Microsoft is riding two secular growth trends, the rise of cloud computing, and the shift towards software as a service. The growth from both trends combined with Microsoft’s high returns on capital will fuel its future dividend growth and share buybacks.
Glenn breaks down how Azure is using network effects and scale advantages shared to attract more users and grow the value of its cloud computing network.
Glenn also discusses the three main switching costs that keep users locked into Microsoft software.
- The learning Curve Trap
- The Data Trap
- And the Industry Standard
We also cover the risks to Microsoft’s future growth and the competition coming after its software businesses.
At the end, we cover our estimate of fair value for Microsoft and why a company in a secular growth trend with high returns on invested capital always looks expensive.
