NEW ARTICLE BY DANIEL TODD, (SEEKING ALPHA)!
Although Microsoft (MSFT) posted strong numbers for its fiscal year 2012 fourth quarter (earning $0.73 per share, higher than the $0.62 that the Street expected and 6% higher than in the same quarter a year ago) its stock price continues to hover around the $30 price range that it has been mired in for a decade. This may be because its mobile division has continued to fail to meet expectations. However with the release of Windows Mobile 8, and through acquisitions and strategic partnerships, Microsoft is to moving to become a major presence in the white-hot mobile sector.
Microsoft is using the Windows Mobile 8 and Windows Azure platforms as the basis of its strategy to bolster its mobile business sector and is forging key relationships around mobile search and social search. I believe this strategy will generate significant mobile revenues and pull its stock price out of the ten year doldrums it has languished in.
Partnerships
In particular, Microsoft has just invested in Klout; a social media reputation start-up that has created a buzz with its service that works with several social networks. Microsoft has also started to integrate Klout data into Bing search results. The size of Microsoft's investment was not disclosed, but Klout CEO Joe Fernandez revealed in a blog post that "Microsoft has made a strategic investment in Klout and that we have signed a multi-year agreement where Bing will become one of Klout's most significant partners." Microsoft's investment in Klout will allow Microsoft to leverage its strategic investment partnership with Facebook .
Klout works by allowing users on social networks to rate each other and based on these ratings assigns users a score for their social media influence. If users have a Facebook (FB) account Bing will now include these Klout scores in the social sidebar that it displays. This investment and partnership with Klout in the social search niche, underscores Microsoft's commitment to enhancing Bing and Microsoft's overall search and recommendation capabilities.
Last month Mimvi (MIMV.OB), a leading mobile app search and recommendation provider, announced a partnership and investment deal with Microsoft which is designed to enhance overall search and recommendation on Microsoft's Windows Azure and Windows Mobile 8 platforms. Mimvi has announced the launch of Mimvi ECHO™, the first in a series of mobile app products and services designed to help all mobile search engines, mobile app developers and app stores monetize with greater efficiency. Mimvi ECHO™ combines the Company's proprietary search and recommendation technology with a pre-built social community comprising tens of millions of active mobile users. At its core is a set of proprietary search and relevance algorithms and technology enabling social reach. Based on its newly formed partnership with Microsoft, Mimvi will be working closely with the Microsoft Azure team to advance Mimvi ECHO™ algorithms and apps initially with deployments across Windows Azure, Microsoft's Cloud Platform.
Microsoft also recently announced that its Windows Azure Mobile Services platform would enable developers to add a cloud backend to its Windows 8 application, with support for mobile platforms including Windows Phone, iOS and Android to follow shortly. In addition to Mimvi ECHO™, Mimvi is likely to develop search tools for mobile apps and data stored on the cloud using Microsoft's Windows Azure Cloud Services platform.
It appears that Mimvi will also work closely with Microsoft's Bing team to combine mobile app search with general web search, enabling users to go to a single location to find both mobile and general web search results. This will be a huge bonus for Microsoft's Windows 8, which promises to make it easy for developers to build mobile apps that run on the desktop as well as on mobile devices.
Acquisitions
Microsoft announced last week that it had acquired PhoneFactor, a service that provides an additional layer of security during the authentication process. The additional step PhoneFactor offers involves using a phone to authenticate users when they sign in by a phone call, text or mobile app. This sort of multi-layer authentication is primarily an issue in business and enterprise environments.
PhoneFactor supports a number of enterprise integrations, including many which integrate with Microsoft technologies, like Active Directory, Windows Azure Active Directory, Office 365, IIS, SharePoint and Outlook Web Access. It works both on-site and in the cloud. Microsoft indicates that it will integrate PhoneFactor's technology deeper into its own technologies, providing it with another layer of security for enterprise solutions.
Overall Strategy
Microsoft's new strategic acquisitions and partnerships give it the technical means to develop myriad mobile-centric opportunities, one of which is its gigantic Android-related patent licensing deal with Samsung (SSNLF.PK) whereby Microsoft gets royalty revenue on every Android phone and tablet that Samsung sells . These deals will also enhance its relationship with Facebook and its apparently tenuous relationship with Yahoo (YHOO). Microsoft's $240 million investment in Facebook in 2007 gave it a share of the company and enabled its Bing team to power searches on the social networking site. In 2010 it started integrating Facebook friend data in search results. Likewise Microsoft's 2009 partnership deal with Yahoo gave the Bing team control of Yahoo's search. Yahoo's CEO, Marissa Mayer, recently met with Microsoft CEO Steve Ballmer about improving Yahoo's search advertising partnership.
Early reports on Windows 8 and Windows Mobile 8 have been favorable but execution will be critical to their ultimate success. As we have seen with Apple suffering over the Mapgate and Purple Haze affairs, it is all about delivering a perfectly seamless experience for the user. If Microsoft fails to do so, it will undermine its strategic relationships.
It is interesting to note that the company that was once known as the Evil Empire, Microsoft, is wooing small companies like Mimvi and Klout through investment and partnership agreements, whereas Google (GOOG) is engaged in battle against companies such as Vringo (VRNG) over search copyright issues.
Conclusion
Microsoft's technical partnership and investment deals with Klout and Mimvi underscore its commitment to enhancing its presence in the increasingly vital mobile search, social search and search advertising marketplaces. In particular, Mimvi and Klout will enable it to integrate new features of social search and mobile search into Bing and other Microsoft products in a compelling way for users and developers alike. While Bing has barely chipped away at Google's continued dominance in the desktop search market, the mobile search and social search arenas offer additional opportunities to gain market share and increase revenues. I remain positive about Microsoft's endeavors in these crucial growth areas and consider it a strong buy. Likewise I consider Mimvi a Strong Buy.
Although Microsoft (MSFT) posted strong numbers for its fiscal year 2012 fourth quarter (earning $0.73 per share, higher than the $0.62 that the Street expected and 6% higher than in the same quarter a year ago) its stock price continues to hover around the $30 price range that it has been mired in for a decade. This may be because its mobile division has continued to fail to meet expectations. However with the release of Windows Mobile 8, and through acquisitions and strategic partnerships, Microsoft is to moving to become a major presence in the white-hot mobile sector.
Microsoft is using the Windows Mobile 8 and Windows Azure platforms as the basis of its strategy to bolster its mobile business sector and is forging key relationships around mobile search and social search. I believe this strategy will generate significant mobile revenues and pull its stock price out of the ten year doldrums it has languished in.
Partnerships
In particular, Microsoft has just invested in Klout; a social media reputation start-up that has created a buzz with its service that works with several social networks. Microsoft has also started to integrate Klout data into Bing search results. The size of Microsoft's investment was not disclosed, but Klout CEO Joe Fernandez revealed in a blog post that "Microsoft has made a strategic investment in Klout and that we have signed a multi-year agreement where Bing will become one of Klout's most significant partners." Microsoft's investment in Klout will allow Microsoft to leverage its strategic investment partnership with Facebook .
Klout works by allowing users on social networks to rate each other and based on these ratings assigns users a score for their social media influence. If users have a Facebook (FB) account Bing will now include these Klout scores in the social sidebar that it displays. This investment and partnership with Klout in the social search niche, underscores Microsoft's commitment to enhancing Bing and Microsoft's overall search and recommendation capabilities.
Last month Mimvi (MIMV.OB), a leading mobile app search and recommendation provider, announced a partnership and investment deal with Microsoft which is designed to enhance overall search and recommendation on Microsoft's Windows Azure and Windows Mobile 8 platforms. Mimvi has announced the launch of Mimvi ECHO™, the first in a series of mobile app products and services designed to help all mobile search engines, mobile app developers and app stores monetize with greater efficiency. Mimvi ECHO™ combines the Company's proprietary search and recommendation technology with a pre-built social community comprising tens of millions of active mobile users. At its core is a set of proprietary search and relevance algorithms and technology enabling social reach. Based on its newly formed partnership with Microsoft, Mimvi will be working closely with the Microsoft Azure team to advance Mimvi ECHO™ algorithms and apps initially with deployments across Windows Azure, Microsoft's Cloud Platform.
Microsoft also recently announced that its Windows Azure Mobile Services platform would enable developers to add a cloud backend to its Windows 8 application, with support for mobile platforms including Windows Phone, iOS and Android to follow shortly. In addition to Mimvi ECHO™, Mimvi is likely to develop search tools for mobile apps and data stored on the cloud using Microsoft's Windows Azure Cloud Services platform.
It appears that Mimvi will also work closely with Microsoft's Bing team to combine mobile app search with general web search, enabling users to go to a single location to find both mobile and general web search results. This will be a huge bonus for Microsoft's Windows 8, which promises to make it easy for developers to build mobile apps that run on the desktop as well as on mobile devices.
Acquisitions
Microsoft announced last week that it had acquired PhoneFactor, a service that provides an additional layer of security during the authentication process. The additional step PhoneFactor offers involves using a phone to authenticate users when they sign in by a phone call, text or mobile app. This sort of multi-layer authentication is primarily an issue in business and enterprise environments.
PhoneFactor supports a number of enterprise integrations, including many which integrate with Microsoft technologies, like Active Directory, Windows Azure Active Directory, Office 365, IIS, SharePoint and Outlook Web Access. It works both on-site and in the cloud. Microsoft indicates that it will integrate PhoneFactor's technology deeper into its own technologies, providing it with another layer of security for enterprise solutions.
Overall Strategy
Microsoft's new strategic acquisitions and partnerships give it the technical means to develop myriad mobile-centric opportunities, one of which is its gigantic Android-related patent licensing deal with Samsung (SSNLF.PK) whereby Microsoft gets royalty revenue on every Android phone and tablet that Samsung sells . These deals will also enhance its relationship with Facebook and its apparently tenuous relationship with Yahoo (YHOO). Microsoft's $240 million investment in Facebook in 2007 gave it a share of the company and enabled its Bing team to power searches on the social networking site. In 2010 it started integrating Facebook friend data in search results. Likewise Microsoft's 2009 partnership deal with Yahoo gave the Bing team control of Yahoo's search. Yahoo's CEO, Marissa Mayer, recently met with Microsoft CEO Steve Ballmer about improving Yahoo's search advertising partnership.
Early reports on Windows 8 and Windows Mobile 8 have been favorable but execution will be critical to their ultimate success. As we have seen with Apple suffering over the Mapgate and Purple Haze affairs, it is all about delivering a perfectly seamless experience for the user. If Microsoft fails to do so, it will undermine its strategic relationships.
It is interesting to note that the company that was once known as the Evil Empire, Microsoft, is wooing small companies like Mimvi and Klout through investment and partnership agreements, whereas Google (GOOG) is engaged in battle against companies such as Vringo (VRNG) over search copyright issues.
Conclusion
Microsoft's technical partnership and investment deals with Klout and Mimvi underscore its commitment to enhancing its presence in the increasingly vital mobile search, social search and search advertising marketplaces. In particular, Mimvi and Klout will enable it to integrate new features of social search and mobile search into Bing and other Microsoft products in a compelling way for users and developers alike. While Bing has barely chipped away at Google's continued dominance in the desktop search market, the mobile search and social search arenas offer additional opportunities to gain market share and increase revenues. I remain positive about Microsoft's endeavors in these crucial growth areas and consider it a strong buy. Likewise I consider Mimvi a Strong Buy.
