Microsoft Diversification Strategy Final


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Microsoft Diversification Strategy Final

  1. 1. DiversificationStrategy<br />Presented By:<br />Rahul Kumar (10/PMB/075)<br />
  2. 2. Company Profile<br />Industry : Computer software, Consumer electronics Computer hardware, Video games IT consulting, Online advertising, Automotive software<br />Founded: April 4, 1975 , Albuquerque, New Mexico <br />Founder(s) Bill Gates Paul Allen<br />Headquarters One Microsoft Way Redmond, Washington, United States<br />Key people Steve Ballmer (CEO) Brian Kevin Turner (COO) Bill Gates (Chairman) Ray Ozzie (CSA) Craig Mundie (CRSO) <br />Revenue  $62.484 billion (2010)<br />Operating income  $24.098 billion (2010)<br />Profit  $18.760 billion (2010)<br />Employees 89,000 (2010)<br /> Website<br />
  3. 3. History<br />Founded By Bill Gates with Paul Allen<br />Started selling a version of BASIC (a programming language) with Altair<br />1980, IBM selected Microsoft to develop a OS for its PCs<br />Paul Allen left Microsoft in mid 1983s<br />Microsoft introduced Windows in mid 1980s<br />1993, it introduced Windows NT to competed with UNIX<br />
  4. 4. History cont.<br />1998, US Justice department filed antitrust charge that Microsoft had stifled Internet Browser competition and limited consumer choice<br />1995, Founded Microsoft Network (MSN)<br />Experienced toughest economic downturn due to burst of dot-com bubble<br />Aimed to position its OS and to diversify in the other software, IT services and other web based serives<br />
  5. 5. Development factors in Emerging IT Industry<br />Customers were expecting to get more out of their technology investments<br />Procurement department became more involved in the IT purchasing process<br />In Addition, CEOs became more demanding of the return on Investment (ROI) on new technology spendings<br />
  6. 6. IT Spendings of companies<br />First annual decline after 1958<br />
  7. 7. Trailing 3 calendar year revenue and operating profit CAGR*<br />* based on three year growth figures for operating income, excluding certain items and stock based compensation expense for calendar year 2003. A reconciliation of the non-GAAP measures presented above to to reported GAAP operating income for the relevant periods can be found in slide #13.<br />
  8. 8. Towards the next big thing<br />Although the IT industry looked rather gloomy in 2006, analysts predicted, based on previous cycles, that industry would take off again in 2007 or 2008. <br />In particular a number of factor would drive the next growth cycle for the technology. Some foresaw that software spending would reach US$325 billion by 2008, and the growth rate of the market was expected to be in the range of 3% to 7% annually.<br />
  9. 9. Factors<br />Service Oriented Architecture and Web Services<br /><ul><li>Enterprise Software
  10. 10. IT Infrastructure
  11. 11. Applications as Services
  12. 12. Downloadable programs
  13. 13. Bridge between desktop and Internet computing
  14. 14. Web based Enterprise Applications
  15. 15. Extended Internet
  16. 16. Embedded devices
  17. 17. RFID
  18. 18. Biometrics
  19. 19. Social Computing
  20. 20. Gaming and Internet TV, Entertainment , IM, Blogging, streaming, Marketing and Media</li></li></ul><li>What does Microsoft’s business model look like today?<br />Diversified Business Model<br />Customer type data based on fiscal year to date information.<br />
  21. 21.
  22. 22. Strategic Repositioning<br />It followed low level of Diversification as its main focus of business was centric i.e. in Software and Web based Services.<br /> The Desktop software market was Matured<br />Continued to diversify in Non-PC Markets and expanded into enterprise software, Consumer product and Service market.<br />Re-Organized the company into three units<br />Platform Product and Service Division<br />Business Division<br />Entertainment and Device Division<br />
  23. 23. Platform Products and Services<br />Ventured into service market through MSN<br />Information search, Email (Hotmail), IM, Online shopping and Games<br />Purchased WebTV Networks for MSN TV<br />Hotmail plus, MSN Music, Radio Plus<br /><ul><li>Adopted Lego-Like development Approach
  24. 24. In 2005, acquired Groove Networks (a software maker), Sybary Software (an antivirus security provider) and Front Bridge (a email security developer)</li></li></ul><li>Business Division<br />The second most money-generating division<br />Providing similar software as free online services like Google and other players<br />Aggressively pursued opportunities with small and midsized enterprises instead of competing with SAP and Oracle<br />Acquired Great Plains Software and formed Microsoft Business Solutions.<br />Offered wide range of software applications including accounting, CRM, SCM, E-Commerce etc.<br />
  25. 25. Entertainment Device Division<br />Entered into video gaming in 2001<br />Launched Xbox Console<br />Gave tough competition to Sony’s Play station 2<br />Launched Xbox 360 against Play station 3<br /><ul><li>Ventured into Mobile Communication market
  26. 26. Persuaded operators to develop windows based phones
  27. 27. Established as a leading IPTV technology provider
  28. 28. Formed a partnership with NBC Universal Cable and formed MSNBC</li></li></ul><li>Key Competitors<br />
  29. 29. Looking Ahead…..<br />Bill Gates knows how to compete with anyone who charges money for products… but his head explodes whenever he has to go up against anyone who gives away products for free<br /> - George Colony<br /> Chairman & CEO, Forrester Research<br />By pursuing diversification strategy Microsoft continued to move beyond its comfort zone.<br />Continued to hold monopoly in OS market, the only product that could challenge Microsoft’s dominant position would be Linux<br />MSN Services were another critical component in its diversification strategy.<br />
  30. 30. Microsoft, Google, and Yahoo! Had been fighting fiercely to become the primary gateway to the internet or the leading Web Portal<br />SAP and Microsoft had been in partnership to jointly develop a product.<br />Microsoft would be competing with players<br />Sony, Apple, iMac, iPod, & Electronics Segment<br />
  31. 31. Conclusion<br />With it Diversification Strategy, Microsoft had entered various new market in which it had no proprietary advantage.<br />To Sustain in a fast changing competitive landscape,<br /> It had to significantly leverage existing and new partners with established players in the newly targeted industries<br /> Need to monitor the dynamic changes in the relevant ecosystems and adjust it alliance in markets<br />