New technology coming out of the software industry is creating opportunities for innovation as the sector moves from the historically, well-defined desktop environment, with user devices being PCs, to now alternate operating systems from different manufacturers for tablets and smartphones, as well as PCs, says Mark Moerdler, Ph.D., a Senior Research Analyst at Sanford C. Bernstein & Co., LLC.
“Then, there are all of the changes occurring in the data center as you move from completely on-premise, to some mix of on-premise, the cloud and private cloud. We also see the move to new alternate types of databases. It’s creating lots of opportunities for all the companies within our coverage area,” he said.
Moerdler has an “outperform” rating on Microsoft Corporation (MSFT) because he sees the cloud creating opportunities for Microsoft, with the Office365, Dynamic CRM Online, Azure which is Microsoft’s platform-as-a-service, PaaS, as well as a number of other offerings. He also believes Windows 7 is the standard in the corporate world, while Windows 8 in the consumer world creates the next generation for which these companies will continue to develop.
“Microsoft has been a company that hasn’t been as organically innovative as some other companies have. Right now, we see a lot more organic innovation going on in the company than we’ve seen before,” Moerdler said. “And we think that creates a great opportunity for the company to beat the Street’s expectations and to prove that some of the bear cases are wrong and to do that in a reasonably short time horizon.”