Strategy Intent Said That the Goal for Smart Competitor Is Competitive Innovation

Strategy intent said that the goal for smart competitor is competitive innovation, not competitive imitation. On January 21, Microsoft provided a detailed and technical overview of its latest operating system, Windows 10, which offers a single operating system across desktops, PCs, smartphones, and tablets. Through Windows 10, Microsoft aims to win customers in the mobile space where Apple (AAPL) and Google (GOOG) (GOOGL) are leading players that collectively command ~92% market share of the operating system space, according to IDC (International Data Corporation). While Microsoft reported a decline in net income in 2Q15, its close peer Apple registered $18 billion in profit. Windows 10 works on a unified code module, so it helps developers write identical programs for PCs, desktops, tablets, and phones. Microsoft’s success in attracting programmers to generate unified codes that can be easily customized and altered for PCs and handheld devices gives Microsoft a competitive edge. Thus, the success of Windows 10 will be a key determinant in the success of Windows revenues that contribute significantly to the company’s overall revenues. By contrast, In order to strengthen its position in mobile and tablet computing, Microsoft’s previous OS, Windows 8, focused on touch commands. However, customers didn’t like the changes in the awkward system, and the fact that the system did not have a start menu further aggravated customers. Finally, Microsoft decided to reverse its decision about the start menu with an update, Windows 8.1. Windows 8 failed to entice the majority of Microsoft users to upgrade from Windows 7. Microsoft skipped 9 and went straight ahead with Windows 10. According to Forrester, Windows 8 is only on about 10% of PCs and 19% of tablets. The reason for the low rate of upgrading is higher costs and unfulfilled expectations with the OS.

Strategic intent said that an organization do not rely on just one source of advantages. Also build their own brand, increase their distribution channels, and tailor your products to unique markets. To meet these demands, Microsoft (MSFT) announced its plans to support the new Raspberry Pi in early February 2015. The company also launched Windows 10 for Windows 10 Industry, Windows 10 Mobile, Windows 10 Compact, Windows 10 “Athens,” and the updated version of the .NET Micro Framework, as the below presentation shows. Windows 10 mobile SKU is expected to run on both Intel (INTC) and ARM (ARMH) tablets and phones. If Windows 10 is able to become the leading operating system for billions of IoT (Internet of Things) devices, it will not only benefit investors, but also ETFs such as the Power shares QQQ Trust (QQQ) and the Technology Select Sector SPDR Fund (XLK), which have 8% and 9.61% exposure to Microsoft, respectively. Microsoft’s focus on big data, IoT, and cyber security space. As seen in the earlier part of the series, through Raspberry Pi and Windows 10, Microsoft is taking fast steps to strengthen its footprints in the IoT (Internet of Things) space. Gartner estimates that by 2017, more than 20% of organizations will have digital security services that will protect business initiatives using devices and services in IoT. Gartner also predicts that the number of connected intelligent devices will grow exponentially, and that these devices will have the ability to sense, interpret, communicate, and negotiate, and assume a digital “voice”. Thus, it’s no wonder companies are looking for opportunities to create new services, usage scenarios, and business models based on these areas of high growth.

Microsoft is investing in products outside its own platform to enhance its presence

Under Satya Nadella, Microsoft (MSFT) realized its insignificant share in the mobile space. It thus launched MS Office on Apple’s (AAPL) iOS that was earlier available only on Windows, Windows RT, and Windows Phone. Microsoft launched Office on iOS for free. The company later launched Office for Google’s (GOOG) (GOOGL) Android too. According to Microsoft, within one week of its launch on iOS, there were 12 million downloads of Word, Excel, PowerPoint, and OneNote for iPad. Microsoft is more concerned about updates of its services on other platforms. According to Quartz, Microsoft has launched about 100 apps on both Android and iOS. As the above chart shows, Microsoft is more concerned with other platforms than its own Windows Phone. There are only a few apps, such as Snipp3t for iOS, that are only available on other platforms. Skype for both iOS and Android has received a number of app updates. Plus, the general consensus is that Office for iPad displays documents better than Windows tablets do.With the recent acquisitions of Acompli, HockeyApp, and Sunrise, along with the development of apps for other platforms, it is clear that Microsoft’s strategy has shifted. Instead of keeping its apps and services walled behind its platform and waiting for people to use its operating system, it has opted to develop cross-platform apps and services.