Microsoft (MSFT)

Today,

1. they sell Operating systems for home and servers (They entered the business later than Novell and IBM but today they compete mostly against the *nix flavors and Apple),
2. they sell the XBOXes that are the most powerful game consoles, at present, beyond the PS3 (they entered the business later than Sony and Nintendo but caught up to the competition),
3. they are #1 in Office products. The Open Source competition lacks the feature-laden products to compete for customers who desire all the bells and whistles
4. they are #1 in Internet browsers market share
5. they increase their market with IIS/Windows Server against the Open Source solutions and they should become #1 in 2010 (source not provided yet)
6. they are #1 in the mobile market. Their mobile OS is by far superior than the the others, especially in enterprising and third-party applications department.

These successes across diversified markets are demonstration Microsoft is sufficiently sensitive to the needs of the market. They are willing to sustain long-term investments, providing improved solutions large segments of the market are willing to embrace.

The current introduction of a large cycle of new products (Vista OS, Xbox 360, Windows Live, AdCenter) makes it likely that Microsoft will see significant earnings growth for the next year or so, as companies upgrade their older systems.

Microsoft's unique position of stacked offerings promises greater compatibility and integration for demanding enterprises, from the OS up through the server applications. This makes an all-Microsoft system an attractive buy, and the desire to maintain maximum integration also persuades many companies to upgrade all their Microsoft products together.

Microsoft is currently undertaking new branding exercises. According to Adweek.com they are bidding out a $50M account to 4 agencies. This was originally reported to be a $200M account, and is not replacing any existing marketing initiatives.

The current introduction of a large cycle of new products (Vista OS, Xbox 360, Windows Live, AdCenter) makes it likely that Microsoft will see significant earnings growth for the next year or so, as companies upgrade their older systems.

Microsoft's near-monopoly on the desktop operating system market gives it tremendous pricing leverage as well as a steady cash flow. This domination of the desktop OS makes it easier for name-brand Microsoft to penetrate new OS markets like those of mobile phones, PDAs, mp3 players, digital cameras, and car navigation computers--Microsoft has both a technological advantage of extensive OS experience and an advertisement advantage with its reputation for high-quality OS offerings.