This Could 'Ignite' Microsoft's Enterprise Business

• Microsoft Corporation MSFT shares are down 8 percent since December 22.
• Piper Jaffray’s Katherine R. Egbert maintained an Overweight rating for the company, with a price target of $64.
• The new Windows support policy may lead to an Enterprise PC upgrade cycle, Egbert stated.

On January 15, Microsoft announced a change to its Windows 7/8.1 support. It said that new hardware running the latest silicon would require the latest version of Windows for support.

Analyst Katherine Egbert believes that the company has decided on this policy to offer “a more consistent and competitive Windows experience, by ensuring that future Windows-based hardware will take advantage of the improved security, performance and other enhancements that often come with new silicon.”

This is a step towards having an integrated system, like Macs and Chromebooks. After July 17, 2017, the Win7/8.1 hardware would need to be upgraded to Windows 10 or be left with very limited support, Egbert mentioned.

The analyst expects the new support policy to support Microsoft’s goal of reaching 1bn Windows 10 devices 2-3 years after launch. There are currently more than 200 million Windows 10 devices worldwide. According to Piper Jaffray’s estimates, 66 percent of PCs are currently running Windows 7/8.1, with 10 percent running Windows 10.

“We believe the new enterprise support policy Microsoft has put in place, in addition to an acceleration in commercial adoption of Windows 10, could result in a uptick in enterprise hardware sales in the next 1-2 years,” Egbert commented.