Chromebook’s growing popularity is bad news for Microsoft

How Microsoft is expanding its presence through acquisitions (Part 3 of 16)

(Continued from Part 2)

Windows OS is facing severe threats from the rising popularity of Android OS

As we have seen in the earlier part of the series, Microsoft’s (MSFT) Windows operating system dominates the PC market. However, its position is continuously being challenged by people’s preference and shift towards mobile and connected devices and the growing prominence of Google’s (GOOG) (GOOGL) Android operating system.

After successfully capturing a huge share in the mobile segment, Google is all set to make inroads in the PC and laptop sphere. China and other developing Asian economies that are strong markets for Microsoft are slowly turning to its peers like Apple (AAPL) and Google.

Owing to its low price and extensive features, consumers increasingly prefer the Google Chromebook. Apple products in both the desktop and mobile spaces were earlier considered to be pricey, though they are becoming affordable. To respond to this and increase adoption of its products, Microsoft slashed prices of its Windows and Xbox products.

If you are interested in gaining exposure to Microsoft, you can consider gaining exposure to ETFs like the Powershares QQQ Trust (QQQ) and the Technology Select Sector SPDR Fund (XLK) that have 8.00% and 9.61% exposure to Microsoft, respectively.

Windows 8 failed to meet user expectations

In order to strengthen its position in mobile and tablet computing, Microsoft’s previous OS, Windows 8, focused on touch commands. However, customers didn’t like the changes in the awkward system, and the fact that the system did not have a start menu further aggravated customers.

Finally, Microsoft decided to reverse its decision about the start menu with an update, Windows 8.1. Windows 8 failed to entice the majority of Microsoft users to upgrade from Windows 7. Microsoft skipped 9 and went straight ahead with Windows 10. According to Forrester, Windows 8 is only on about 10% of PCs and 19% of tablets. The reason for the low rate of upgrading is higher costs and unfulfilled expectations with the OS.

Continue to Part 4

Browse this series on Market Realist:

• Part 1 - Why Microsoft expects to post solid revenues in the near future

• Part 2 - Falling revenue from Microsoft Windows is a concern for investors

• Part 4 - Windows 10 could be a game changer for Microsoft