Microsoft Windows Vista’s Hidden Killer Application

This is the second article in a two article series in reference to a William Trent article on his blog, The Stock Market Beat. Mr. Trent’s article made reference to the lack of investment value in installing early versions of Microsoft Corporation’s (MSFT) Windows Vista.

The new Microsoft Windows Vista operating system contains a number of usability and performance improvements compared to Windows XP. The major improvements highlighted by Release Candidate coverage of Vista consists mainly of the following features:

32 and 64-bit support

Native multi-core support

Improved file system and search speed

New Vista explorer preview that includes live previews of the last three files you used when you mouse over a folder in explorer

Built-in PVR (Personal Video Recorder) in all versions of Vista that allows you to download TV programs and get TV schedules

New Aero-Glass user interface for improved graphical effects

Flip-3D Application switcher when you Alt-Tab through your open programs

Native support for widgets on the desktop

While these are all exciting new features in Vista, the one lightly covered feature that may emerge as a possible killer application is the new OS’s much improved voice support.

Here is a quote directly from Microsoft.com on Vista’s built-in voice recognition:

You can dictate documents and e-mails in commonly used programs, and use voice commands to start and switch between applications, control the operating system, and even fill out forms on the web.

I’ve always felt that speaking would be the most efficient way to control a computer or to type a document. Most people can speak many times faster than they can type and for most people typing lengthy documents is a difficult process. In a few minute verbal conversation I can get across several pages of content that would take me a couple hours to compose and type out.

For anyone that has used the cutting-edge of voice-recognition software, they know that you have to speak in a slow and mostly un-natural way for the voice-recognition to properly work. This difficult way of speaking defeats the purpose of naturally speaking to write documents. While still not 100% natural, Windows Vista makes great strides in voice recognition that Microsoft will likely improve on.

Voice recognition has been one of the most processor intensive applications in the past and the advent of multi-core cpu architectures from Intel Corporation (INTC and Advanced Micro Devices, Inc. (AMD) will undoubtedly lead toward improved performance. Once dual and quad-core cpu’s become ubiquitous, Microsoft could theoretically dedicate one, two or even three cpu cores to the application in the future. This is all leading me to believe that in the next decade voice recognition will be the next hidden killer application on the PC. Voice really is the most natural way to interact with computers.

You really have to see it to believe it for yourself so here is a link to a screencast by Mr. Long Zheng I found recorded on a medium-low range Toshiba Portege M400 Tablet PC.

Benjamin Gauthey on benjamingauthey.com performed the samedemonstration in French.

If the Chinese version works just as well you can immediately see the benefit in the emerging economy of China since basic mouse and keyboard skills is largely a lengthy educational process due to the lack of available PC’s.

Business users can immediately derive benefit from voice recognition during presentations. If the software continues to improve I can foresee a possibility in the future of people speaking into their bluetooth-enabled phones to dictate documents to a laptop they carry around. This is all very exciting and all very possible with the new technologies coming out from Microsoft, Intel and AMD.

So what does this mean for possible investments? Well I will reiterate that I am bullish on Intel. I sold Intel in late 2006 for no-profit and bought a larger position back during its current dip. I am confident in buying the stock ahead of the consumer release of Vista. The user experience, although driven by the Vista OS, will be powered by Intel or AMD. Since Intel has a current superior performing product to AMD’s offerings it opens up a marketing opportunity for the company to capture confidence before the normally strong fall season for PC sales. It will take time to build a reputation and judging by AMD’s release schedule Intel will have a half year lead over its rival. I like Intel at current prices and I may purchase additional shares if the stock drops below $20.

Going back to voice-recognition we can consider shorting shares of Nuance Communications, Inc. (NUAN) This quote from an Inquirer.net article describes the situation clearly.

The main question I had was: is Microsoft “doing a Netscape” on both Nuance’s Dragon and IBM’s Viavoice products? In other words, how can these companies compete on desktop dictation software if the feature is “integrated” into the OS? To me, it’s just like watching “IE vs Netscape” all over again.

I doubt Microsoft’s built-in voice-recognition will have any effect on International Business Machines Corporation (IBM) since Viavoice contributes to a tiny-fraction of the companies revenues. For Nuance, Dragon NaturallySpeaking is the companies major driver of revenue. Microsoft’s offering is a major threat to Nuance and investors should carefully monitor Microsoft’s advances in voice-recognition.

*Disclaimer: The author currently owns 5000 shares of INTC purchased at an average price of $20.55.

Building your Edge, An Early 2007 Opportunity In Intel Corporation

This is the first article in a two article series in reference to a William Trent article on his blog, The Stock Market Beat. Mr. Trent’s article covers his view on a few semiconductor companies we jointly follow.

In an earlier article I wrote, I prosed to Mr. Trent that Technology + Applications = Probable Success. I suggested that Mr. Trent read a preliminary performance preview of Intel’s (INTC) Core 2 Quad processor on HardOCP a computer enthusiast website.

Mr. Trent responded in this article that I had left users out of my formula and that unlike myself and my fellow enthusiasts, there just wasn’t that much of a crisis to simply download the free public beta of Windows Vista RC1 and a 1080p Windows High Definition (HD) video. These were two activities I suggested Mr. Trent follow to evaluate whether his computer was up to speed for Vista. My year old average computer skipped quite a bit on the task of playing the 1080P Windows HD video. Playing HD video from a disc format or from downloaded HD videos will be an activity that I believe will become common place in the short to medium-term future.

When Mr. Trent wrote that I had left users out of the picture the first person I thought of was legendary investor Peter Lynch, the former star manager of Fidelity’s Magellan Fund. In Lynch’s book “One Up On Wall Street” he makes an important point that the most basic way to evaluate an investment was to use the service or product. When Lynch was beginning his research on La Quinta Motor Inns the first thing he did was stay three nights in three different La Quintas. When the semiconductor industry is going through a cycle change, like it is now, there is no way for a normal consumer to use upcoming products. Neither Mr. Trent nor I can tell you for certain where the technology users will be. Consumers have to rely on the press and the computer enthusiasts like HardOCP. I value the data from enthusiasts to make investment decisions because they are so willing to void the warranties of computer processors to see for far a specific architecture like the Intel Core 2 Duo or Quad can be pushed. This is something you won’t find from the mainstream media and something that can help you avoid investing in upcoming architectures that aren’t as commercially scalable as you had hoped. When press and enthusiasts endorse a product you have a better idea where users may go.

Mr. Lynch makes another point in “One Up in Wall Street” to define your edge. Mr. Lynch writes that it is human nature for doctors to endorse oil stocks and for the oil professional to endorse pharmaceutical stocks. People tend to ignore the basic edge they have in the expertise they posses. There are few people better equipped than computer enthusiast’s who sample and test semiconductor products, to tell you which products are working and have the most technical opportunity for success. The enthusiast’s posses a simple edge a consumer can turn into their investment advantage. You can further build your personal edge by engaging in activities like downloading the Windows Vista RC1 candidate and a Windows HD video.

This is an important summation in why I believed that Mr. Trent only saw half the picture when he presented his entirely accurate data on semiconductor inventories and the glum picture the data draws. Enough demand can change production increases or make additional investment into cutting edge manufacturing processes a wise decision by semiconductor firms. By combining the data Mr. Trent presents with a fundamental picture you get a fuller view on making semiconductor investments.

Additional information from around the web on Intel and Microsoft Corporation (MSFT) have lead me to have a bullish view on semiconductor firms in light of a growing semiconductor glut.

The Intel Core 2 Duo microprocessor currently powering the vast majority of new PC products is a superior performing product to Advanced Micro Devices Incorporated’s (AMD) current offerings.
As evidence from computer hardware enthusiast websites like HardOCP point out, there is a lot of headroom to be found in the Core 2 Duo. Earlier reports from around the web show the Intel Core 2 Duo E6300 regularly approaching or breaking the 3Ghz barrier. The E6300 which has a default speed of 1.86Ghz is currently Intel’s least expensive Core 2 Duo processor.

The implications of these reports are enormous for investors in Intel. The high speeds reached by the E6300 show the scalability of the Core 2 Duo architecture. A large part of the scalability is no doubt a part of Intel’s shift to a 65 nanometer manufacturing process. Smaller manufacturing processes for Intel should mean more chips per wafer, improved power consumption and lowered heat output per processor. Analysts and enthusiasts are expecting AMD’s major shift to 65nm sometime in the middle of 2007. This gives Intel a comfortable lead and enough time to work out any cost or manufacturing efficiencies as the company becomes more acquainted with the 65nm process. The benefits of the Intel Core 2 Duo and shift to 65nm should become more apparent as the company releases earnings in the first half of 2007. Intel has an opportunity build consumer trust ahead of the 2007 holiday season.

There should be tremendous optimism in Intel if sales can improve and Intel can maintain a comfortable performance lead over AMD. Historians can take note that the last time Intel had such a scalable CPU as the E6300 was during the days of the Celeron 300A. The Celeron 300A was a 300Mhz CPU that regularly hit speeds of 450Mhz or a 50% speed increase. The E6300 is regularly capable of moving from 1.86Ghz to 3Ghz, a 62% speed increase. During the days of the Celeron 300A Intel was a dominant force over AMD. I am a big fan of AMD’s Athlon XP products. As I have written in the past it is hard for any company to follow up one hit with another. Even mighty Intel lost the performance crown during the last round of the CPU battle. With technology, developments move so fast there is no telling who will control the CPU performance crown in the long-term. With Microsoft’s Corporations (MSFT) Windows Vista around the corner in January of 2007, I expect both Intel and AMD to benefit in 2007. Intel, however, appears to be in a better position to benefit from the new Microsoft OS with a superior performing product in the short-term.

*Disclaimer: The author owns 5000 shares of INTC purchased at an average price of $20.55.

Raw Greed in 2007

I hope everyone enjoyed a wonderful Christmas and New Year. It’s time to look forward to 2007 and beyond. We should all remember to pray and give thanks for the past. Please remember to pray for those less fortunate.

Raw Greed 2006 Performance

The Raw Greed portfolio balance on December 31st, 2006 stood at $182,452.32, a year prior the portfolio stood at $144,038.63.

The Raw Greed 2006 portfolio gain was $38,413.69 or 26.67%.
The Raw Greed realized gain for 2006 was $42,769.45 or 29.69%

In comparison here is how Raw Greed performed against the major indexes in 2006:

Dow Jones Industrial Average 16.29%

Nasdaq Composite 9.52%

S&P 500 13.62%

Russell 2000 17.00%

S&P 400 Midcap index 8.98%

2006 held up to be a great year for investors. I will continue to refine and hopefully improve Raw Greed’s performance in 2007.

Raw Greed Freelance Programmer Found

I found a programmer from Get A Coder to handle the Wordpress plug-in with AJAX update for my stock portfolio and predictions page. Hopefully Raw Greed readers can look forward to major improvements in readability and more frequent updates when I start using the system.