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


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

  1. 1. 11/10/2013 Iman M. Ahmed Ibrahim 1
  2. 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. 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. 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.”, 11/10/2013 Iman M. Ahmed Ibrahim 4
  5. 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. 6. Analysis and discussion: External analysis Industry Analysis 11/10/2013 Iman M. Ahmed Ibrahim 6
  7. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 17. Thank you 11/10/2013 Iman M. Ahmed Ibrahim 17