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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Diamond Jim who wrote (5925)	4/22/1998 4:44:00 PM
From: Smart Investor	Respond to of 74651

Everybody I talked to said that they will upgrade to Window98 as soon as it is coming out ! Its revenue will be much higher in the 2nd half. I just think MSFT has been playing this game of talking down expectations for so long, and not many people are buying that anymore.

To: Diamond Jim who wrote (5925)	4/22/1998 4:54:00 PM
From: Deliveryman	Respond to of 74651

But there are more computers out there that can install Win98 than there were machines that could Win95. A lot of computers need expensive hardware upgrades for Win95. Today users will buy Win98 even if it just promises a slight speed up...

To: Diamond Jim who wrote (5925)	4/22/1998 5:03:00 PM
From: Jeff Goodman	Read Replies (2) \| Respond to of 74651

>Cause you don't need Windows '98, just like the slow down Intel has experienced all this last year because you don't need more than a 166mhz PC, True statement, Jim, but a big part of what is slowing down Intel, IMHO, is that they are no longer able to exercise that most valuable perq that comes along with monopoly power--the ability to set pricing for the industry. AMD and Cyrix (now National) have just enough capability and just enough market share (particularly at the low end) that they are not allowing Intel to set pricing where Intel would like to . . . and Intel's profit margins are hurting big-time as a result. Even if Intel is able to come out with a new proprietary standard--whether in packaging technology or in microprocessor specs--it's not clear to me that they can ever regain the kind of pricing control they had up until about a year ago. In Microsoft's case, however, there really is no one out there now that is forcing them to lower prices. Their pricing for Win98 has not gone down vs. Win95, and although the computer manufacturers may squawk about how much higher a percentage of the total price of a shipping computer MS Windows accounts for, I don't see that changing substantially in the near- to mid-term future. Further, while Intel is hurting because they can't make up profits on increased volume given their decreased profit margins on the sub-$1,000 PC's, we shouldn't forget that MS gets to sell one copy of MS Windows for each of those increasingly numerous PC's. Intel's pain is Microsoft's gain here. Also, as an MS Office 98 for Mac user, I can confirm that this is really a wonderful suite of software they have (finally!) delivered to the Mac market. I have been using it for the last couple weeks, and I have to give MS their due on this--it has been a long time since I have used software packages that I have enjoyed as much as Word 98 and Excel 98. Sounds from Microsoft's statement today as though they have done quite well the first month or two that Mac Office 98 has been out. I do believe, though, that this is just the beginning of the penetration for that market. MS is going to sell Office 98 for the Mac hand over fist for the rest of this year, because Mac users have been literally starving for it--pent-up demand like you wouldn't believe. Will it change Microsoft's life as far as profits for the year go? No, probably not, but it's going to be _very_ nice icing on the cake. Word-of-mouth alone will carry this one very, very far in the Mac market. And on one other front, the on-going "gorilla-collision" between Microsoft and Oracle looks as though it could have a substantial effect on MS's market cap over the next year or two. (This particular definition of a high-tech "gorilla" and the market implications are taken out of Geoff Moore's "Inside the Tornado" and "The Gorilla Game" books on high tech marketing, business, and investment strategy.) As Microsoft continues to win business away from Oracle, Oracle's market cap and market cap appreciation potential are going to get siphoned directly over into Microsoft. Again, this portends good things for Microsoft. Bottom line is (again, IMO), despite Intel's jump today, they have very difficult times ahead of them. Comparatively speaking, Microsoft doesn't. Regards, Jeff