The latest salvo in a season of Microsoft (NASDAQ: MSFT) bashing comes courtesy of the smoking guns of Acer CEO JT Wang who was quoted recently in the Financial Times suggesting that it woud be a shame if anything were to happen to Microsoft's precious tablet plans:
"Think twice (Microsoft). It will create a huge negative impact for the ecosystem and other brands may take a negative reaction. It's not something you are good at so please think twice."
Or else?
Wang's reaction to Microsoft's plan to develop Surface is not unusual. The line of skeptics muttering and mumbling under their breath about Microsoft's return to the hardware world might possibly stretch from one end of the software giant's gilded green campus to the other. What is a little atypical was the bluntness (one headline referred to Wang's "Mafia-style threat") and openness coming from others inside the tech tent - and from a chief exectuive officer, no less.
Microsoft CEO Steve Ballmer. (Image credit: AFP/Getty Images via @daylife)
The idea of Acer thumping Microsoft in the chest is a little comical to some. I can't help but be reminded of the poster my Dad used to keep in the den (this was back in the days before man caves), a cartoon drawing of a mouse demonstrably flipping the bird in the shadow of a swiftly descending hawk. The caption read: The Last Great Act of Defiance.
My guess is that the relationship between Microsoft and the Acers of the world will resolve itself more amicably than the one between the foremetioned mouse and hawk (past abuse of hardware makers, notwithstanding). Despite the Acer's threat to "abandon" the Windows platform altogether if Microsoft will not relent in its drive toward Surface, I doubt Acer has much in the way of a back up plan if it did carry out its threat to leave the world of Windows (I imagine Steve Ballmer huffing, "Let them eat Linux!").
Actually, if Acer did go in any direction, Android and the building of Android tablets instead of Windows tablets a la Surface would probably be the the Taiwanese corporation's only other real option - though as pointed out here, Google (NASDAQ: GOOG) already has a tablet maker in Asus.
This may be why Wang's outburst - and that of other top Acer executives - may be more accurately understood in the context of the (positive) disruption that tablets and smartphones are bringing to the technology market - especially for hardware makers like Acer. Seen in this light, the anxieties of Acer are as much a representative of the growing pains of the industry rather than a cogent critique of Microsoft's ability to do hardware (Xbox anyone?).
Looking at the stock, shares of Microsoft appear headed for a fourth higher close in a row. Should MSFT finish up today on Wednesday, the stock will have closed in short-term overbought territory for a third consecutive session. As I suggested a few days ago, the stock is moving through a pattern of lower highs and higher lows. And this kind of price compression historically has led to sizable moves once the pattern is broken by either a significant higher high or a significant lower low.
Note that a similar pattern of lower highs and higher lows in the late summer and fall of 2011 helped pave the way for a major breakout in MSFT just after the beginning of this year. If the current pattern plays out similarly to the previous one, then traders may want to be on the lookout for a break by the end of August.
