Microsoft Defends Its Empire - the Future of Microsoft

Microsoft was founded in 1975 and it was first publicly traded on March 13, 1986. It opened at $25.50 and closed that day at $28.00. The stock closed October 18, 2010 at $25.82. The stock has increased in value and split nine times since inception. Microsoft has sustained many internal and external changes throughout time. The popularity of the Internet is one of the changes Microsoft is currently reacting to. The Internet changed the way all companies would need to conduct business in order to become or stay successful. From the mom and pop shops in quaint communities to giant retailers around the globe, nearly all companies have a website. Consumers use websites to shop, research, and bank, just to name a few purposes of the Internet. Microsoft is no different in needing to react to the every growing popularity of the World Wide Web.

The Future of Microsoft

The decision to rent or purchase may not be a choice only made by persons in the market for a home. Microsoft CEO Steve Ballmer believes offering its software to rent as opposed purchase is the answer to competing with inexpensive software alternatives available on the Internet. Now, businesses have a choice to rent software such as Microsoft Exchange and SharePoint.

The benefit to the consumer is a less expensive route. The cost savings comes into effect when taking the price of personnel and the hardware to maintain the software. Additionally, there would be less maintenance involved for the businesses.

The benefit for Microsoft is more revenue. Ballmer believes he can generate more revenue from large corporations renting software versus purchasing software. Still unknown is the challenge and cost associated with maintenance.

Ballmer has also emphasized the necessity to meet the customer's needs. In order to do so, he has made overhauling programs a priority. One of the programs being revamped is the ever popular Microsoft Office. Never before has Microsoft Office been offered for free. A less robust version of Microsoft Office will be offered at no cost for consumers who do not need all the functionalities. The free, less robust option will directly compete with other software alternatives available on the Internet. This version would allow users to access documents on portable devices such as cellular telephones and online.

For users who need or want a more powerful version of Microsoft Office, Ballmer has added more capabilities to the paid version. The paid version of Microsoft Offices offers more fonts, formats, and arithmetic tools. Users have the ability to share documents with groups, allowing them to work together in real time. The additional features in Microsoft Office are an attempt to meet the needs of consumers.

Internal Analysis

To maintain and potentially grow market share, a company needs to recognize the value of an internal analysis. Internal resources such as financial resources, operating resources, and technical resources, just to name a few, define the strengths and weaknesses of an organization.

In considering an internal analysis, an organization looks at a chain of activities from research and development to sales and service and everything in between. A value chain analysis clarifies for an organization the value a consumer places in every aspect of a product.

Microsoft develops, manufactures, licenses, and supports software products for many computing devices. The company's software products consist of operating systems, server applications, information worker productivity applications, business solution applications, high-performance computing applications, and software development tools. Microsoft also develops the MSN network of internet products and services. The company has a strong brand image, which promotes greater trust in its product and services, which boosts their demand. However, intense competition from various technology players may affect Microsoft's margins and market share. (Microsoft Corporation SWOT Analysis, Aug2010, p. 4)

The strengths, weaknesses, opportunities, and threats of Microsoft are detailed below.

(Microsoft Corporation SWOT Analysis, Aug2010, p5)

Microsoft's main advantage is brand recognition and financial strength. Microsoft has the financial resources to focus on research and development. The research and development will allow Microsoft to offer advanced technology to meet the needs of consumers.

Microsoft is attempting to maintain its competitive advantage by designing the new Windows operating system to work with smart phones and portable devices. Microsoft recognizes the growing popularity of portable devices such as Blackberrys, iPads, and Kindles. By introducing an operating system compatible with these devices Microsoft is capturing more market share.

Microsoft can be seen as a server software monopoly. Other products such as IBM mainframes and Linux are not comparable. Microsoft's server software is less expensive and more dependable.

Microsoft's Internet division has the smallest revenue; thus, it has more opportunity for growth. Microsoft's search engine market share is low. To capture more search engine market share, Microsoft launched Bing. Bing is off to a strong start. The Bing search engine focuses on "delivering great search results and one-click access to relevant information, creating a more organized search experience, and simplifying tasks and providing tools that support insight about key decisions." (Customer and Partner Experience: Increasing the Satisfaction of Microsoft Customers and Partners White Paper, 2010, p. 11)

In the world of entertainment and devices, a product that begins with i holds a large market share. iPhones, iPods and iPads are difficult to compete with. Additionally, there are Blackberrys and Wiis. Cellular telephones that utilize Windows Mobile software and Xbox keep Microsoft's entertainment and devices division profitable; however, there is room for growth.

On October 11th Microsoft is due to unveil phones from manufacturers such as HTC and Samsung that incorporate its new operating system, Windows Phone 7 (WP7). An accompanying media blitz will seek to position it as an attractive alternative to Apple's iPhone, Google's Android and Symbian, which powers many Nokia phones. The stakes are high for Microsoft and for Mr. Ballmer, whose stewardship of the firm is the subject of intense debate. (Economist; 10/9/2010, Vol. 397 Issue 8703, p90)

Microsoft has the financial strength to conduct research