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
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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.
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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
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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.
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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.
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7. Porter’s five
Industry forces
Suppliers’ Bargaining
power
Low
Complimentors
Many
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Risk of entry by
potential competitors
HIGH
Rivalry among existing firms
in the industry
HIGH
Buyers’ Bargaining
power
Low
Threats of substitutes
Few & Close
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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.
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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.
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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;
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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.
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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
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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.
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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.
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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:
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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.
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