Microsoft at Crossroads: Coping with the Changing Dynamics of the Industry
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Case Code: BSTR457 Case Length: 16 Pages Period: 2010 - 2014 Pub Date: 2014 Teaching Note: Not Available |
Price: Rs.500 Organization: Microsoft Corporation Industry: Information Technology Countries: Global Themes: Innovation, Market Agility |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Trouble Brewing at Microsoft
Microsoft was known to have a huge presence in the enterprise segment. For the FY ended 2013, the software giant reportedly had a 55 percent market share in the enterprise segment Analysts felt that Microsoft was focusing on the enterprise segment at the cost of the growing consumer segment. Industry observers opined that Microsoft's limited presence...
Operating System and Web Browser Market
In its initial years, i.e. in the 1980s, Microsoft only had Windows OS for PCs and Microsoft Office, an office suite for desktop applications, services, and servers for its Windows OS. By the late 1990s, Windows OS had garnered a market share of 90 percent, dominating the PC OS market....
Search Engine Market
Before entering the online search engine market with a search engine, Microsoft launched an Internet portal in August 1995 called MSN. MSN was a collection of Internet websites and services by Microsoft. Since it did not appeal to the consumers, Microsoft launched the Windows Live Search in 2006. After going through several revisions, Microsoft came out with Live Search in March 2007. In May 2009,....
Gaming Market
In 2001, Microsoft entered the gaming market by launching the Xbox gaming console. The product was a huge success. However, the company failed to replicate this success in its successive product launches for the gaming market, experts said. Moreover, the company could not sustain competition and the gaming market was taken over by Nintendo's Wii, which outsold Xbox by catering to casual gamers...
Portable Media Player
In October 2001, Apple launched the iPod. Microsoft launched Zune in November 2006 as a competitor to this product. However, by the time Zune was launched, the iPod was already in a position of dominance in the music download and multimedia market....
The Declining PC Market
After the Windows OS was launched by Microsoft in the 1980s, it captured a major chunk of the OS market. By 2002, it was reported that the Windows Os had captured 97.6 percent of the desktop OS market. While Microsoft had garnered huge revenues through OEMs for its Windows OS for PCs for several years, it started losing market share when consumers' preferences started shifting from PCs to tablets and smartphones....
Changing Mobile OS Market and Smartphone Market
After entering the mobile operating software market in 2000, Microsoft, over the years, launched several OS based on Windows for smartphones with enhanced features such as Bluetooth headset support, support for add-on keyboards, SMS reply options, Wi-Fi Protected Access support, etc. In 2005, Windows Mobile 5 (code named Magneto) was officially launched. It featured a newer version of Pocket Office called Office Mobile. It also had nifty features such as photo caller ID, default QWERTY keyboard support, picture and video package, etc....
The Tablet Segment
In 2010, Apple launched its tablet computer called the iPad. Despite consumers' preferences shifting to tablets, Microsoft did not focus on launching a tablet; instead, it pitched the Windows 7 OS for the iPad. According to Lenovo’s technology director, Howard Locker,...
Aligning with the Changing Industry Dynamics
With the changing industry dynamics, Microsoft tried to align with the new computing segments. This was also a bid to arrest the decline in sales in other segments where the company was continuously losing out to its competitors....
Challenges
While Microsoft was increasing its presence in the intensely competitive consumer technology market, Apple was gearing up to increase its presence in the enterprise segment where Microsoft was a market leader. This Apple did by launching iPads and iPhones for the enterprise segment. In 2014, Ted Schadler (Schadler), a Forrester analyst, reported that the iPad had become the number 1 tablet in the enterprise segment with 98 percent of the Fortune 500 using iPads...
Looking Ahead
Some experts felt that it was Microsoft’s bias toward enterprise software, which accounted for the bulk of its profits, that had led to its not achieving much of a presence or success in the consumer market segment. On the other hand, some industry experts believed that Microsoft had made several attempts to innovate in consumer markets but had felt that a huge focus on this segment could lead to the company losing its core customers, the enterprise segment, which accounted for 55 percent of the company's revenues for the FY 2013.....
Exhibits
Exhibit I: Microsoft's Income Statement(In millions US$, except per share amounts)
Exhibit II: Vendor Share of Consumer Computing (2000-2016 Estimate)
xhibit III: Microsoft's Segment-wise Revenue Information
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