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11/10/2013

Iman M. Ahmed Ibrahim

1
Introduction
Computer industry passed through three eras:
1. The mainframe era was dominated by IBM;
2. The personal computer PC era was
dominated by Microsoft;
3. The World Wide Web (WWW) characterizes
the third era

11/10/2013

Iman M. Ahmed Ibrahim

2
This case focuses on DDs’ operating
systems’ domain, in particular
providers of operating systems for
relatively large consumer devices such
as PDAs and smart phones which
appears as substitute to PCs.

11/10/2013

Iman M. Ahmed Ibrahim

3
Microsoft

• Vision:“to empower people through great software,
anytime, anyplace, on any device”.. (Hill& Jones,2004, p.10)
• Mission:“our mission and values are to help people
and business throughout the world to realize their full
potential.”
• Values: “we value integrity, honesty, openness,
personal excellence, constructive self-criticism,
continual self-improvement, and mutual respect. We
are committed to our customers and partners and have
a passion for technology. We take on big challenges,
and pride ourselves on seeing them through. We hold
ourselves accountable to our customers, shareholders,
partners, and employees by honoring our
commitments, providing results, and striving for the
highest quality.”, http://www.microsoft.com/about/en/us/default.aspx
11/10/2013

Iman M. Ahmed Ibrahim

4
Digital devices
Digital devices (DDs) emerged
and raise as a response to the
perceived limitations in the
nature of desk top PCs and the
evolutionary changes in their
industry. They include: handheld personal digital assistants
(PDAs); portable (PCs)
companions; wireless phones;
set top boxes; video games
terminals; and web tablets.

11/10/2013

common characteristic
• They are all specialized
appliances They emerged as key
compliments to PCs enabling
users to manage their
information and communicate
while they are not tied to a desk;
• They are inexpensive (most are
priced under $500), their sales
will probably accelerate more
rapidly than PCs. (Their total
shipments surpassed those of PCs
by 2003
• They have mass market
potential: in their arena no single
form will dominate.

Iman M. Ahmed Ibrahim

5
Analysis and discussion:
External analysis
Industry Analysis

11/10/2013

Iman M. Ahmed Ibrahim

6
Porter’s five
Industry forces

Suppliers’ Bargaining
power
Low

Complimentors
Many
11/10/2013

Risk of entry by
potential competitors
HIGH

Rivalry among existing firms
in the industry
HIGH

Buyers’ Bargaining
power
Low

Threats of substitutes
Few & Close
Iman M. Ahmed Ibrahim

7
MACRO ENVIRONMENT FORCES
• The economy of the United States is the world's
largest national economy. Its nominal GDP was
estimated to be nearly $14.5 trillion in 2010.
• The pace of technology accelerated during the
third era of computer industry. This tend to
render some product obsolete in very short time
and create host of new ones.
• USA deregulate telecommunication industry since
1996 generating opportunity for companies to
enter each other market, therefore wireless
services penetrated the market and demand
grow rapidly.
11/10/2013

Iman M. Ahmed Ibrahim

8
EXTERNAL ANALYSIS
Opportunities:

Threats:

• Since 2002 PDAs became
incorporated into webenabled cell phones that
allowed users to access email
and Microsoft office products;
• Low bargaining power of
buyers and suppliers;
• Availability of many
complimentary products;
• The macro environment is
conducive to global
competitiveness in such
industry.

• Intense of rivalry between
Microsoft, Palm Symbian ,
Nokia, …etc;
• Risk of entry by potential
powerful companies in the
computer industry;
• Availability of OSs and PCs
substitutes.

11/10/2013

Iman M. Ahmed Ibrahim

9
INTERNAL ANALYSIS: STRENGTHS
• Name recognition and strong reputation for innovative:
• Software products have high name recognition, broad-based
corporate and consumer, and numerous powerful features that are
in use worldwide, thereby promoting standardization and
competitive advantage through their ease of integration.
• Relatively rapid product development processes ;
• The production of the Windows CE 3.0 Pocket PC ;
• Windows CE 3.0 has improved real-time operating system
capabilities; an extended its reach to a wide range of DDs;
• Windows CE has double capacity than Palm OS enabling developers
to create complex graphic interfaces for internet connected devices;
and to use tools to write other applications. This leverage the skill
base of developers around the world;
• Microsoft has been committed to enter into agreements, joint
venture and licensing Windows CE3.0 widely and is working with
both well known equipment and service providers so as to get its
technology incorporated into smart phones;
11/10/2013

Iman M. Ahmed Ibrahim

10
INTERNAL ANALYSIS: WEAKNESSES
• Little or no significant presence in the wireless
market and Windows CE has been disappointing
during 1998-1999
• Falling sales in the operating systems and server
software sectors ( p. C264)
• Response time for the OS is too slow to qualify
for real-time OS;
• The pocket PC is bulky with shorter battery life
and less elegance
• Dependency on computer manufacturers only
to pre-install Microsoft's OSs.
11/10/2013

Iman M. Ahmed Ibrahim

11
SWOT ANALYSIS

• Microsoft capabilities enabled it to broaden its
customer base, get loyal customers and retain
them.
• It showed capabilities in partnership enabled it
reducing intense of rivalry with Palm, Symbian,
Psion, Nokia …etc., reducing the risk of entry by
potential competitors, and reducing the threat of
customers switching to available substitutes.
• Microsoft didn’t respond to emerging customer’s
needs in the wireless market thus giving other
companies the opportunity to offer them what
they wanted before Microsoft did
11/10/2013

Iman M. Ahmed Ibrahim

12
STRATEGIC ANALYSIS: CORPORATE
LEVEL STRATEGY
• Reflecting its vision, mission, values and its
business environment, Microsoft ambition is
to focus on computer and software business
to run in all devices not just PCs or servers.
• This helped in setting its context and has
guided its product related diversification
efforts, vertical integration, cost reduction
and international expansion.
11/10/2013

Iman M. Ahmed Ibrahim

13
BUSINESS LEVEL STRATEGIES:
• Differentiation & cost leadership:
Microsoft designs and supplies products in a way
that better satisfy customer needs than its rivals,
and invest in functional activities to achieve
efficiency. This permits a broader range of pricing
options and creates value for its product and
consequently gives more demand to its industry.
• Its distinctive competencies had shaped its
competitive advantages achieved through its
organization wide commitment to superior
quality, reliable products, innovation in
producing, and delivering their products,
infrastructure and efficiency.
11/10/2013

Iman M. Ahmed Ibrahim

14
CONCLUSION & RECOMMENDATIONS
• Microsoft is a leading company in its chosen
industry; it has successfully leveraged its
competencies of financial stability, research
capacity and brand, however it should not be
captivated by that. The dominance and the
monopoly that it enjoys can be erased and its
dominance in the market can be eclipsed by
other new companies in such a dynamic industry.
Moreover conditions will never remain the same.
The same strategies that led Microsoft to success
in previous eras can take them to failure because
capable, alert competitors can soon beat them .
Therefore it is recommended that Microsoft
should:
11/10/2013

Iman M. Ahmed Ibrahim

15
– Continually analyses and diagnoses it environments and set its strategies,
structure and leadership accordingly;
– Strengthen their capabilities by focusing on the building blocks of competitive
advantage and develop distinctive competencies that will lead them to achieve
superior performance in efficiency and quality through out their company,
innovations in production and work processes;
– Should be more responsive to customers’ needs ;
– Continuously improve its processes and operations through its R&D, create
innovative competencies and learn from previous failures;
– Track best practices of production, processes and services of the most efficient
companies, seek cooperation, partnership and licensing the technology with
powerful competitors manufacturing DDs;

– Own and establish proprietary standards for different customers segments
that other company will follow. Strategies to adopt this are producing
complimentary product that leverage killer applications; aggressive pricing and
marketing. And use positive feedback loop to develop the standard based on
customers’ changing need;
– Adopt an overarching universal platform OS with all the emerging features
that will allow all devices in a network to locate and work perfectly and
effortlessly with each other;
– As well as concentrating on growth Microsoft should be prepared to respond
to a likely shakeout.
11/10/2013

Iman M. Ahmed Ibrahim

16
Thank you
11/10/2013

Iman M. Ahmed Ibrahim

17

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Digital devices current and future market: a new era for competition

  • 2. Introduction Computer industry passed through three eras: 1. The mainframe era was dominated by IBM; 2. The personal computer PC era was dominated by Microsoft; 3. The World Wide Web (WWW) characterizes the third era 11/10/2013 Iman M. Ahmed Ibrahim 2
  • 3. This case focuses on DDs’ operating systems’ domain, in particular providers of operating systems for relatively large consumer devices such as PDAs and smart phones which appears as substitute to PCs. 11/10/2013 Iman M. Ahmed Ibrahim 3
  • 4. Microsoft • Vision:“to empower people through great software, anytime, anyplace, on any device”.. (Hill& Jones,2004, p.10) • Mission:“our mission and values are to help people and business throughout the world to realize their full potential.” • Values: “we value integrity, honesty, openness, personal excellence, constructive self-criticism, continual self-improvement, and mutual respect. We are committed to our customers and partners and have a passion for technology. We take on big challenges, and pride ourselves on seeing them through. We hold ourselves accountable to our customers, shareholders, partners, and employees by honoring our commitments, providing results, and striving for the highest quality.”, http://www.microsoft.com/about/en/us/default.aspx 11/10/2013 Iman M. Ahmed Ibrahim 4
  • 5. Digital devices Digital devices (DDs) emerged and raise as a response to the perceived limitations in the nature of desk top PCs and the evolutionary changes in their industry. They include: handheld personal digital assistants (PDAs); portable (PCs) companions; wireless phones; set top boxes; video games terminals; and web tablets. 11/10/2013 common characteristic • They are all specialized appliances They emerged as key compliments to PCs enabling users to manage their information and communicate while they are not tied to a desk; • They are inexpensive (most are priced under $500), their sales will probably accelerate more rapidly than PCs. (Their total shipments surpassed those of PCs by 2003 • They have mass market potential: in their arena no single form will dominate. Iman M. Ahmed Ibrahim 5
  • 6. Analysis and discussion: External analysis Industry Analysis 11/10/2013 Iman M. Ahmed Ibrahim 6
  • 7. Porter’s five Industry forces Suppliers’ Bargaining power Low Complimentors Many 11/10/2013 Risk of entry by potential competitors HIGH Rivalry among existing firms in the industry HIGH Buyers’ Bargaining power Low Threats of substitutes Few & Close Iman M. Ahmed Ibrahim 7
  • 8. MACRO ENVIRONMENT FORCES • The economy of the United States is the world's largest national economy. Its nominal GDP was estimated to be nearly $14.5 trillion in 2010. • The pace of technology accelerated during the third era of computer industry. This tend to render some product obsolete in very short time and create host of new ones. • USA deregulate telecommunication industry since 1996 generating opportunity for companies to enter each other market, therefore wireless services penetrated the market and demand grow rapidly. 11/10/2013 Iman M. Ahmed Ibrahim 8
  • 9. EXTERNAL ANALYSIS Opportunities: Threats: • Since 2002 PDAs became incorporated into webenabled cell phones that allowed users to access email and Microsoft office products; • Low bargaining power of buyers and suppliers; • Availability of many complimentary products; • The macro environment is conducive to global competitiveness in such industry. • Intense of rivalry between Microsoft, Palm Symbian , Nokia, …etc; • Risk of entry by potential powerful companies in the computer industry; • Availability of OSs and PCs substitutes. 11/10/2013 Iman M. Ahmed Ibrahim 9
  • 10. INTERNAL ANALYSIS: STRENGTHS • Name recognition and strong reputation for innovative: • Software products have high name recognition, broad-based corporate and consumer, and numerous powerful features that are in use worldwide, thereby promoting standardization and competitive advantage through their ease of integration. • Relatively rapid product development processes ; • The production of the Windows CE 3.0 Pocket PC ; • Windows CE 3.0 has improved real-time operating system capabilities; an extended its reach to a wide range of DDs; • Windows CE has double capacity than Palm OS enabling developers to create complex graphic interfaces for internet connected devices; and to use tools to write other applications. This leverage the skill base of developers around the world; • Microsoft has been committed to enter into agreements, joint venture and licensing Windows CE3.0 widely and is working with both well known equipment and service providers so as to get its technology incorporated into smart phones; 11/10/2013 Iman M. Ahmed Ibrahim 10
  • 11. INTERNAL ANALYSIS: WEAKNESSES • Little or no significant presence in the wireless market and Windows CE has been disappointing during 1998-1999 • Falling sales in the operating systems and server software sectors ( p. C264) • Response time for the OS is too slow to qualify for real-time OS; • The pocket PC is bulky with shorter battery life and less elegance • Dependency on computer manufacturers only to pre-install Microsoft's OSs. 11/10/2013 Iman M. Ahmed Ibrahim 11
  • 12. SWOT ANALYSIS • Microsoft capabilities enabled it to broaden its customer base, get loyal customers and retain them. • It showed capabilities in partnership enabled it reducing intense of rivalry with Palm, Symbian, Psion, Nokia …etc., reducing the risk of entry by potential competitors, and reducing the threat of customers switching to available substitutes. • Microsoft didn’t respond to emerging customer’s needs in the wireless market thus giving other companies the opportunity to offer them what they wanted before Microsoft did 11/10/2013 Iman M. Ahmed Ibrahim 12
  • 13. STRATEGIC ANALYSIS: CORPORATE LEVEL STRATEGY • Reflecting its vision, mission, values and its business environment, Microsoft ambition is to focus on computer and software business to run in all devices not just PCs or servers. • This helped in setting its context and has guided its product related diversification efforts, vertical integration, cost reduction and international expansion. 11/10/2013 Iman M. Ahmed Ibrahim 13
  • 14. BUSINESS LEVEL STRATEGIES: • Differentiation & cost leadership: Microsoft designs and supplies products in a way that better satisfy customer needs than its rivals, and invest in functional activities to achieve efficiency. This permits a broader range of pricing options and creates value for its product and consequently gives more demand to its industry. • Its distinctive competencies had shaped its competitive advantages achieved through its organization wide commitment to superior quality, reliable products, innovation in producing, and delivering their products, infrastructure and efficiency. 11/10/2013 Iman M. Ahmed Ibrahim 14
  • 15. CONCLUSION & RECOMMENDATIONS • Microsoft is a leading company in its chosen industry; it has successfully leveraged its competencies of financial stability, research capacity and brand, however it should not be captivated by that. The dominance and the monopoly that it enjoys can be erased and its dominance in the market can be eclipsed by other new companies in such a dynamic industry. Moreover conditions will never remain the same. The same strategies that led Microsoft to success in previous eras can take them to failure because capable, alert competitors can soon beat them . Therefore it is recommended that Microsoft should: 11/10/2013 Iman M. Ahmed Ibrahim 15
  • 16. – Continually analyses and diagnoses it environments and set its strategies, structure and leadership accordingly; – Strengthen their capabilities by focusing on the building blocks of competitive advantage and develop distinctive competencies that will lead them to achieve superior performance in efficiency and quality through out their company, innovations in production and work processes; – Should be more responsive to customers’ needs ; – Continuously improve its processes and operations through its R&D, create innovative competencies and learn from previous failures; – Track best practices of production, processes and services of the most efficient companies, seek cooperation, partnership and licensing the technology with powerful competitors manufacturing DDs; – Own and establish proprietary standards for different customers segments that other company will follow. Strategies to adopt this are producing complimentary product that leverage killer applications; aggressive pricing and marketing. And use positive feedback loop to develop the standard based on customers’ changing need; – Adopt an overarching universal platform OS with all the emerging features that will allow all devices in a network to locate and work perfectly and effortlessly with each other; – As well as concentrating on growth Microsoft should be prepared to respond to a likely shakeout. 11/10/2013 Iman M. Ahmed Ibrahim 16
  • 17. Thank you 11/10/2013 Iman M. Ahmed Ibrahim 17