Microsoft Considers Restructuring Based on Mobile Devices and Services

Michael Teague  |

In the early hours of Monday morning, reports had surfaced that the once-dominant computer company Microsoft (MSFT) was considering a major restructuring of its business that would see operations become more exclusively focused on mobile devices and services.

Shares were up over 1.1 percent in midday trading to $35.35, marking a new 52-week high.

A lot of the older generation of computing companies has had a difficult time keeping up with the dramatic shifts in the market that have resulted from the exponentially increasing use of mobile devices and cloud computing services rather than the PCs, laptops, and server and network hardware that allowed for the rise of firms such as Intel (INTC), Cisco (CSCO), Dell (DELL), and Hewlett-Packard (HPQ).

While these companies have had varying degrees of success with mobile, nothing they’ve done to date has been comparable in scale, popularity, or growth-potential as techs like Apple (AAPL), Google (GOOG), Samsung, or even Amazon (AMZN).

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To give some idea of how far behind some of the older tech firms are when it comes to mobile, consider that while Google has propelled its Android operating software into the world’s most popular smartphone platform, along with powering countless other unexpected gadgets and devices, Intel’s announcement last Friday that Samsung would be using its processors in one of an upcoming series of tablet releases was received as described as a coup.

Microsoft has dabbled with tablets and phones, as seen most recently in the company’s Surface model, which runs on the RT operating system, an alternative to Android and Apple’s iOS. The so-called “new tablet PC”, however, has had little success in capturing any significant share of the market, and Microsoft walked away from the first quarter of 2013 with less than one percent of the tablet market.

Despite CEO Steve Ballmer’s contention last year in a letter to shareholders that the changes soon to arrive for the company would be a significant shift “both in what we do and how we see ourselves—as a devices and services company,” many tech players looking for a way in to mobile devices have either abandoned the RT operating system, or have avoided it altogether.

Weak sales and overwhelming consumer preference for the operating systems of the company’s competitors have prompted Microsoft to announce a fairly drastic price reduction for its mobile version of Windows in an attempt to retain mostly other older techs who are themselves desperately trying to enter the lucrative market in a meaningful way.

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