The Tycoon Report

ANOTHER BRICK IN THE WALL: ‘Origami’ -- Microsoft’s BIG Secret

Hey, folks, I hope everybody is doing well.

Today I wanted to do something I haven’t done for a while and just talk about a new Technology. I’ll obviously discuss some of the business implications behind it and the company involved -- but I really just want to focus on the technology here for a minute.

First, let me give you all a little bit of background:

A few years ago, Microsoft (Nasdaq: MSFT) realized they had the home technology markets on complete lockdown. The company had the PC, the web browser and a ton of software and web sites in between. But, that’s as far as it went.

Microsoft didn’t have access to what users were listening to on their stereos or playing on their video game consoles. Thus began the journey of Microsoft into the home entertainment market with its launch of the Xbox. The company has done surprisingly well in that market, and with that success, is focusing on beefing up its home entertainment or personal entertainment offerings.

There have been whispers in the industry as of late of a new handheld device the company is planning to launch. However, people at the company have been less than forthcoming with information on the new product. The only thing one company executive, Richard Scoble, would say on his blog was that this new project -- which is code-named ‘Origami’ (I love this clandestine, Mission Impossible type stuff) -- is a handheld device, and more information will be available in the coming weeks.

But what kind of Tech Stock Insider would I be if I couldn’t dig (codename for ‘pay off Microsoft employees’ -- totally kidding by the way) and find out more about this secret project?

So, let me tell you what we know so far ...

This product won’t directly compete with the iPod, but will certainly offer features that allow users to play music ... but not so much as a personal music player. The product is being dubbed as a higher-end PDA. From early screen shots (there will be links below so you can see them, too,) we can see that users can play video games, use it as a remote control for their computers, use it as a navigation system in a car, and a number of other interesting things.

Other screen shots have shown the device being used as a digital picture frame, and it even has an attachable keyboard so it can be used as a fully-functional portable PC.

One of the coolest features appears to be the integration of Microsoft’s Tablet PC technology -- which has been extremely popular among corporate users, but due to its high cost, never took off with the consumer market. You can use a stylus to write directly on a touch screen. It’s almost like writing on a sheet of paper.

We haven’t been able to find much information on pricing, but that same Microsoft executive referred to the price as being “fairly low-cost.” Mr. Gates himself commented on a product last year that would be priced between $500 - $800, have an all-day battery life, and weigh less than a pound. This was likely a reference to the future Origami project that we’re hearing about now and will officially learn more about on March 2nd.

The project’s official web site is: http://www.origamiproject.com

Now, let’s talk a bit about the business implications of this technology. First, it’s being produced through Microsoft’s entertainment division (same one responsible for the Xbox.) We feel the current market for both entertainment software and hardware is WHITE HOT! We expect to see tremendous growth from this sector in 2006 and beyond. With the iPod leading the way, every company has been trying to get in on this market.

But, in my opinion, nobody has more to gain (or lose) than Microsoft. One day, we will likely not use a PC to browse the web, but rather we’ll do it from our couch while having a drink in front of a large flat-screen television using some type of remote control keyboard. That’s why it’s imperative Microsoft becomes a major player in this market for its future survival in the home computing market, in general.

Another, and more immediate, business implication is what this device could do for the Xbox gaming console. In one of the screen shots of this product, we clearly see a user playing the Halo video game on a screen that appears to be twice the size of Sony’s PSP. This device alone could propel Microsoft into the top spot for the handheld gaming market. Not to mention the fact that this could be one of the best personal video players to hit the market in years.

If the Origami lives up to its hype as a “fairly low-cost”, lightweight and highly versatile handheld PDA/video/gaming device, then this could really be Microsoft’s launching pad for a whole new suite of software and services for the personal entertainment market. From an investing standpoint, we’ll definitely be watching this product launch closely. As I did with my Synaptics trade many years ago, I’ll be looking for the same types of component companies when deciding how to profit from this new innovation.

So, for all you Tech Stock Insider members out there, stay close to your e-mail boxes.

We should have some very profitable trades in this area for 2006.