A sea change may be underway in the personal computing market that may be as fundamental, perhaps even more so, as the breathtaking switch consumers made from Blackberry (NASDAQ: BBRY) devices to the Apple Inc. (NASDAQ: AAPL) iPhone, iPod, and iPad, as reported by Fortune. This sea change is the Microsoft (NASDAQ: MSFT) Surface Book and the reaction of consumers.
Suddenly, tablets have an extended functional use. Sure, for games, photos, and videos, and many other purposes, iPods and Alphabet (NASDAQ: GOOG, GOOGL) Android devices are necessary, even desirable. But an Android or Apple device, even though it had the power to complete the tasks, was still being used by very few people as their sole computer. Laptops, made by both Apple and plethora of personal computer manufacturers, have remained a mainstay, perhaps somewhat out of necessity.
The Surface Book changes this. It is a full-blown tablet that attaches to a standard QWERTY keyboard. It runs Windows 10, the very same system that most Microsoft users are probably running. Further, it's very similar to Windows 7 and 8.
The Surface Book runs all of the Microsoft applications to which computer users are accustomed, flawlessly. It represents the perfect bridge between the personal computer of the past and the personal computer of the future. Microsoft reports that the Surface Pro runs 50 percent faster than the comparable MacBook Air -- and it's a tablet. The MacBook Air is a bona fide laptop. The Surface Book represents a true paradigm shift in personal computing and consumers appear to be voting with their wallets.
Demand for the Surface Book has been steady. Tech Crunch reports that the Microsoft website has been sold out at times since the new potentially disruptive laptop competitor was announced on October 6. The Surface Book officially launches on October 26 and there are wait times for many of the Surface Book versions and accessories. Microsoft is taking Surface Book pre-orders on its website, with prices reported to start at $1,499.
Over the past 90 days MSFT EPS estimates have been reduced from $0.65, by 9.2 percent. Full 2015-year MSFT EPS estimates have been taken down from $2.84 to $2.69 and 2016 views from $3.21 to $3.08, over the same time frame.
Analysts see Microsoft generating $91.1 billion in revenue in 2016 and growing that figure 7.2 percent to $98.5 billion in 2017.
EPS growth for Microsoft, judging by current estimates, is mediocre at best. Quarterly MSFT EPS growth of 9.3 percent is expected on Thursday and then 1.4 percent in the second quarter of the MSFT 2016 fiscal year. EPS growth of 9.3 percent is forecast for all of 2016 and then 14.5 percent in 2017. MSFT EPS growth of 8.2 percent annually over the coming five years is the consensus among analysts who publish Microsoft estimates.
Perhaps, if Tech Crunch is right, and Microsoft did indeed "underestimate the demand" for the Surface Pro, the new laptop alternative could be adding to the Microsoft bottom line in the near future, as the iPod, and later iPhone, did to Apple's.
MSFT shares trade near 52-week highs. News of upside guidance has the potential to start a new stock rally and chapter in the Microsoft story.
[Feature Photo by Andrew Burton / Getty Images]