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Microsoft Updates Skype, Discontinues Surface Plus Upgrade

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Microsoft (MSFT - Free Report) is currently focused on restructuring as evident from its new update for Skype. The update has added new functionalities which will aid the video-calling and messaging service to stay true to its original simplified structure.

In fact, the company regularly updates its services with new features while discontinuing the unpopular ones primarily based on user feedback.

The tech giant also closed its Surface Plus financing program for new enrollments from Aug 31. The program was primarily aimed at aiding U.S. consumers and businesses, alike to avail a Surface device with reasonably low monthly down payments. Moreover, the company will discontinue the Surface Plus Portal on Sep 30.

Notably, Microsoft has returned 33% year to date, outperforming the industry’s rally of 27.3%. In the same period, the stock has also fared better than the S&P 500 index’s rise of 10.1%.

This outperformance can primarily be attributed to its continuous efforts in strengthening Artificial Intelligence and Internet of Things based capabilities. Undisturbed focus on Azure continues to remain a key catalyst.

Skype Updates Focused on Simplicity, Undoing “Highlights”

Skype is frequently updated with robust features to boost user engagement. The new functionalities provide it with a competitive advantage, against its peers which includes the likes of WeChat, Facebook’s (FB - Free Report) Messenger, WhatsApp, and Snap (SNAP - Free Report) owned Snapchat, among other similar messaging services.

The “Highlights” feature was added to Skype make the service resonate with Instagram’s “Story” and Snapchat. However, the company believes it complicated things for Skype users, consequently, removing the feature.

Undoing the“Capture” as well as “Highlights” feature and rearranging buttons of Chats, Contacts and Calls are expected to provide users with a cleaner user interface (UI). This is expected to eventually increase efficiency.

In the words of Peter Skillman, Director of Design for Skype and Outlook, “We are refocusing on the fundamentals of why most people use Skype—to make a call (often with video) and/or send a message.”

Why Skype Matters?

Microsoft acquired Skype for $8.5 billion in 2011. Notably, Skype for business has experienced strong adoption rate. The changes in the features of Skype, on consumer demand, are likely to increase its adoption. This will consequently boost its top-line.

Per Datanyze estimates, Skype for Business is placed at rank #1 from 21 Unified Communications (“UC”) technologies under survey. Notably, Gartner projects worldwide spending on UC to increase at a CAGR of 3% to $45.7 billion in 2022.

We believe Microsoft is well poised to grab this opportunity with the aid of Skype for Business and Microsoft Teams, another chat based workspace tool in its Office 365 software suite.

Closing Surface Plus Financing Program

Surface Plus financing program was offered to U.S. customers to avail Surface devices at a payment plan spread over 24 months at 0% annual percentage rate (“APR”).
New enrollments into the program have been done away with; however, existing customers can retain their Surface device post the 24 month time period. Nevertheless, after the online portal shuts down on Sep 30, the beneficiaries of the service are required to directly contact a Microsoft customer service representative.

Meanwhile, the company will continue its Surface Plus for Business program in partnership with LiftForward. The program aimed at SME businesses across the United States enables them to avail Surface devices.

To Conclude

We believe the restructuring initiatives, and old schemes making way for new effective plans bode well. It enables Microsoft to explore productive options for both the company as well as customers.

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Microsoft sports a Zacks Rank #1 (Strong Buy).

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AspenTech has a long-term earnings growth rate of 16.5%.

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