Why Is Microsoft Keen on the PC Market despite Its Softness?



PC continues to be the most important gaming platform

Previously in the series, we discussed Microsoft’s (MSFT) initiatives in the gaming space. Any gaming platform is considered to be successful if it’s backed by developers and the developer community. VR (virtual reality) is also rapidly becoming popular.

According to the Game Developers Conference State of the Industry 2016 survey, the PC (personal computer) is the top gaming platform in terms of developer support. This is despite 4Q15 being the fifth-consecutive quarter of worldwide PC shipment decline and PC shipments hitting an eight-year low in 2015.

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This news is significant to Microsoft, as it generates the majority of its revenue from the PC market. After PC, its mobile segment is its leading platform for game development among developers, as the above chart shows. Except for Apple (AAPL), all PC vendors experienced falls in their market shares in 4Q15.

VR market is rapidly moving up the gaming platform ladder

In the survey, 52% of developers indicated their involvement in working on a game for a PC. This figure was followed by smartphones and mobile devices. These hold appeal to developers due to their vast audience.

Of current generation consoles, the Japan-based (EWJ) Sony (SNE) PS4 (PlayStation 4) is the developers’ favorite. The PS4 is followed by Microsoft’s Xbox One. Nintendo (NTDOY) doesn’t have many takers from the developing community.

VR is rapidly emerging as a future gaming platform for which developer support has doubled compared to 2015. Later in the series, we’ll discuss how Microsoft intends to benefit from this trend through its HoloLens device.

You can consider investing in the PowerShares QQQ Trust, Series 1 ETF (QQQ) to gain exposure to Microsoft. It accounts for 8.4% of QQQ. Investors who would like application software exposure could also consider QQQ. Application software accounts for ~28.4% of QQQ.


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