TradingWithCody Chief Guide Elad Ryba on Microsoft, ecosystems and how to invest in tech
Microsoft was downgraded today at two firms as PC shipments fell nearly 14%. The stock is down nearly 5% this morning. Is it a surprise?
My kids almost exclusively use iPads and iPhones for video, chat, text, FB, instagram, homework research etc. So this past weekend I was at a mall to visit an apple store. My daughter is interested in a laptop for school work, reports papers and other homework related items on a device of her own to customize. She has saved enough in the past few years to buy her own windows based laptop as an Apple MacBook is a premium product and would need my assistance in the way of a 3.5% loan — hey rates are low so time to borrow (only kidding — it’s an investment in her future).
A Sony store was right next door to the Apple store. She was intrigued by the Windows 8 touch screen laptops from Sony and loved interacting with it. We were there for 45-60 minutes the first time as she swiped and touched her way through the windows 8 software. I have to admit it was fun. A touchscreen on a laptop? We asked the sales people there some detailed questions on battery life, apps, etc. So the great debate began PC touch laptop with Microsoft Windows 8 or Apple’s MacBook air like product. A Windows 8 kiosk run by Microsoft was also in the mall highlighting its software on multiple tablets and laptop from numerous companies.
I read a great article on touch screen laptops and how Microsoft had collected a few BILLION hours of user data on touchscreen laptops and if available people will use it vs. just a touch mouse pad like on an Apple laptop. Apple CEO Tim Cook has basically ruled out the idea of a touch screen laptop, period. He sees tablets and smart phones as the future and no need to integrate.
I believe from the discussion with my daughter the reason she wants a PC based laptop is for the “Word” software and ability to type on a full sized keyboard on a flat surface that can be used in a bed, couch etc. We were introduced to an app called “Pages” that can do many things “Word” can do and costs $20 dollars vs. the $150 it costs to buy the “Word” package from MSFT that includes excel, power point and others that right now she does not need at all, but perhaps will in the future. I advised her not to make a decision at the store for the windows unit which she brought her money to buy. The 13” unit was $699 and the 15” unit a bit faster and more ram was $799. She wanted the lighter 13” unit by the way. We went back and forth several times to the Apple and Sony store before she agreed it would be best to go home and think about it vs. making a hasty decision. At one point she took out all her money put it on the table near the Sony unit and said I want this one, I quickly told her to put it back in her purse that wasn’t smart- More on the Instant gratification generation later.
When we got home I showed her the zagg.com website and the flat surfaced iPad dock / case that connects to a full sized keyboard and can be carried as one solid unit. She was intrigued and surprised. She only knew of laptops vs. the ipad. These new keyboard units such as those from ZAGG which are very cool and act like a clam shell one piece laptop unit for the iPad and keyboard combo are very nice.
We discussed the pros and cons of knowing and being comfortable with the ipad operating system or MacBook pro we have in the house already. From face time, 10 hour battery life, laptops getting very hot if on your lap for hours of use, having her downloaded iTunes music and same apps on all her devices.
She smartly stated well I guess that’s what YouTube is for. Her apps can be available for the most part on a MacBook Air (newest Operating System) or ipad / ZAGG keyboard. This is and was a lot for a soon to be newly minted 10 yr. old to absorb. Yet I think this is what is happening around the world and the slowdown of PC sales reported today. The cool factor of Windows 8 touchscreen laptops are something to try for yourself. Aside from that the apple ecosystem, simple use and lower priced iPads, long battery life, amazing HD screen, it being lightweight really beats anything a PC laptop can compete with. The MacBook Air is cool but very expensive starting at $999 for an 11” version. An Ipad for $499 has an HD screen, “Pages” app for $20, $100-125 for a very cool ZAGG keyboard and iPad case in one, iTunes eco system that all equaled to the final solution for her. A tablet or in this case an Ipad wins hands down and todays MSFT downgrade and 14% decline in PC’s confirms that decline which is here to stay. My daughter will make the right decision as the facts even to a 10 year old are becoming clearer.
Oh yeah, did I mention my son who just turned 7 thinks laptops are heavy thick pieces of metal? He has an iPad glued to his hands for games, learning apps and he lives in the iTunes ecosystem and its instant gratification click. And it’s here in seconds no shipping, 3-7 business days, driving to buy from a store, in stock, out of stock that’s just life as we knew it issues we all grew up with. For the younger generation that doesn’t compute.
In sum then, MSFT has a steady stream of income from its combined units and a solid 3-4% dividend. I would stay away though and focus our attention to the ecosystem and companies we are adapting to and our kids and next generation are growing up with in Apple, FB, Google, and Amazon.
