MARKETING STRATEGIES OF

MICROSOFT
A Summer Training Project Report
Submitted in partial fulfillment of the requirement of GGS Indraprastha University for
the award of the Degree of
Bachelor of Business Administration

2013-2016
Submitted By:
Mr. MOHIT JAIN
Enrolment No.:
01112501713
Under the Supervision of
Ms. NEHA MANGA
Faculty, DSPSR

Delhi School of Professional Studies and Research

(Affiliated to Guru Gobind Singh Indraprastha University, New Delhi, India)

Certificate

This is to certify that the Summer Training Project titled MARKETING STRATEGIES OF
MICROSOFT is an academic work with industrial intent done by MOHIT JAIN submitted in partial
fulfillment of the requirement for the award of degree Bachelor of Business Administration from
Guru Gobind Singh Indraprastha University under my supervision & direction at Delhi School of
Professional Studies and Research. To the best of my knowledge and belief the data & information
presented by him/her in the project has not been submitted elsewhere.

Name and Signature of the Faculty Guide

Declaration
This is to certify that the Project Report titled MARKETING STRATEGIES OF MICROSOFT
which is submitted by me in partial fulfillment of the requirement for the award of degree Bachelor of
Business Administration from Guru Gobind Singh Indraprastha University at Delhi School of
Professional Studies and Research, Delhi comprises only my original work and has not been submitted
in part or full for any other degree or diploma of any university.

Name and Signature of Candidate

ACKNOWLEDGEMENT

This project has been made possible through direct and indirect support of various people
from whom I wish to express my appreciation and gratitude.
I would like to thank GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY for giving
me an opportunity to work on a valuable project.
I The company my sincere and whole hearted thanks to MS. NEHA MANGA and other faculty
members for constantly guiding and assisting me tackling variety of hurdles with implicit
patience throughout my project.
My deepest thanks go to my Parents for understanding and supporting me.

MOHIT JAIN

INDEX
Page no.
1. Introduction to Microsoft
2. History of Microsoft (1972-83)
3. History of Microsoft (1984-94)
4. History of Microsoft (1995-2005)
5. History of Microsoft (2006-2010)
6. History of Microsoft (2011-2014)
7. Some Competitors of Microsoft
7.1 Apple
7.2 Oracle
7.3 Google
8. Financial Analysis
9. SWOT Analysis
9.1 Strengths

2
3
5
7
9
11
14
15
18
20
22
26

9.2 The company weaknesses

27

9.3 Opportunities
9.4 Threats
10. Service provided by Microsoft
11. Marketing Strategies
11.1 How the Smartphone market has evolved over the last 5 years
11.2 Brand Positioning
11.3 Segmentation Strategies
11.4 A review of the brand and communication strategies
Expenditure, media mix, reach and effectiveness
12. Strategic Objectives for the Next Five Years
13. Risk Factors Impact on Forecast for Next 5 Years

28
29
30
33
34
35
36

14. Conclusion

42

15. Bibliography

43

37
39
40

MICROSOFT
Microsoft is an American multinational corporation headquartered in Redmond, Washington, that
develops,
manufactures,
licenses,
supports
and
sells computer
software,
consumer
electronics and personal computers and services. Its best known software products are the Microsoft
Windows line of operating systems, Microsoft Office office suite, and Internet Explorer the company
browser. Its flagship hardware products are Xbox game console and the Microsoft Surface series of
tablets. It is the world's largest software maker measured by revenues. It is also one of the world's most
valuable companies.

Microsoft was founded by Bill Gates and Paul Allen on April 4, 1975, to develop and
sell BASIC interpreters for Altair 8800. It rose to dominate the personal computer operating
system market with MS-DOS in the mid-1980s, follow The Company by Microsoft Windows. The
company's 1986 initial public offering, and subsequent rise in its share price, created three billionaires
and an estimated 12,000 Millions from Microsoft employees. Since the 1990s, it has increasingly
diversified from the operating system market and has made a number of corporate acquisitions. In May
2011, Microsoft acquired Skype Technologies for $8.5 billion in its largest acquisition to date.

As of 2013, Microsoft is market dominant in both the IBM PC-compatible operating system and offices
software suite markets (the latter with Microsoft Office). The company also produces a wide range of
other software for desktops and servers, and is active in areas including Internet search (with Bing),
the video game industry (with the Xbox, Xbox 360 and Xbox One consoles), the digital services market
(through MSN), and mobile phones (via the Windows Phone OS). In June 2012, Microsoft entered the
personal computer production market for the first time, with the launch of the Microsoft Surface, a line
of tablet computers.

With the acquisition of Nokia's devices and services division to form Microsoft Mobile Oy, the company
has re-entered the Smartphone hardware market, after its previous attempt, Microsoft Kin, which resulted
from their acquisition of Danger Inc.

In October 2014, it was reported in the media that Microsoft which acquired Nokia to succeed in mobile
device market was incurring losses due to acquisition, which was visible in its fiscal first quarter
earnings.

HISTORY OF MICROSOFT
197283: Founding and company beginnings

Paul Allen and Bill Gates, childhood friends with a passion in computer programming, The Company
seeking to make a successful business utilizing their shared skills. In 1972 they founded their first
company named Traf-O-Data, which offered a rudimentary computer that tracked and analyzed
automobile traffic data. Allen the Company on to pursue a degree in computer science at the University
of Washington, later dropping out of school to work at Honey the Company. Gates began studies at
Harvard.

The January 1975 issue of Popular Electronics featured Micro Instrumentation and Telemetry Systems
(MITS)Altair 8800 microcomputer. Allen suggested that they could program a BASIC interpreter for the
device; after a call from Gates claiming to have a working interpreter, MITS requested a demonstration.
Since they didn't actually have one, Allen worked on a simulator for the Altair while Gates developed the
interpreter.

Although they developed the interpreter on a simulator and not the actual device, the interpreter worked
flawlessly when they demonstrated the interpreter to MITS in Albuquerque, New Mexico in March 1975;
MITS agreed to distribute it and market it as Altair BASIC. They officially established Microsoft on
April 4, 1975, with Gates as the CEO. Allen came up with the original name of "Micro-Soft," the
combination of the words microprocessor and software, as recounted in a 1995 Fortune magazine article.
In August 1977 the company formed an agreement with ASCII Magazine in Japan, resulting in its first
international office, "ASCII Microsoft .The Company moved to a new home in Bellevue, Washington in
January 1979.

Microsoft entered the Operating System business in 1980 with its own version of UNIX,
called XENIX. The company, it was MS-DOS that solidified the company's dominance. After
negotiations with Digital Research failed, IBM awarded a contract to Microsoft in November 1980 to
provide a version of the CP/M OS, which was set to be used in the upcoming IBM Personal
Computer (IBM PC). Following the release of the IBM PC in August 1981, Microsoft retained ownership
of MS-DOS. Since IBM copyrighted the IBM PC BIOS, other companies had to reverse engineer it in
order for non-IBM hardware to run as IBM PC compatibles, but no such restriction applied to the
operating systems. Due to various factors, such as MS-DOS's available software selection, Microsoft
eventually became the leading PC operating systems vendor. The company expanded into new markets
with the release of the Microsoft Mouse in 1983.

198494: Windows and Office

10

While jointly developing a new Operating System with IBM in 1984, Operating System/2, Microsoft
released Microsoft Windows, a graphical extension for MS-DOS, on November 20, 1985. Microsoft
moved its headquarters to Redmond on February 26, 1986, and on March 13 the company the
company public; the ensuing rise in the stock would make an estimated four billionaires and 12,000
Millions from Microsoft employees. Due to the partnership with IBM, in 1990 the Federal Trade
Commission set its eye on Microsoft for possible collusion; it marked the beginning of over a decade of
legal clashes with the U.S. Government.

Microsoft released its version of Operating System/2 to original equipment manufacturers (OEMs) on
April 2, 1987; meanwhile, the company was at work on a 32-bit OS, Microsoft Windows NT, using ideas
from OS/2; it shipped on July 21, 1993, with a new modular kernel and the Win32 application
programming interface (API), making porting from 16-bit (MS-DOS-based) Windows easier. Once
Microsoft informed IBM of NT, the OS/2 partnership deteriorated.

In 1990, Microsoft introduced its office suite, Microsoft Office. The software bundled separate office
productivity applications, such as Microsoft Word and Microsoft Excel. On May 22 Microsoft
launched Windows 3.0 with a streamlined user interface graphics and improved protected
mode capability for the Intel 386processor. Both Office and Windows became dominant in their
respective areas. Novell, a Word competitor from 19841986, filed a lawsuit years later claiming that
Microsoft left part of its APIs undocumented in order to gain a competitive advantage.

11

On July 27, 1994, the U.S. Department of Justice, Antitrust Division filed a Competitive Impact
Statement that said, in part: "Beginning in 1988, and continuing until July 15, 1994, Microsoft induced
many OEMs to execute anti-competitive "per processor" licenses. Under a per processor license, an OEM
pays Microsoft a royalty for each computer it sells containing a particular microprocessor, whether the
OEM sells the computer with a Microsoft operating system or a non-Microsoft operating system. In
effect, the royalty payment to Microsoft when no Microsoft product is being used acts as a penalty, or tax,
on the OEM's use of a competing PC operating system. Since 1988, Microsoft's use of per processor
licenses has increased."

12

19952005: Internet and the 32-bit

era

Following Bill Gates internal "Internet Tidal Wave memo" on May 26, 1995, Microsoft began to
redefine its offerings and expand its product line into computer networking and the World Wide the
Company. The company released Windows 95 on August 24, 1995, featuring pre-emptive multitasking, a
completely new user interface with a novel start button, and 32-bit compatibility; Millions to NT, it
provided the Win32 API. Windows 95 came bundled with the online service MSN, and for
OEMs Internet Explorer, a The Company browser. Internet Explorer was not bundled with the retail
Windows 95 boxes because the boxes The company printed before the team finished the Company
browser, and instead was included in the Windows 95 Plus! pack.

13

Branching out into new markets in 1996, Microsoft and NBC Universal created a new 24/7 cable news
station, MSNBC. Microsoft created Windows CE 1.0, a new OS designed for devices with low memory
and other constraints, such as personal digital assistants. In October 1997, the Justice Department filed a
motion in the Federal District Court, stating that Microsoft violated an agreement signed in 1994 and
asked the court to stop the bundling of Internet Explorer with Windows.

Bill Gates handed over the CEO position on January 13, 2000, to Steve Ballmer, an old college friend of
Gates and employee of the company since 1980, creating a new position for himself as Chief Software
Architect. Various companies including Microsoft formed the Trusted Computing Platform Alliance in
October 1999 to, among other things, increase security and protect intellectual property through
identifying changes in hardware and software. Critics decry the alliance as a way to enforce
indiscriminate restrictions over how consumers use software, and over how computers behave a form of
digital rights management; for example the scenario where a computer is not only secured for its owner,
but also secured against its owner as The Company.

On April 3, 2000, a judgment was handed down in the case of United States v. Microsoft, calling the
company an "abusive monopoly"; it settled with the U.S. Department of Justice in 2004. On October 25,
2001, Microsoft released Windows XP, unifying the mainstream and NT lines under the NT codebase.
The company released the Xbox later that year, entering the game console market dominated by
Sony and Nintendo. In March 2004 the European Union brought antitrust legal action against the
company, citing it abused its dominance with the Windows OS, resulting in a judgment of 497 Millions
($613 Millions) and to produce new versions of Windows XP without Windows Media Player, Windows
XP Home Edition N and Windows XP Professional N.

14

200610: Windows Vista, mobile, and

Windows 7

Released in January 2007, the next version of Windows, Windows Vista, focused on features, security,
and a redesigned user interface dubbed Aero. Microsoft Office 2007, released at the same time, featured a
"Ribbon" user interface which was a significant departure from its predecessors. Relatively strong sales
of both titles helped to produce a record profit in 2007.

The European Union imposed another fine of 899 Million ($1.4 billion) for Microsoft's lack of
compliance with the March 2004 judgment on February 27, 2008, saying that the company charged rivals
unreasonable prices for key information about its workgroup and BackOffice servers. Microsoft stated
that it was in compliance and that "these fines are about the past issues that have been resolved".

15

Bill Gates retired from his role as Chief Software Architect on June 27, 2008, while retaining other
positions related to the company in addition to being an advisor for the company on key projects. Azure
Services Platform, the company's entry into the cloud computing market for Windows, launched on
October 27, 2008. On February 12, 2009, Microsoft announced its intent to open a chain of Microsoftbranded retail stores, and on October 22, 2009, the first retail Microsoft Store opened in Scottsdale,
Arizona; the same day the first store opened, Windows 7 was officially released to the public. Windows
7's focus was on refining Vista with ease of use features and performance enhancements, rather than a
large reworking of Windows.

MICROSOFT IN MOBILE INDUSTRY

As the Smartphone industry boomed beginning in 2007, Microsoft struggled to keep up with its
rivals Apple and Google in providing a modern Smartphone operating system. As a result, in 2010,
Microsoft revamped their aging flagship mobile operating system, Windows Mobile, replacing it with the
new Windows Phone OS; along with a new strategy in the Smartphone industry that has Microsoft
working more closely with Smartphone manufacturers, such as Nokia, and to provide a consistent user
experience across all smart phones using Microsoft's Windows Phone OS. It used a new user interface
design language, code named "Metro", which prominently used simple shapes, typography and
iconography, and the concept of minimalism.

16

Microsoft is a founding member of the Open Networking Foundation started on March 23, 2011. Other
founding companies include Google, HP Networking, Yahoo, Verizon, Deutsche Telekom and 17 other
companies. The nonprofit organization is focused on providing support for a new cloud
computing initiative called Software-Defined Networking. The initiative is meant to speed innovation
through simple software changes in telecommunications networks, wireless networks, data centers and
other networking areas.

20112013: Rebranding, Windows 8, Surface

Following the release of Windows Phone, Microsoft under The Company a gradual rebranding of its
product range throughout 2011 and 2012the corporation's logos, products, services, and the company
sites adopted the principles and concepts of the Metro design language. Microsoft preview the
company Windows 8, an operating system designed to the company both personal computers and tablet
computers, in Taipei in June 2011. A developer preview was released on September 13, and was replaced
by a consumer preview on February 29, 2012. On May 31, 2012, the preview version was released.
17

On June 18, 2012, Microsoft unveiled the Surface, the first computer in the company's history to have its
hardware made by Microsoft. On June 25, Microsoft paid US$1.2 billion to buy the social
network Yammer. On July 31, 2012, Microsoft launched the Outlook.com The company mail service to
compete with Gmail. On September 4, 2012, Microsoft released Windows Server 2012. On October 1,
Microsoft announced its intention to launch a news operation, part of a new-look MSN, at the time of the
Windows 8 launch that was later in the month. On October 26, 2012, Microsoft launched Windows 8 and
the Microsoft Surface.

Three days later, Windows Phone 8 was launched. To cope with the potential for an increase in demand
for products and services, Microsoft opened a number of "holiday stores" across the U.S. to complement
the increasing number of "bricks-and-mortar" Microsoft Stores that opened in 2012.

On March 29, 2013, Microsoft launched a Patent Tracker. The Kinect sensor device was upgraded for the
2013 release of the eighth-generation Xbox One and its capabilities The Company revealed in May 2013.
The new Kinect uses an ultra-wide 1080p camera, it can function in the dark due to an infrared sensor, it
employs higher-end processing The company and new software, it can distinguish bet The company fine
movements (such as a thumb movements), and the device can determine a user's heart rate by looking at
his/her face. Microsoft filed a patent application in 2011 that suggests that the corporation may use the
Kinect camera system to monitor the behavior of television vie The company as part of a plan to make
the viewing experience more active.

On July 19, 2013, Microsoft stocks suffered its biggest one-day percentage sell-off since the year 2000
after its fourth-quarter report raised concerns among the investors on the poor showings of both Windows
8 and the Surface tablet; with more than 11 percentage points declining Microsoft suffered a loss of more
than USD 32billion. For the 2010 fiscal year, Microsoft had five product divisions: Windows Division,
Server and Tools, Online Services Division, Microsoft Business Division, and Entertainment and Devices
Division.

18

Nokia devices

On September 3, 2013, Microsoft agreed to buy Nokia's mobile unit for $7 billion. Also in 2013, Amy
Hood became the CFO of Microsoft. The Alliance for Affordable Internet (A4AI) was launched in
October 2013 and Microsoft is part of the coalition of public and private organizations that also
includes Facebook, Intel and Google. Led by Tim Berners-Lee, the A4AI seeks to make Internet access
19

more affordable so that access is broadened in the developing world, where only 31% of people are
online. Google will help to decrease internet access prices so that they fall below the UN Broadband
Commission's worldwide target of 5% of monthly income.

In line with the maturing PC business, in July 2013 Microsoft announced that it would reorganize the
business into 4 new business divisions by function: Operating System, Apps, Cloud and Devices. All
previous divisions will be diluted into new divisions without any workforce cut. On February 4,
2014, Steve Ballmer stepped down as CEO of Microsoft and was succeeded by Satya Nadella, who
previously led Microsoft's Cloud and Enterprise division. On the same day, John W. Thompson took on
the role of chairman, with Bill Gates stepping down from the position to become more active within the
company as Technology Advisor. On April 25, 2014, Microsoft acquired Nokia Devices and Services and
formed a new subsidiary, Microsoft Mobile Oy.

On September 15, 2014, Microsoft acquired the videogame development company Mojang for $2.5
billion, best known for its wildly popular flagship game Minecraft.

SOME COMPETITORS OF MICROSOFT

List of Competitors of Microsoft are as follows:1. Apple
2. Oracle
3. Google
Apple: - Apple has an "i" for revolutionary technology. Since its release, the company's iPhone
has spurred a revolution in cell phones and mobile computing. It also continues to innovate its core Mac
desktop and laptop computers, all of which feature its OS X operating system, including the iMac all-inone desktop for the consumer and education markets, the Mac Book Air ultra-portable laptop, and the
high-end Mac Pro and Mac Book Pro for consumers and professionals.
20

Oracle: - Oracle wants to proclaim it far and wide: it knows all about supporting business operations.
The leader in enterprise software (almost 75% of its sales), it also provides hardware and services to help
companies improve their processes. Best known for its focus on databases, it offers aid in areas such
as managing business data, collaboration and application development, customer relationship
management, and supply chain management.
Google: - The firm generates revenue through ad sales. Advertisers deliver relevant ads targeted to
search queries or Web content. The Google Network is a network of third-party customers that use
Google's ad programs to deliver relevant ads to their own sites. Founders Sergey Brin and Larry Page
each have nearly 30% voting control.

Apple

21

Apple Inc. is an American multinational corporation headquartered in Cupertino, California, that designs,
develops, and sells consumer electronics, computer software, online services, and personal computers. Its
best-known hardware products are the Mac line of computers, the iPod media player, the iPhone,
Smartphone and the iPad tablet computer. Its online services include iCloud, iTunes Store, and App
Store. Apple's consumer software includes the OS X and iOS operating systems, the iTunes media
browser, the Safari The Company browser, and the iLife and iWork creativity and productivity suites.

Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne on April 1, 1976, to develop and
sell personal computers. It was incorporated as Apple Computer, Inc. on January 3, 1977, and was
renamed as Apple Inc. on January 9, 2007, to reflect its shifted focus towards consumer electronics.

Apple is the world's second-largest information technology company by revenue after Samsung
Electronics and the world's second-largest mobile phone maker after Samsung. Fortune magazine named
Apple the most admired company in the United States in 2008 and in the world from 2008 to 2012.

On September 30, 2013, Apple surpassed Coca-Cola to become the world's most valuable brand in
the Omnicom Group's "Best Global Brands" report. The company, the company has received criticism for
its contractors' labor practices, as the company as for its own environmental and business practices.

As of June 2014, Apple maintains 425 retail stores in fourteen countries, as The Company as the
online Apple Store and iTunes Store, the latter of which is the world's largest music retailer. Apple is
the largest publicly traded corporation in the world by market capitalization, with an estimated market

22

capitalization of $446 billion by January 2014. As of September 29, 2012, the company had 72,800
permanent full-time employees and 3,300 temporary full-time employees worldwide.

Its worldwide annual revenue in 2013 totaled $170 billion. As of Q1 2014, Apple's five-year growth
average is 39% for top line growth and 45% for bottom line growth.

In May 2013, Apple entered the top ten of the Fortune 500 list of companies for the first time, rising 11
places above its 2012 ranking to take the sixth position.

According to the 2014 edition of the Inter brand Best Global Brands report, Apple is the world's most
valuable brand, with a valuation of US$118.9 billion. According to the Boston Consulting Group "50
Most Innovative Companies" ranking, Apple is also the world's most innovative brand in 2014. Apple
occupies this rank since 2005.

23

Source: - apple corp.

The Apple Corporation Get its most income from iphone followed by iPad and mac which makes Apple
highest revenue generating company in smartphones.

24

AAPL- Apple MSFT- Microsoft

Source: Gartner Inc.
The market share of apple is much high than Microsoft till the year of 2014 but as predicted the
Microsoft has take over on nokia this might increase the share of Microsoft in Smartphones.
Apple had a commanding 87.4% share of the worldwide tablet market last year, according to
IDC. Gartner predicts Apple will keep a 69% share this year and will still have 47% by 2015. Windows
doesn't show up in that forecast.

Oracle

Oracle Corporation is an American multinational computer technology corporation headquartered

in Redwood City, California, United States. The company specializes in developing and
marketing computer hardware systems and enterprise software products particularly its own brands of
database management systems. As of 2011, Oracle is the second-largest software maker by revenue,
after Microsoft.
25

The company also builds tools for database development and systems of middle-tier software, enterprise
resource planning (ERP) software, customer relationship management (CRM) software and supply chain
management (SCM) software.

Larry Ellison, a co-founder of Oracle, had served as Oracle's CEO throughout its history. On September
18, 2014, it was announced that he would be stepping down (with Mark Hurd and Safra Catz to become
co-CEOs).

Ellison will become executive chairman and CTO. He also served as the Chairman of the Board until his
replacement by Jeffrey O. Henley in 2004. On August 22, 2008, the Associated Press ranked Ellison as
the top-paid chief executive in the world.

Ellison co-founded Oracle Corporation in 1977 with Bob Miner and Ed Oates under the name Software
Development Laboratories (SDL). Ellison took inspiration from the 1970 paper written by Edgar F.
Codd on relational database management systems (RDBMS) named "A Relational Model of Data for
Large Shared Data Banks." He heard about the IBM System R database from an article in the IBM
Research Journal provided by Oates.
Also derived from Codd's theories, Ellison wanted to make Oracle's product compatible with System R,
but failed to do so as IBM kept the error codes for their DBMS a secret. SDL changed its name
to Relational Software, Inc (RSI) in 1979, then again to Oracle Systems Corporation in 1982, to align
itself more closely with its flagship product Oracle Database.
At this stage Bob Miner served as the company's senior programmer. In 1995, Oracle Systems
Corporation changed its name to Oracle Corporation, officially named Oracle, but sometimes referred to
as Oracle Corporation, the name of the holding company.
Part of Oracle Corporation's early success arose from using the C programming language to implement
its products. This eased porting to different operating systems (most of which support C).

26

Source: - Forbes.com
The Above chart shows about the Software Vendors worldwide which shows that Oracle has lowest share
in software industry whereas Microsoft is 2 largest Software sellers in this world.

Google

27

Google is an American multinational corporation specializing in Internet-related services and products.

These include online advertising technologies, search, cloud computing, and software. Most of its profits
are derived from AdWords.

Google was founded by Larry Page and Sergey Brin while they the company Ph.D. students at Stanford
University. Together they own about 14 percent of its shares but control 56 of the stockholder voting the
company through supervoting stock. They incorporated Google as a privately held company on
September 4, 1998. An initial public offering follows The Company on August 19, 2004. Its mission
statement from the outset was "to organize the world's information and make it universally accessible and
useful," and its unofficial slogan was "Don't be evil."In 2004, Google moved to its new headquarters
in Mountain View, California, nicknamed the Google plex.

Rapid growth since incorporation has triggered a chain of products, acquisitions and partnerships beyond
Google's core search engine. It offers online productivity software including email (Gmail), a cloud
storage service (Google Drive), an office suite (Google Docs) and a social networking
service (Google+).

Desktop products include applications for The company browsing, organizing and editing photos,
and instant messaging. The company leads the development of the Android mobile operating system and
the browser-only Chrome OS for a netbook known as a Chrome book. Google has moved increasingly
into communications hardware: it partners with major electronics manufacturers in the production of its
28

"high-quality low-cost" Nexus devices and acquired Motorola Mobility in May 2012. In 2012, a fiberoptic infrastructure was installed in Kansas City to facilitate a Google Fiber broadband service.

The corporation has been estimated to run more than one Million servers in data centers on the world (as
of 2007) and to process over one billion search requests and about 24 terabytes of user-generated data
each day (as of 2009). In December 2013 Alexa listed google.com as the most visited the company site in
the world.

Numerous Google sites in other languages figure in the top one hundred, as do several other Googleowned sites such as YouTube and Blogger. Its market dominance has led to prominent media coverage,
including criticism of the company over issues such as copyright, censorship, and privacy.

Source: - Lexiconnect.co.uk

29

The above chart shows the market share of Android (Google) in Smartphone Market which is at the top
followed by apple and RIM.

Financial Analysis
Revenue USD
Millions
Gross Margin %
Operating
Income USD
Millions
Operating
Margin %
Net Income USD
Millions
Operating Cash
Flow USD
Millions
Free
Cash
Flow USD
Millions
Working
Capital USD
Millions

200506
39,788

200606
44,282

200706
51,122

200806
60,420

200906
58,437

201006
62,484

201106
69,943

201206
73,723

201306
77,849

201406
86,833

84.4

82.7

79.1

80.8

79.2

80.2

77.7

76.2

74

69

14,561

16,472

18,524

22,492

20,363

24,098

27,161

21,763

26,764

27,759

36.6

37.2

36.2

37.2

34.8

38.6

38.8

29.5

34.4

32

12,254

12,599

14,065

17,681

14,569

18,760

23,150

16,978

21,863

22,074

16,605

14,404

17,796

21,612

19,037

24,073

26,994

31,626

28,833

32,231

15,793

12,826

15,532

18,430

15,918

22,096

24,639

29,321

24,576

26,746

31,860

26,568

16,414

13,356

22,246

29,529

46,144

52,396

64,049

68,621

Source: Yahoo finance

30

100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2005-06 2006-06 2007-06 2008-06 2009-06 2010-06 2011-06 2012-06 2013-06 2014-06

Revenue USD Millions

90
80
70
60
50
40
30
20
10
0
2005-06 2006-06 2007-06 2008-06 2009-06 2010-06 2011-06 2012-06 2013-06 2014-06

Gross Margin %

31

80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2005-06 2006-06 2007-06 2008-06 2009-06 2010-06 2011-06 2012-06 2013-06 2014-06

Working Capital USD Millions

35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2005-06 2006-06 2007-06 2008-06 2009-06 2010-06 2011-06 2012-06 2013-06 2014-06

Operating Cash Flow USD Millions

32

The Interpretation of the above graphs is as follow: 1. The First graph shows the revenue generated by Microsoft as revenue increased in year 2005 to 2008
and in 2009 there is a fall in revenue and again starts increasing till now.
2. The Second graph shows about the Gross Margin of the Microsoft as it mostly got decreased from the
year 2005 till now.
3. The Third Graphs shows Operating Cash Flow of Microsoft as it shows increase in Operating Cash
Flow from 2006 with almost double in 2014.
4. The Last Graphs shows about the working capital of the company which shows decreasing from year
2005 till 2008 and from 2009 it is keep on increasing.

33

SWOT Analysis:Strengths
Brand loyalty. Over the years, Microsoft has been the leading OS and software provider, which resulted
in more than 90% market share for PC OS. Most of us grew up using its easy to use OS, are Millions
with it and will keep using it. Few other brands are capable to compete with Microsoft for this reason.
Even open source OS, which are completely free and The Company suited to use for common user, find it
hard to attract users.
Brand reputation. According to Inter brand, Microsofts brand is the 5th most valuable brand in the
world, valued at $ 57.8 billion. Forbes listed the corporate as the 7th most reputable business in the
world. Brand reputation leads to higher sales and greater market share.
Easy to use software. Windows OS and Office software products are so popular not just because
Microsoft has great monopolistic the company, strong distribution channels and good brand reputation
but also because its products are of great quality and really easy to use.
Strong distribution channels. The company works with all the major computer hardware producers
such as Lenovo, Dell, Toshiba and Samsung and major computer retailers to make sure computers would
be sold with already pre-installed Windows software. The company also invested in Dell and Nokia to
tighten its relationships with these companies.
Robust financial performance. Microsoft grew its revenues by 20% from 2008 to 2012 and holds more
than $63 billion of cash and cash equivalents that can be used for acquisitions and substantial investments
into R&D.
Acquisition of Skype. With nearly 300 Million users, Skype is a significant boost to Microsofts online
presence and have a lot of potential in generating income from online advertising.

34

The company weaknesses

Poor acquisitions and investments. Few of Microsofts acquisitions the company successful and
brought not just revenues and products but new skills and competencies to the company. Massive, Link
Exchange, The company TV, Danger are just few examples of multi Millions acquisitions made by
Microsoft but soon shut down or divested.
Dependence on hardware manufacturers. Microsoft is a giant software corporation but it does not
produce its own hardware and depends on computer hardware manufacturers to develop products that run
Windows OS. If cheap and popular alternative OS would appear, hardware manufacturers may simple
choose the alternative and Microsoft could do little to change the situation.
Criticism over security flaws. Windows OS, the main Microsoft product has been heavily criticized for
being so the company against various viruses attacks. Compared to other OS, Windows is the least
protected against such attacks.
Mature PC markets. Only recently has Microsoft entered the mobile technology sector and still heavily
depends on its OS and software sales for standalone and laptop computers. The market for these products
has matured and Microsoft will find it harder to grow revenues in these sectors.
Slow to innovate. Microsoft has huge R&D resources and great position to enter new markets with
innovative products but constantly failed to do so. It had an opportunity to be the first player in online
advertising but missed the opportunity. Its entrance to mobile OS was also too late, while Google and
Apple captured the market share.

35

Opportunities
Cloud based services. Microsoft could expand its range of cloud services and software as the demand
for cloud-based services is expanding.
Mobile advertising. Mobile advertising markets are expected to grow in double digits over the next few
years and Microsoft has a great opportunity to tap into these markets with its mobile OS.
Mobile device industry. Smart phones and tablets markets will grow steadily over the next few years
and Microsoft could exploit this opportunity by introducing more of its own tablets and a new company
phone.
Growth through acquisitions. With a huge reserve of cash Microsoft could start acquiring new startups
that would bring new technology, skills and competences to the business.

36

Threats
Intense competition in software products. Microsoft is more than ever on the pressure to introduce
successful OS both in PC and mobile markets as such competitors like Google and Apple have already
established positions.
Changing consumer needs and habits. Customers shift from buying laptops and standalone PCs to
buying Smartphone and tablets, the markets, where Microsoft has only a modest market share and may
never establish itself.
Open source projects. Many new open source projects are coming to the market and some of them
became quite successful, such as new Linux OS and Open Source Office. Open source projects are free
and so they can become an alternative to expensive Microsofts products.
Potential lawsuits. Microsoft has already been sued for many times and lost quite a few large scale
lawsuits. Lawsuits are expensive as they require time and money. And as Microsoft continues to operate
more or less the same way, there is high probability for more expensive lawsuits to come.

37

Services Provided by Microsoft

Collect full price before download
The simplest business model is that we have to pay the full price for our app before they can download it.

Requiring a purchase in order for a customer to download your app may not be the most effective option
unless potential customers already trust your app, or you charge a low price. Consider one of the options
listed below to help monetize your app.
We can promote our app in the Windows Store by putting it on sale to temporarily the company the price
(or even make it free) for a specified period of time.

Note If a person published the same app to the Windows Phone Store using the same reserved app name,
a customer who purchases the app in one Store can also download it from the other Store without having
to pay for it again. This applies even if the app's price isn't the same in both Stores.

Free trial versions of paid apps

Even if we going to sell our app consider letting customers try it for free. Well be able to upgrade from a
trial version to the full version by purchasing it, either from right within the app or by going to its listing
in the Windows Store.

One way to enable a trial is to limit the functionality available in our trial version so that only certain
features are available until the customer purchases the app. Determine which features should be limited
before we begin coding, and then make sure that our app only allows them to work when a full license
has been purchased.

38

We can also choose to offer a free trial version (with either limited or full functionality) for a set amount
of time. Unless the customer buys the app, it will stop working once the time period expires. We can
select the time period for the trial when submitting your app to the Windows Store.

In-app products
Whether our app is free or not, we can sell content, other apps or new app functionality (such as
unlocking the next level of a game) from right within the app. We can place the options to buy in-app
products wherever it's convenient for your customers. Windows 8.1 adds support for consumable in-app
productsitems that can be purchased, used up, and then purchased again if desiredin addition to
durable in-app products (which cannot be used up and repurchased).

For a durable in-app product, we can set a time limit after which the feature will expire, or you can let it
remain active for as long as the customer has a valid license for their app. We configure the product
lifetime when you describe the in-app offer in your Windows Store Dashboard.

Note In-app products cannot be offered from a trial version of an app.

Make sure we design our app in such a way that the features we want to sell are separate from the core
experience. The app should maintain basic functionality, even if the customer does not make an extra
39

purchase. For example, a note-taking app that asks your customer to pay extra for the ability to save notes
won't be popular. Charging for features that are available at no cost in Millions apps can also limit sales
of our app. make sure that our features are clearly worth the additional charge relative to the competition.

Before we start writing code, think through your feature model so that we can keep the features that we
intend to enable as in-app products as compartmentalized as possible. We want to make it easy to
incorporate these features into your licensing model, while preventing our app from invoking them
through other code paths.

Note If a person has published the same app to the Windows Phone Store using the same reserved app
name, a customer who purchases a specific durable in-app product will be able to access it from within
the app on any Windows device. This does not apply to consumable in-app products.

In-app advertising
Including ads in your app is another way to make money. Make sure to follow the Windows and
Windows Phone Store Policies when designing where you place ads. See Advertising guidelines for more
recommendations on how to display ads in your app.
The Microsoft Advertising SDK can help you build support for ads into your app.

There are also many partner companies which you can work with to bring advertising revenue to your
app. You can use any ad platform, as long as the ads comply with the Windows and Windows Phone
Store Policies. In particular, the ads provided by the ad service must comply with the same content
policies that apply to apps in general.

Consider giving customers the option to remove ads. You might offer an in-app product that removes ads,
or include ads in the trial version of your app but remove them for those who buy the full version.
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Third-party transactions
There are many additional ways for apps to make money aside from the options provided by the
Windows Store. You can use a third-party transaction provider, or benefit from ties to other lines of
business, as long as the transactions comply with the App Developer Agreement.
For example, if you have a transaction platform that integrates into a CRM system, you can use that in
your app to keep track of your subscribers.

Note The Windows Store does not charge any fee for transactions that take place via a third-party
transaction provider or your own platform.

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Marketing Strategies
1) Network Marketing The first and most known strategy of Microsoft is Network marketing.
This is because each windows product is compatible with another windows product. Your office
documents can be opened on most computers because of the number of people using Microsoft. Thus it
has established the concept of Network marketing perfectly.

2) Regular product launches Microsoft is present almost everywhere, be it the music market
with its Zune, the computer peripherals market, it is the market leader in operating systems, it has its own
tablets, it has revolutionized gaming with XBOX 360, it is now involved in Cloud computing and it
generally comes out and gives tough competition to the current players in the market. This expansion
helps build up the deep pockets of Microsoft.

3) Follow the company strategy One problem in the strategy of Microsoft has been that it has
had a follow the company strategy in the past decade or more. It has rarely come out with an innovation.
Check Microsoft office from 2003 to 2010. You will see that except for graphics, they have been
almost the same products over and over again. In hardware too, there has hardly been an innovation in
Microsoft. IPod launched in 2001 and Zune launched in 2006.

4) Learning and adapting If you look at Windows, you will find that XP had the most security
holes, Windows Vista had several too, Windows 7 has quite less security problems and Windows 8 too is
expected to be even better in security. Thus Microsoft is learning fast and adapting to the environment.
Microsoft knows that nowadays people need security and it is providing the same to them.

5) Build a cash cow Even though I am repeating this point, but this is important. Microsoft has a
cash cow operating systems as its backup. And its whole empire is built on the basis of this cash

6) Be customer focused There are a lot of jokes about the customer service of Microsoft but if you
really look at it, then the reason why Microsoft is actually working is because help is available offline as
The company as online. Your computer might crash for any reason, but generally you are able to specify
the reason for the crash and if you are a techie you will be able to rejuvenate it. Even a 10 year old
nowadays knows how to correct windows.
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7) Ease of use Make products which can be used by the youngest to the oldest in the easiest manner.
Like Nokia in mobile phones, Microsoft OS is known for its ease of access. The start button has been
revolutionary.

8) Build brand equity Today Microsoft is amongst the top 10 companies in terms of its brand
equity due to many different consumer and business to business products that it has. Building such high
brand equity has paid off for Microsoft with it becoming a highly trusted household name.

How the SMARTPHONE Market has evolved Over the last

5 years
While the Smartphone concept of combining telephony with computing has been gaining
traction since 2002, the growth rates currently seen in the industry really only began in 2007
when Apple released the first iPhone. According to Gartner, at that time Windows mobile held
11.5% of the market, but as more competitors joined the market, their share dropped continuously until it
fell to just 2.6% by the end of 2012. The Global market for Smartphone is
currently expected to grow from $55.4 billion in 2009 to $150.3 billion by 2014.
Apple revolutionized Smartphones with the iPhone to an extent that previous competitors such
as Blackberry and Microsoft struggled to cope. Simply put, the previous market leaders failed to
4innovate with their products in the manner which the consumer now expected.
Apple now offered a top of the range product at premium price, and by 2009 they had grown to
command just under 18% of the market and showed no signs of slowing. While Windows, Blackberry,
and Nokia all still had a strong presence, their respective market shares were dwindling.
Apples entry to the market, however, was closely followed in 2008 by another potential threat
Google Android.
Google released their first phone in 2008. Initially, uptake on their product was slow, as they
were considered outsiders to mobile technology. Since releasing their first flagship phone,
however, they have steadily won more and more of the market with a focus on low to mid-range
phones. While Google does now offers Google phones, they also provide the android software
free to any manufacturer who wishes to use it. Their business plan centres not on making profit
from their software, but from making profit from knock-on Google advertisements on
Smartphone which use the Android system. As a result, in Q2 of this year, Android accounted
for 80% of all shipped Smartphones, highlighting their current dominance (in volume at least) in
the market.
As of Q3 2014, Android holds 79% of the market with iPhone maintaining 14%. Meanwhile,
Microsoft has grown slightly to a 3.3% market share with Blackberry falling to an all-time low of
43

2.7%.

BRAND POSITIONING
Brand positioning is essential to the success of any firm because it delivers a perception into the
consumers minds which differentiates them from their competitors. Microsoft began to grow their brand
over 20 years ago with Bill Gates an underlying vision of a computer on every desk and in every
home. This resulted in Microsoft developing into a huge multinational company with personal
computing at the forefront of their business. Microsoft dominated this industry for many years which is
reflected in the high brand recognition of Microsoft products worldwide.
8
However, this dominance has slowly evaporated and Microsoft has failed to react to new trends such as
the rapid expansion of the Smartphone and tablet industries. It appears that Microsofts failure to respond
to the market trends can be attributed to an over confidence by Microsoft in their brand positioning while
their competitors have been developing software in new dynamic ways and diversifying their products.
Microsoft is now presented with a problem. Their vision of a computer on every desk and in every
home has essentially been achieved and their consumers are now looking to new technologies to satisfy
their needs. Microsoft needs to restructure their brand position in order to facilitate this which the public
is beginning to see. The announcement that Microsofts CEO Steve Ballmer will retire in the next twelve
months and the recent 5.4 billion acquisition of Nokias phone business reflects this. The firm is heading
in a new direction and it is essential that Microsoft develops their brand positioning in line with this as
they attempt to shift towards a services and devices firm.
With the recent acquisition Microsoft has inherited the Nokia Lumia range. A Smartphone range which
focuses on the convenience of use, poking fun at the iPhone and Android counterparts while emphasizing
the lightness of the phone and quality of the camera. It will be interesting to see how Microsoft develops
their brand positioning in the future. Microsoft released the Microsoft Surface in 2012.
The tablet failed dramatically with the company incurring a loss of $900 Million worth of stock. This
failure could have been easy to predict as there was no real creative vision associated with the product.
The product was advertised as a medium between being used for work and leisure activities. This lack of
creativity resulted in there being no place for the tablet within the market as people continued using their
iPads for leisure and their MacBook Air for work. The surface 2 has recently been introduced and it is
vital that Microsoft ensure this time that their brand positioning exposes a new niche in the market.

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SEGMENTATION STRATEGIES
Microsoft only recently attempted to infiltrate the tablet industry with the Microsoft surface last year. The
companys mission statement which states at Microsoft, Our mission and values are to help people and
businesses throughout the world realise their full potential illustrates their segmentation strategy.
Microsoft didnt focus on a particular segment within the market but rather focused on the entire market.
While, this strategy worked for many years for the company in terms of personal computing due to the
monopoly they acquired it proved to be unsuccessful when applied to the tablet industry. Microsoft failed
to adequately research the demographics, psychographics or the behaviour of the consumers within the
industry which resulted in a target market which was too broad. Last month, Microsoft unveiled the
Microsoft Surface 2.
The product is targeting users who prefer to use their tablet for work purposes over leisure with built
in Microsoft software, high storage and durable battery. The emphasis that the Microsoft Surface 2 is a
tool not a toy provides a clear idea that Microsoft is targeting professionals who are interested in
productivity. For now, we will just have to wait and see if Microsofts segmentation strategy proves to be
successful over the upcoming year.
9
The recent 5.4 billion acquisition of Nokias phone business will enable Microsoft to become
more competitive within the Smartphone industry as they can segment this area of their
business as a subsidiary section. This presents Microsoft with a new opportunity to implement a
segmentation strategy similar to Google and Apple who dominate the market with 75.3% and
16.9% of the market share respectively according to research undertaken by the IDC Worldwide
Phone Tracker.
This provides an exciting challenge for Microsoft as more resources, expertise and time will be attributed
to the sector in the hope that Microsoft can increase their market share. In order for this to be achieved
Microsoft must ensure they can attain Nokias feature phone users as individuals begin to switch over to
Smartphones. To achieve this goal Microsoft has inherited Nokias segmentation strategy of providing
low to mid-level priced phones such as the Nokia Lumia 520 and 720 instead of only focusing on the
high-end of the segment.
This will enable Microsoft to acquire a market share in regions such as India where only about
10% of the 870 million mobile phone users own Smartphones. This strategy of focusing on the
entry-level segment will enable Microsoft to increase their market share as the industry expands. Along
with these low to mid-level priced phones Microsoft will continue to produce premium phones such as
45

the Nokia Lumia 1020 in order to compete with Google and Apple in regions where the Smartphone
culture is already in place.

A REVIEW OF THE BRAND AND COMMUNICATION STRATEGIES EXPENDITURE,

MEDIA MIX, REACH AND EFFEC

A REVIEW OF THE BRAND AND

COMMUNICATION
STRATEGIES

EXPENDITURE, MEDIA MIX, REACH AND

EFFECTIVENESS
As a result of the wide spectrum of products Microsoft offers, they communicate to a wide customer
base. The company has implemented successful brand and communication strategies throughout their
range of products which vary across software, entertainment, devices and gaming etc. The modern media
mix typically used by Microsoft includes television campaigns and the internet to generate reach, mobile
to drive engagement and social media to spark conversations and generate virility.
However, in contrast with the other sectors they operate in Microsoft holds a smaller market share in the
Smartphone and tablet industries. This means that Microsoft needs to implement branding and
communication strategies that focus on gaining new customers rather than customer retention.
The Microsoft Surface was launched with a television campaign that branded it as a fun device with
several dancers on top of tables dancing to the tune of the integrated keyboards clicking on to the tablet
which was similarly followed by the Surface pro which also featured dancers but in a business
environment. Although there was a strong investment in this campaign and it reached a large audience it
proved to be ineffective with the company retracting 900 million worth of stock.
Unsurprisingly Microsoft shifted to an informative television campaign for the upcoming launch of the
Surface 2 which has rebranded the product as productivity focused tablet by focusing on the tablets
features in comparison with their competitors. The Microsoft Surface also has independent profiles across
the three main social media platforms; which are Facebook, twitter and YouTube.
The Surface Facebook page has 465,725 likes with 17,260 people talking about it, the Twitter page has
259,361 followers and the YouTube page has 72 posted videos with 45,378 subscribers as of 13th
October. The Surface YouTube page divides its videos under the headings Surface commercials and
Life with Service. The commercial videos are reposted television advertisements which gather extra
exposure.

46

The Life with Service videos coincide with the rebranding of the Surface as they10give real life
examples of people using them in their various working fields which range from an adventure
photographer to a medical student. In comparison with their competitors. Microsoft is not gathering the
same exposure through social media. Apples iPad Facebook page has 8,481,852 likes. Microsoft needs
to gather more interest in their social media sites in order to utilise social media as effectively as their
competitors.

Microsoft has inherited the Nokia Smartphone range through their recent acquisition. This leaves
uncertainty in determining the brand and communication strategies Microsoft will use. The main question
is whether or not the company will maintain the Nokia brand name. This is a sensitive area because
rebranding the Smartphones could result in a loss of loyal Nokia users.
It is a feasible option the Microsoft may keep the name and maintain brand and communication strategies
which Nokia previously put in place. However, Microsoft will need to drop the name eventually to avoid
confusion among consumers as they attempt to become serious competitors in the future.

Ultimately, Microsoft is left with an exciting challenge in the future and success will largely be dependent
on their branding and communication strategies. The task will not be reaching their target audience, as
the company has a strong communication infrastructure in place, rather the problem will be connecting
with customers and influencing them to buy Microsofts products.

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STRATEGIC OBJECTIVES FOR THE NEXT

FIVE YEARS
GROWTH IN THE MOBILE DEVICES MARKET (AIM
OF 15% BY 2018)
Microsofts partnership with Nokia will enable it to move forward in the mobile devices market. At the
start of 2013 the Windows phone held 3.2% of global Smartphone market share, although this is a very
low percentage, it still leaves Microsoft in only third place, behind iOS and Android. Microsofts CEO
Ballmer addressed this issue at this years financial analysis meeting. He described their low market share
as an upside opportunity which most likely served as the key reason as to why Microsoft moved to
secure Nokias phone business.
The partnership means Microsoft is selling Nokias brand of Smartphones including the Lumia 1020,
their newest model, which has the best quality camera of all Smartphones. Nokia phones are currently
occupying 79% of Windows Phone Sales. Hopefully from the Microsoft-Nokia synergy will come with a
new Smartphone technology that will rival the iOS and Android phones.

REORGANISATION OF THE COMPANY

Steve Ballmer issued a statement this year stating that he would step down as CEO of Microsoft within
the next twelve months. His departure marks the reorganisation of Microsoft as a whole. The company
will shift from a software maker into a devices and services company. In the next five years an entire
family of new products and services should be expected from Microsoft; the smartphone, Xbox and tablet
are only the beginning.

TECHNOLOGY & INNOVATION

In order to keep up with their rivals Microsoft have vowed to continuously innovate, something which
they have expressed regret in not doing in the past: I regret there was a period in the early 2000s when
we were so focused on what we had to do around Windows [Vista] that we weren't able to redeploy talent
to the new device called the phone (Steve Ballmer).

48

Microsoft applied for 27 US Patents in 2013 in an attempt to gain advantage in innovation and
incremental advances. As well as this, Microsoft are rumoured to be working on a technology that shares
data between desktop, mobile and Xbox devices. Owning this data would curb concerns of digital
information being sold over the web as well as enabling Microsoft to build a digital profile of its users
(similar to Google). The company hase xpressed interest in going beyond the cookie and said their
priority is to develop technology that respects the interests of users.

RISK FACTORS IMPACT ON FORECAST

FOR NEXT 5 YEARS
FOREIGN CURRENCIES AND GLOBAL ECONOMIES
Current forecasts, as seen above, are exposed to foreign currency risk. Although Microsoft monitor their
foreign currency exposures daily and hedge a portion of their international currency exposure (Annual
Report, 2011), significant fluctuations in exchange rates between the U.S dollar and foreign currencies
may have a negative effect on net sales. Emerging markets are a major focus for Microsoft's international
growth strategy (Annual Report, 2010) and there are a number of risks involved in targeting these
markets. 'Deterioration of social, political, labour, or economic conditions in a specific country or region'
may also have a significant impact on Microsoft's financial results (Annual Report, 2010).

EUROPEAN COMMISSION REGULATION

The European Commission closely scrutinizes the design of high-volume Microsoft products and the
terms on which Microsoft make certain technologies used in these products, such as file formats,
programming interfaces, and protocols, available to other companies (Annual Report, 2010). For
example, in 2004 the Commission ordered Microsoft to create a new version of Windows that didn't
contain certain multimedia technologies and to provide competitors with instructions on how to
implement certain Windows communications protocols into their own products. The commission limits
Microsoft's ability to innovate in designing its products and allows competitors to copy the functionality
of their products leading to a possible decline in sales.

49

INTELLECTUAL PROPERTY RIGHTS AND PATENTS

Piracy outside the U.S is a significant issue as many countries laws are weak in protecting intellectual
property rights. This results in revenues growing a lot slower outside the U.S market. The situation is
similar with regard to the lack of consistency and correspondence in patent laws Worldwide.

COMPETITION
Microsoft faces intense competition in the Smartphone and tablet industry from the likes of Apple and
Samsung who are constantly innovating with new products. Microsoft currently hold only 3.3% market
share in the Smartphone market and should look to hold 15% by 2018. In order to achieve this they must
capitalize on their new synergy with Nokia and focus on innovation when designing their new product
range in order to gain competitive advantage over Apple and Samsung. Further improvements will also
need to be made to their Surface tablet range and operating systems as they currently hold only 1.8%
market share in the tablet industry.

50

Conclusion
In recent times, Microsoft has lost its dominant market position, but we believe that this can be regained
by using its prior resources, as well as the new resources gained by the acquisition of Nokia, to channel
its core competencies and regain market strength.
In terms of external analysis, we found that the existing threats and opportunities showed that there was
scope for market growth, especially in terms of the low-cost smartphone market. We found that Nokia
had a large following in the emerging economies, and believe this is something that Microsoft should
look to exploit.
In competitor analysis, we highlighted the three main competitors to Microsoft in terms of operating
systems. Although competition exists, we believe that gaps still appear in the market in terms of
customisation. The recent acquisition of Nokia also limits the amount of handsets that competitors can
operate on.
Analysis of current brand positioning and segmentation strategies showed us that the brand positioning
requires adjustment, as certain positions of the Microsoft brand have been saturated. A new brand
position can be achieved with a new range of devices. In terms of segmentation, the analysis showed a
clear aim towards the professional market, which had to be taken into consideration when preparing our
marketing strategy.

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Bibliography
http://www.Microsoft.com
http://www.Oracle.com
http://www.Apple.com
http://msdn.microsoft.com/en-in/library/windows/apps/hh465433.aspx
http://financials.morningstar.com/ratios/r.html?t=MSFT
http://www.microsoft.com/investor/CompanyInfo/Strategy/default.aspx
http://www.interbrand.com/en/best-global-brands/2014/Best-Global-Brands-2014.aspx
http://www.microsoft.com/investor/reports/ar14/index.html
http://www.computerworld.com/article/2507485/vertical-it/apple-vs--microsoft-by-the-numbers.html
http://www.lexiconnect.co.uk/

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