Be careful about using intuition to guide your investments. Take a look at this detailed model of microsoft at trefis.com:

http://www.trefis.com/company?hm=MSFT.trefis&hk=bdfe503063872d6d5b1a3cd6c47d5ed123cf6baf&from=share&shr=61

Almost all of the value in the stock comes from windows and office. Bing, Zune and XBox are rounding errors. Compare that to Apple. Big ideas have seldom come _from_ MSFT, only quickbasic was really in house. MSFT was the first to charge money for software, and it positioned itself really well with windows and office, but those legacies are ending. It's hard for me to look at microsoft and see anything but an aging dinosaur, or perhaps a whale rotting on a shore. Yes, it will be there 50 years from now.

I agree with the rationale that they have the brute strength to get into any market that they choose. And I own them in my IRA (not linked on CV) because I think they'll have the staying power of IBM, etc.

But one has to be careful. Microsoft is a cash generating machine, not an idea generating one. Historically, it's been behind the eight-ball on innovations, just copying things that have been proven to be successful. That's not bashing them, as they're quite good at taking an idea and refining it. It's just that it's doubtful the next big thing will come from them. But when the next big thing occurs, they'll be standing nearby waiting to disassemble it and make it better.

Whether that occurs or not is anyones guess. The Zune hasn't been a smash for instance. Neither was Vista. But the x-box still seems to be.

I am not sure what people mean by having to be careful. It is a cash generating machine and it is a technology company. Sure, any given product other than Windows will make up a small percentage of the company when compared to Windows, but that does not in any way shape or form mean that the company is incapable of thought or is incapable of creating the next great product.

As an example, it is conceivable that they develop software for a cell phone which "blows" the iPhone away or at least, matches what the iPhone has, and that the phones it is installed upon will outnumber the iPhone by an order of magnitude just as the number of PCs that run windows blows away the number of mac computers.

I am not saying it is probable, only that it is possible, and given that it is a software giant, I am comfortable placing a bet on them. I am holding a far greater amount of Apple than Microsoft, but that does not mean I feel Microsoft is incapable of competing.