, or 3.88 percent. FBR increased their price target on the software giant from $28 to $30.

Microsoft (NASDAQ:MSFT) Quarter Driven by Increasing Enterprise Spend, Kinect

Microsoft (NASDAQ:MSFT) will get a nice boost from their wildly successful connect, but long-term the boost in enterprise spending will drive the company.

Barclays says, "Microsoft reports 2QFY11 results on Thursday after the market close. For the quarter, we forecast revenue of $19.35 billion (+1.7% y/y) and EPS of $0.70, slightly ahead of consensus estimates of $19.14 billion and $0.68. We expect very solid results driven by improving enterprise IT spending trends with the revenue upside driven by the success of Kinect/Xbox 360 during the holiday period.

"Looking out to the balance of FY11, we expect Microsoft to maintain a positive tone given improving enterprise trend, W7 enterprise cycle and Kinect momentum (8 million units sold in 2Q). For FY11, we maintain our revenue and EPS forecast at $69.3 billion and $2.52, respectively (consensus: $68.49 billion/$2.45).

"While we believe estimates can continue to move higher near-term, we continue to view Microsoft's inability to compete in tablets and smartphones as impediments to material multiple expansion."

Barclays reiterates an "Equalweight" rating on Microsoft (MSFT), which closed Tuesday at $28.45, up $0.07, or 0.25 percent. Barclays has a price target on Microsoft of $29.

Microsoft (Nasdaq:MSFT) May Struggle to Meet XBOX 360 Demand in Early 2011

Saying sales of the Xbox 360 during the Christmas season pressured inventory levels, Microsoft (Nasdaq:MSFT) announced there may be a shortage of the gaming system in the early part of 2011.

In December the software giant sold 1.9 million Xbox units, driven for the most part by the wildly popular Kinect device, which allows users to use the control system without using their hands.

To meet the unexpected surge in demand for December, Microsoft said they borrowed inventory they had set aside for January and February in order to meet it.

The popularity of Kinect caught Microsoft offguard, as when it was released in November, it sold 2.5 million units in the first 30 days. There is a bundle Microsoft is offering including the 250GB Xbox 360 and Kinect for $399. The 4 gigabyte version is being offered for $299.

Microsoft CEO Steve Ballmer has aluded to the probability Microsoft may expand the technology used for Kinect to other screens, such as TVs and PCs.

Microsoft was trading at $28.35, gaining $0.18, or 0.59 percent.

Microsoft's (NASDAQ:MSFT) EPS Estimates Raised on Kinect Sales

Goldman Sachs (NYSE:GS) raised their EPS estimates on Microsoft (NASDAQ:MSFT) for 2011 through 2013, based on their higher-than-expected sales of Kinect.

Microsoft's full year 2011 through 2013 EPS estimates were boosted from $2.42, $2.67 and $2.95 to $2.45, $2.68 and $2.96.

Goldman also noted the announcement about Windows 8 is a push in the right direction for the software giant.

The recent flow of executives out of Microsoft seems to point to the lack of traction with Azure.

Goldman maintains their "Neutral" rating on Microsoft, which was trading at $28.52, up $0.41, or 1.46 percent, as of 12:31 PM EST.

Microsoft (NASDAQ:MSFT) Regaining Confidence in Consumer Tech Segment

While sales of Kinect aren't that meaningful to the bottom line of Microsoft (NASDAQ:MSFT), the enormous popularity of the accessory and extraordinary sales have repositioned it as a force to be reckoned with in the consumer tech segment.

"Kinect as an important psychological win for Microsoft as it seeks to regain relevance in consumer tech, which will in turn help neutralize the current negative sentiment on the stock," says Jefferies (NYSE:JEF).

Jefferies raised their EPS/revenue estimates for FY11 and FY12 to $2.51/$68.4 billion and $2.74/$73.6 billion from $2.48/$67.3 billion and $2.70/$71.4 billion.

As popular as Apple's (NASDAQ:AAPL) iPad has been, sales of Kinect are soaring at a pace 2.5 times the rate of iPad.

If it continues at this pace, it'll be the fastest growing device in history. At its current pace, it would sell 5 million units over a 50-day period.

Jefferies maintains their "Buy" rating on Microsoft, which closed Wednesday at $27.85, up $0.23, or 0.83 percent.

Microsoft's (Nasdaq:MSFT) Xbox 360, Kinect on Fire

Microsoft has been getting a great image boost from the sales of Xbox and Kinect this Christmas season, as Xbox leads in console sales and Kinect soaring to top the accessary heap.

As far as Microsoft's (Nasdaq:MSFT) bottom line, this isn't that important, as it may account for maybe two percent of revenue, or a little more.

What's most important is the bragging rights and reminder that Microsoft can still develop hot products for the consumer market. It's worth its weight in marketing gold to the company, just by the numbers they produced, which also include four other accessories in the top ten of the console market.

Canaccord said, "According to data compiled by NPD, Microsoft’s Xbox 360 was the best-selling game console in November, with sales up 68% from last year. More than 1.37 million Xboxes crossed the counter last month, ahead of Nintendo’s Wii at 1.27 million. Sony’s (NYSE:SNE) numbers were relatively dismal, with the PS3 recording sales of just 530,000. The Xbox 360 had five of the 10 best-selling accessories on the month, with the Kinect landing at number one. Microsoft launched the Kinect on November 4, and had sold 2.5 million units by the end of the month – twice the initial selling rate of Apple’s (Nasdaq:AAPL) iPad. In just one month, the Kinect is already the top-selling accessory in terms of dollar sales on a year-to- date basis. NPD said the Xbox 360, paired with the Kinect, is setting the tone for a promising end of year. Last month was the best November on record for the industry, beating November 2008 sales by about $30 million. Every category was up except portable hardware and software. 'We expect a big jump in sales in November due to seasonality and the influence of holiday, but the change this November over October is bigger across most platforms than it was last November,' commented one NPD analyst. 'This could point to the impact of aggressive retail promotions during the critical Black Friday week.'"

Microsoft closed Monday at $27.25, down $0.09, or 0.35 percent. Sony was at $35.88, up $0.05, or 0.14 percent. Apple ended the day at $321.67, up $1.11, or 0.35 percent.

Kinect Giving Microsoft (Nasdaq:MSFT) Image Boost it Needs?

Microsoft (Nasdaq:MSFT) has went through cycles of image crises, as they're always compared to Apple (Nasdaq:AAPL) or Google (Nasdaq:GOOG), and others, as far as the "cool" factor goes, even when they have come out with products like the XBox, which was grudgingly admitted by some to be outstandingly awesome.

Now they've generated another win, which while not being a major part of their bottom line, will be just as important from the marketing and branding factor as anything else they do in the short term.

For business user their finally getting their cloud computing lined up won't hurt either, although that's a different demographic and media-type story.

As far as Kinect, it's an accessory that can be added to the Xbox which allows the user to play a video game without needing to use the controller.

Since introducing Kinect, over 2.5 million hve been sold, with a total of 5 million expected to be sold by the end of 2010. More than likely it'll far surpass those numbers.

Even if they were to sell the 5 million, and probably many more, that would only account for about 1 percent of the projected $68.6 billion in revenue Microsoft will generate for the fiscal year ending June 30.

Again, what this does for Microsoft is position them in the mind of people as an innovation giant, something that tends to ebb and flow with them, and usually to the negative side of the equation.

But with some calling kinect "one of the greatest technologies ever invented," as equity-research analyst at Standard & Poor's, Jim Yin asserted, it has again put Microsoft on the innovation map.

It is believed it could lead to extraordinary products in the future.

This can only be good news for the tech giant, which continues to be largely undervalued.

Microsoft closed Friday at $27.34, up $0.26, or 0.96 percent.