Microsoft Stock Predictions: Why Microsoft Needs Windows 7 Hold-outs To Upgrade To Windows 10

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First

Microsoft Stock Predictions

Summary:

  • Microsoft announced last April 2015 it expects 1 billion people using Windows 10 by April 2018. This was the time when it was still bullish on Windows 10 Mobile.
  • Unfortunately Windows 10 Mobile is dead on the water. Microsoft therefore still needs more people to upgrade their computers to Windows 10.
  • The official free upgrade offer to Windows 10 has long expired but Microsoft still offers several ways where people can get licensed free upgrades to Windows 10.
  • The failure of Windows on mobile has allowed Android to become the most-used operating system in the world today.
  • Microsoft’s cloud-first initiative won’t make up for the future losses if Windows 10 becomes a minority operating system.

 

Microsoft (MSFT) was very confident last April 2016 when it said there will be 1 billion devices running Windows 10 within three years. As of May 2017, only 500 million devices run on Windows 10. This figure already includes some Windows 10 Mobile handsets. I estimate that there might be 550 million devices running Windows 10 already but it is already September.

Microsoft therefore has a tall order to hit 1 billion in the next eight months. The slower than expected adoption of Windows 10 and Microsoft’s abandonment of its Lumia phone business has allowed Google’s (GOOG) Android to be the most-used operating system in the world.

At the moment, Android not touts 39.87% share in operating system usage, notably higher than Windows 35.99% share.

(Source: StatCounter)

 

Microsoft Is Still Giving Away Free Windows 10

Android’s emergence as the most popular operating system is likely why Microsoft still offers ways where people can get free Windows 10 upgrades. The official free upgrade offer to Windows 10 expired last July 2016. However, there are still several methods where people can get free Windows 10 OS.

I fixed/reformatted five desktop PCs and three laptops last week. They were all more than six years old and running OEM Windows 7 Home. I availed of Microsoft’s free Windows 10 offer for people using assistive technologies (like using Windows screen magnifiers or text-to-voice readers) and installed it on those eight computers I repaired.

 

(Source: Microsoft)

I am long MSFT so I enabled all the data gathering options on those eight Windows 10 computers. Microsoft needs a more intensive way to gather personal habits of people to improve its Bing Ads platform. Windows 10 is important because it helps Cortana and Bing observe and learn from the computing and web surfing habits of people. Advertisers want Bing Ads to be as accurate as Google’s search engine ads.

 

Why Attracting Windows 7 Hold-outs Is Very Important

I do not think Microsoft is going to make or sell new Windows 10 Mobile smartphones. The 1 billion devices by April 2018 target will therefore largely rely on more people upgrading their old/new Windows 7 computers to Windows 10. Based on the global August data of NetMarketShare, Windows 7 still dominates with 48.43% share. More than three years since it was released, Windows 10 only has 27.99% share.

 

(Source: NetMarketShare)

If there are around 550 million devices running Windows 10, I guesstimate that there are a billion PCs still running Windows 7.  Microsoft needs this large popular of Windows 7 hold-outs to switch to Windows 10. The Windows App Store, Cortana, and Edge browser cannot be installed on Windows 7 machines. Microsoft’s advertising efforts and personal data gathering therefore is not efficiently accessing a billion of Windows 7 computers.

Microsoft now has a $1 billion/quarter ($4 billion annual) search advertising business. It therefore needs more people adopting Windows 10 (which has several ways to monitor people’s compute/web surfing habits/online shopping) to improve its library of personal data for advertising purposes.

 

Conclusion

Majority of Windows 7 PC users are most likely not aware that there are still methods they can get a free Windows 10 upgrade. Microsoft has not exactly advertised about its free upgrade offer to people using assistive technologies. Convincing Windows 7 hold-outs to update to Windows 10 can help Microsoft hit its 1 billion devices target for Windows 10 by April 2018.

It would have been easier to do so if only Microsoft actually did what Apple (AAPL) did. Apple has given away its Mac OS X operating systems since 2013. Android is free, Linux is free, it’s only Microsoft that still wants some people to pay for Windows. Making an official announcement that Windows 10 is free for individual/home users will immediately attract 200 or 300 million people to upgrade from Windows 7/Windows 8/Windows XP.

Windows 10 is the final release of Microsoft’s iconic PC operating system. There will be no more Windows 11. Microsoft therefore has compelling reason to have billions of people switch to Windows 10. The more people using Windows 10, the better it will be for Microsoft’s advertising business.

I Know First gave positive near and long-term algorithmic forecasts for Microsoft. I therefore rate MSFT a buy.

microsoft stock predictions

 

As per my TipRanks account, hedge fund managers still have a very positive view of Microsoft. Microsoft is definitely worth adding to your long-term portfolio.

Past I Know First Forecast Success with Microsoft

On February 11th, 2014, I Know First analyst foresaw Nadella’s encouraging new direction for Microsoft and the manner in which Nadella would lead. Since he assumed this position on February 4th, 2014, the many changes brought up by him served as a turning point for Microsoft’s rise. From February 14th, 2014, Microsoft shares increased over 104% in line with the I Know First algorithm’s forecast. See chart below.

(Source: Yahoo Finance: Microsoft)

This bullish forecast for Microsoft was sent to I Know First subscribers on May 18th, 2017. To subscribe today click here.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

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