Strategic Analysis for Microsoft Corporation

1. Scratching the Surface: Microsoft’s race to the
trillion dollars valuation
Francesco Perniciaro Spatrisano | 517057 | 517057fp@eur.nl
Perniciaro & Co.

2. Table of contents
Executive summary &
business description
Finding the opportunity
Structuring the opportunity
Exploring the opportunity
Strategizing the opportunity
Appendix

3. Impactful strategies stick 3
Microsoft is a Giotto in the high-tech landscape
Identifiers
Name
Ticker
HQ
Logo
Microsoft
MSFT
Redmond,
Washington, US
Market NYSE, NASDAQ
Tax % 18%, effective
Currency
USD
Industry High tech
Microsoft’s value chain
Net income overview in the high-tech landscape, 2018
Revenues Operating costs Profit
0
2
4
6
8
10
12
14
Increase Decrease Total
BillionDollars
Operating performance in 2018
Software R&D
Hardware
R&D
Development
Production
Marketing &
sales
0 10 20 30 40 50 60 70
Alphabet
Amazon
Apple
Facebook
Microsoft
Microsoft is on the right path to reach a trillion dollars valuation
Microsoft launched Windows Vista. The software was extremely bugged
and provided a highly unpleasant experience to users. The bad
performance of the software led to a 42% decrease in stock value
Windows Vista
Microsoft was founded in New Mexico in 1975 by Bill Gates. The
founder aimed to empower people by making high technology
available, efficient and productive
Foundation
1975
2013
2007
Following the boom of smartphone sales, Microsoft engaged in the
acquisition of Nokia to catch the wave. The operation was
unsuccessful, leading to a $3.2 billions net loss after selling the
divisions, just two years later
Nokia
2014 Satya Nadella was appointed C.E.O. His key strategic moves were
the restructuring of the core business, with the launch of Windows
X and the subscription-based Microsoft Office product
Satya Nadella
24/03/14 24/03/15 24/03/16 24/03/17 24/03/18 24/03/19
Analysts’ consensus about Microsoft’s current market capitalisation is
estimated to be at $898 billion dollars. It is a $600BN increase in the time
frame considered (March 2014-March 2019). Microsoft’s impressive
growth symbolises a company able to meet customers’ demands and
effectively competing in the high-tech landscape. As a young strategy
consultant, I see the opportunity for Microsoft to reach the trillion dollars
valuation by the end of the fiscal year 2019. This can be achieved by
pragmatically analysing endogenous capabilities and exogeneous stimuli,
setting direction for the foreseeable future to build a long-lasting
competitive advantage
Microsoft’s adjusted closing stock price
Profit gap is estimated to be $3BN, with a potential $102 billions increase in value
Profit (adjusted) Target profit
0
10
20
30
40
50
60
70
Microsoft’s profit gap (all numbers in $BN)
Multiples’ valuation for profit gap estimate
Billion
Dollars
Estimated $11 billion revenues gap
Revenues Operating costs Profit
0
2
4
6
8
10
12
14
Increase Decrease Total
Billion
Dollars
$3
Price = $898
Profit (adjusted) = $ 30
Multiple = = $291.
= $33
Target price = $1000
Multiple = $29
Target profit =2.
$33
$30
Microsoft’s multi-faced platform-based business model provides several
opportunity drivers
Value
Profits
(endogenous)
Revenues
Software
Windows
Office
Cloud
services
Hardware
Personal
computing
Gaming
Costs
R&D
Hardware
production
Servers
Competition
(exogeneous)
Software
Hardware
Value creation/optimization MECE tree Platform-based business model and unique customer experience
§ Van Alstyne, Parker & Choudary (2016) highlight how business strategy
changed, under the pressure of key players in the high-tech industry
§ Apple initiated a switch towards a platform-based business model,
meaning that a product such as the iPhone is no longer ‘just a piece of
hardware’. It is a channel (or pipeline) to boost sales through other
related products such as apps
§ Gammeri & Breschi (2017) found that customers today value a unique,
fully integrated experience that smooths the access to services
§ Indeed, tech companies such as Apple, Amazon and Google kept
focusing on smoothening the customer experience to make it more
pleasant
§ Microsoft is currently following the same trend
High operational efficiency has already been reached
Revenue/costs comparison per product division
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
40.000
45.000
Revenues Costs Revenues Costs Revenues Costs
2018 2017 2016
Productivity and Business Processes Intelligent Cloud More Personal Computing
12.924
11.524
10.610
Productivity and Business
Processes
Intelligent Cloud
More Personal Computing
§ No alarming variation on the costs side
§ Operational efficiency is high and justify the huge increase in value achieved over the last 5 years
§ Devices show lowest operating profit
Operating profit per product division
Scratching the Surface: Microsoft’s profit gap is mainly due to unexplored
devices demand
Can Microsoft leverage a moment
of change in the industry to reach
a trillionaire valuation?
*all hypotheses supported
Assumption Proof Analysis Data
H1: Market is changing
H2a: Not all competitors have the
resources to exploit the market
H2b: Not all competitors fully
understand the market
H3a: Microsoft fully understands
the market
H3b: Microsoft is not pushing
devices enough
Convertibles far outgrow the
industry
Some competitors have low cash
flows & market share
Some competitors score low in
growth
High growth rates
Low market share
§ Industry matrix
§ Competitors’ financial analysis
§ Trend analysis
§ Industry matrix
§ Microsoft's financial
performance
§ Microsoft’s product offering
analysis
§ Industry analysis
§ Euromonitor, tech industry
data
§ Statista
§ Competitors’ financial
statements (Bloomberg
Terminal)
§ Euromonitor
§ Bloomberg Terminal,
competitors’ costs, revenues &
market share (BMC function)
§ Own insights
§ The Verge, Forbes and other
high-tech reviews/YouTube
channels
§ Microsoft’s website, product
features
§ Euromonitor
§ Microsoft’s financial
statement, revenue growth
H1: Device industry is changing
0% 10% 20% 30% 40% 50% 60% 70%
Desktop
Notebook
Detachable Tablet
Slate tablet
2019E
2020E
2021E
Global sales growth rates per product in the hardware industry
Portable Keyboard Digital pen
High
performance
Slate tablet x
Detachable
tablet
x x x x
Notebook x x x
Desktop x x
Devices categorisation by feature
Innovationrate
Time
Hardware computing going through a transitional stage
Stage 1: Fluid Stage 3: Fluid
Stage 2: Transitional
Process
development
Product
development § Abernathy-Utterback (1978) theorize that innovation goes through 3 stages
§ In the first stage, firms experiment with design and attempt to capture customers’
consensus by implementing different features. This implies:
§ High R&D expenditures
§ High sales risk
§ Once the first phase is overcome, a dominant design is reached and customers start to
widely adopt product, leading sales to skyrocket
§ High growth rates are displayed by detachable tablets, showing in which industrial
innovation stage the industry is
High growth rate means transition
H2a: Not all competitors own the strategic resources to exploit the change
Competitors’ investment potential & size
Netincome($millions)
Financial
health
Risk of
distress
Acer
Asus
Apple
Google
HP
Lenovo
Microsoft
Artificial intelligence Cloud computing Convertible hardware Augmented reality
Competitors’ key insight: core knowledge & exploitative assets
capabilities
Tech industry: resources (tools) to win competition
-10
0
10
20
30
40
50
60
70
2015 2016 2017 2018
Acer Asus Apple Google (Alphabet) HP Lenovo Microsoft
Specific
knowledge
Complementary
exploitative assets
Space
awareness
DefinitionImplications
• Core competency,
usually software
• Distinguishes a
company from
competitors
• Company is valued by
customers
• Competitors aim to
copy
• Usually hardware,
lower margins
• Very important for
brand recognition &
product association
• Usually
underestimated
• Company is
recognised by
customers
• Understanding of fast
paced competitive
dynamics
• High competition
leads to rapid
innovation pace
• Building sustainable
competitive
advantage is
challenging
VRIO VRIO VRIO
V= valuable
R= rare
I= inimitable
O= organization needed to monetize competences
*
H2b: Not all competitors fully understand the market
Devices market share Industry tiers, inductive segmentation by “trends”
0% 5% 10% 15% 20% 25%
Lenovo
HP
Dell
Apple
Acer
Asus
Google
Microsoft
Others
Industry is now divided into 4 categories, to best capture the competitive dynamics:
§ Champions achieved high efficiency and still invest in innovation
§ Mountains own high market share, but are not investing in innovation
§ Climbers have low market share and high investments in innovation
§ Losers are losing market share and cash flows are not sufficient to invest in innovation
Software
capabilities
Hardware
capabilities
Lenovo
HP
Acer
Asus
Microsoft
Google
AppleDELL
H3a: Microsoft fully understands the market
Market behavioural segmentation per device user
Microsoft Surface Pro
Microsoft Surface Book
Microsoft Surface Laptop
Microsoft Surface Go
Microsoft’s response to customer segmentation
Productivity
PowerKeyboard usability
Pen
Lappability & Portability
Aesthetic
Battery efficiency
Affordability
Surface Book Line Surface Laptop Line Surface Pro Line Surface Go Line
§ Key features are obtained through in-depth market research
§ Microsoft shows a complete product portfolio, ready to exploit the
market
Potential
customer
Individuals
Content
creator
Gamer
Occasional
user
Student
Business
Start-Ups
Large
corporation
Consultant
Financial
professional
Programmers
H3b: Microsoft is not pushing devices enough, as hardware underperforms industry
Clustered Revenues, 2018
78%
7%
15% Office & Cloud
computing
Devices
Gaming
Microsoft’s global performance (industry benchmark)
Desktop OS market share, 2018
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Windows
MacOSX
Linux
Chrome OS
Others
2017
2018
0%
2%
4%
6%
8%
10%
12%
14%
16%
Office & Cloud
computing
Devices Gaming
Microsoft's growth rates (2018)
Industry growth rates (2018)
Profit gap can be closed by boosting fast-growing devices sales
Profit gap can be closed by boosting faster
growing devices
+10% market
share,
notebooks
+40% market
share,
detachables
Market growth (harmonized)
0
10
20
30
40
50
60
70
80
90
100
2018 2019E 2020E 2021E
Desktop Notebook Detachable Tablet Slate tablet
Billiondollars
Elements of a winning
strategy
Arena
Target
individuals
Gamers
Content
creator
Occasional
user
Student
Target
businesses
Large
corporations
Start-ups
Value
proposition
Market the
products
offline
Market the
products
online
Value creation
Upgrade
existing
products
Invest in new
products
Value
capturing
Optimize
pricing
Focus on
hardware
pricing
optimization
Offer
hardware-
software
bundles
Enhance
efficiency
Strategic levers
Microsoft can undertake several strategies to boost hardware sales
Strategic options
Legend
Impact
Feasibility
§ Scores from 0 (very low) to 5 (very high)
§ Each strategy is colour-coded
Impact-feasibility matrix
§ Targeting businesses seems the most impactful strategy to pursue
§ Targeting individual customers is also an appealing strategy
5
5
2
3
3
5
1
5
2
1
How can Microsoft
leverage the moment of
substantial change in the
industry to reach a
trillionaire valuation?
The Office
Bundle
The Surface
Momentum
The Cloud
Gaming
The Creative
Wave
The Nokia
Reboot
§ Leverage software capabilities to
enhance hardware sales
§ Provide bundles to further exploit
corporates and start-ups markets
§ Boost hardware sales focusing on
current customers
§ Fix pricing to attract more
customers
§ Cannibalize Xbox with new
premium gaming laptop
§ Focus on cloud capabilities to
compete with new entrant Google
§ Expand software capabilities by
focusing on software for creatives
§ Sell software for free to Surface
buyers
§ Expand hardware experience
with a smartphone
0
1
2
3
4
5
6
0 1 2 3 4 5 6
Impact
Feasibility
The Office bundle strategic option offers a potential $4.8 BN profit gain, with
high ease of implementation
Microsoft should leverage its specific
knowledge to boost corporate sales, as
corporate clients already exist
Key intuitions
§ Businesses are larger
§ Microsoft owns both specific knowledge and
complementary exploitative assets to overcome
competition
§ Microsoft already has sales departments in place
selling software and cloud technologies.
Customer base therefore already exists
Strategic objectives
§ 10% increase in notebooks market share
§ 40% increase in detachables market share
Key capabilities needed
§ Effective sales departments
§ Productivity machines
§ Combined pricing strategy
§ Most key capabilities are already in place
Global markets should be soon aggressively targeted Pricing model
Global target
Large
corporations
(high income)
Start-ups (low
income)
Software-
hardware
integration
Arenas
Vehicles
Differentiators
Staging
1-year full implementation
is estimated
Apr-
May
Jun-
Aug
Sep-
May
Pricing strategy optimization &
internal communication
External communication of
new offers
Collect rewards & adjust
pricing to demand
Internal development &
optimization is suggested
§ Microsoft should invest in
training the sales
departments on the new
pricing strategy, as they
should try to combine
software and hardware
§ Increase in hardware
capacity should be
implemented
Nobody in the tech
industry can achieve the
same level of hardware-
software integration, it is
a unique opportunity to
leverageHardware is well
recognized
Office 365 is unique to
companies
Forecasted impact
Start-Up Bundle
§ Low price
§ Focus on Office essentials
§ Provide optimized Surface Pro line with
lowest specs
Premium Bundle Booster
§ Mid price – Decoy effect
§ Focus on full Office 365
§ Provide optimized Surface Pro/Laptop line
with lowest specs
Executive Bundle
§ High price
§ Focus on full Office 365
§ Provide optimized Surface Book line
with top specs
Profit gap Forecastedprofit gain
$3 BN $4.8 BN
The Surface momentum strategic option might lead to $2BN profit gain
Microsoft should adjust its current offering
to better match customers’ needs and
requests
Key intuitions
§ Individual customers already show high
appreciation for Microsoft’s products, as
Microsoft’s scores in tech reviews are excellent
(for more, see The Verge or TechRadar)
§ However, several are the complaints about how
Surface products are priced
§ This is because customers are forced to pay the
Surface keyboard and the Surface pen separately,
while they are perceived as “standard” elements
that should come by default
Strategic objectives
§ 10% increase in notebooks market share
§ 40% increase in detachables market share
Key capabilities needed
§ Economies of scale, achievable by
increasing production
§ Creation platform products (following the
automotive industry business model)
§ Each product has the same
production platform, which is
subsequently customized. This
offers large economies of scale
Global markets should be soon aggressively targeted Pricing model
Global
target
Content creator
Gamer
Occasional user
Student
Add-ons
poorly
perceived
Arenas
Vehicles
Differentiators
Staging
6-months full
implementation is
estimated
Apr-
May
Jun-
Aug
Sep
Pricing strategy optimization
Setting up PPE for increased
production, hire workforce
Collect rewards & adjust
pricing to demand
Economies of scale need to
be set up
§ Microsoft should attempt
to standardize production
of the Surface line
§ Leveraging relationship
with suppliers and building
product platforms are
vehicles to achieve such
target
Surface products are
already well perceived in
the individual customer
segment, however
pricing is an issue
Hardware is well
recognized
Offering an optimized
pricing can lead sales to
skyrocket
Forecasted impact
Integrated primary tools
§ Include keyboard in one-time purchase
§ Include the Surface Pen in one-time
purchase
Accessories to pay for
§ Sell additional accessories such as earbuds
and mice, following the current strategy
Discount policy
§ Offer discounts on key accessories
when purchasing a laptop/computer
BillionDollars
3
2 0
3
Bull case Mid-case Bear case Profit gap
0
1
2
3
4
5
6
Strategic options require a set of assumptions to be tested
4,8
1,7
3
The Office Bundle The Surface Momentum Profit gap
Potential profit gain (USD BN)
Impact
Feasibility
Impact feasibility matrix for selected strategies
0
1
2
3
4
5
6
0 1 2 3 4 5 6
Strategy 1 can lead to a 4,8 USD billion increase in profit
Strategy 2 can lead to a 1,7 USD billion increase in profit
Assumptions Analysis Data
Assumptions Analysis Data
§ Profit margins on Office products
are substantial
§ Internal profitability analysis
§ Microsoft’s customer base analysis
§ Microsoft’s financial data, Office
products revenue stream
§ Sales department can easily
incorporate bundling offer
§ Internal human resources analysis § Survey sales people through HR
§ Competitors would not be able to
respond (true)
§ Market analysis § Data from Euromonitor, Statista
and competitors’ VRIO analysis
§ Surface products are more appreciated
than competitors in the market
§ Market analysis
§ Customers’ preferences
§ Online reviews
§ Client’s insights on Surface line
§ Pricing is misperceived by
customers
§ Customers analysis
§ Interviews
§ Test rooms
§ Marketing trends
§ Economies of scale can be
optimized on the Surface line side
§ Internal operations analysis § Microsoft’s data on each Surface
line processes, only obtainable
from the client
Executive summary
Microsoft is a profitable company. Since current C.E.O. Satya Nadella’s appointment in 2014, the firm’s profitability skyrocketed. This was due to a set of strategies that proved to be
correct. Firstly, Microsoft dismantled the smartphone division, which fell under declining Nokia’s brand. Secondly, the firm heavily invested in cloud technologies and restructured the
Office 365 bundles for both firms and individual users. Today, Microsoft is on the verge of reaching a trillion dollars valuation, reaching companies such as Apple and Amazon. While the
great capabilities of the firm are recognized at the beginning of the presentation, as following fictional management consultant Marty Kaan Microsoft is defined as a Giotto in the high-tech
landscape, a careful analysis shows particularly slow growing devices sales, which are thus recognised as mean to reach the trillionaire valuation. Several strategies evolving around the
widely appreciated Microsoft Surface Line are suggested and ranked on the basis of both feasibility and impact. Conclusively, I recommend Microsoft to create a hardware-software bundle
in order to leverage current business customers and unique capabilities.
BUSINESS DESCRIPTION OPPORTUNITY STRUCTURE EXPLORATION STRATEGY

4. Microsoft is a Giotto in the high-tech landscape 4
BUSINESS DESCRIPTION OPPORTUNITY STRUCTURE EXPLORATION STRATEGY
Billion Dollars
Identifiers
Name
Ticker
HQ
Logo
Microsoft
MSFT
Redmond,
Washington, US
Market
NYSE, NASDAQ
Tax % 18%, effective
Currency
USD
Industry High tech
Microsoft’s value chain
Net income overview in the high-tech landscape, 2018
Revenues Operating costs Profit
0
2
4
6
8
10
12
14
Increase Decrease Total
BillionDollars
Operating performance in 2018
Software R&D
Hardware
R&D
Development
Production
Marketing &
sales
0 10 20 30 40 50 60 70
Alphabet
Amazon
Apple
Facebook
Microsoft

5. Microsoft is on the right path to reach a trillion dollars valuation 5
Microsoft launched Windows Vista. The software was extremely bugged
and provided a highly unpleasant experience to users. The bad
performance of the software led to a 42% decrease in stock value
Windows Vista
Microsoft was founded in New Mexico in 1975 by Bill Gates. The
founder aimed to empower people by making high technology
available, efficient and productive
Foundation
1975
2013
2007
Following the boom of smartphone sales, Microsoft engaged in the
acquisition of Nokia to catch the wave. The operation was
unsuccessful, leading to a $3.2 billions net loss after selling the
divisions, just two years later
Nokia
2014 Satya Nadella was appointed C.E.O. His key strategic moves were
the restructuring of the core business, with the launch of Windows
X and the subscription-based Microsoft Office product
Satya Nadella
24/03/14 24/03/15 24/03/16 24/03/17 24/03/18 24/03/19
Analysts’ consensus about Microsoft’s current market capitalisation is
estimated to be at $898 billion dollars. It is a $600BN increase in the time
frame considered (March 2014-March 2019). Microsoft’s impressive
growth symbolises a company able to meet customers’ demands and
effectively competing in the high-tech landscape. As a young strategy
consultant, I see the opportunity for Microsoft to reach the trillion dollars
valuation by the end of the fiscal year 2019. This can be achieved by
pragmatically analysing endogenous capabilities and exogeneous stimuli,
setting direction for the foreseeable future to build a long-lasting
competitive advantage
Microsoft’s adjusted closing stock price
BUSINESS DESCRIPTION OPPORTUNITY STRUCTURE EXPLORATION STRATEGY

6. Profit gap is estimated to be $3BN, with a potential $102 billions increase in value 6
Profit (adjusted) Target profit
0
10
20
30
40
50
60
70
Microsoft’s profit gap (all numbers in $BN)
Multiples’ valuation for profit gap estimate
Billion
Dollars
Estimated $11 billion revenues gap
Revenues Operating costs Profit
0
2
4
6
8
10
12
14
Increase Decrease Total
Billion
Dollars
$3
Price = $898
Profit (adjusted) = $ 30
Multiple = = $291.
= $33
Target price = $1000
Multiple = $29
Target profit =2.
$33
$30
BUSINESS DESCRIPTION OPPORTUNITY STRUCTURE EXPLORATION STRATEGY

7. Microsoft’s multi-faced platform-based business model provides several opportunity drivers 7
Value
Profits
(endogenous)
Revenues
Software
Windows
Office
Cloud
services
Hardware
Personal
computing
Gaming
Costs
R&D
Hardware
production
Servers
Competition
(exogeneous)
Software
Hardware
Value creation/optimization MECE tree Platform-based business model and unique customer experience
§ Van Alstyne, Parker & Choudary (2016) highlight how business strategy
changed, under the pressure of key players in the high-tech industry
§ Apple initiated a switch towards a platform-based business model,
meaning that a product such as the iPhone is no longer ‘just a piece of
hardware’. It is a channel (or pipeline) to boost sales through other
related products such as apps
§ Gammeri & Breschi (2017) found that customers today value a unique,
fully integrated experience that smooths the access to services
§ Indeed, tech companies such as Apple, Amazon and Google kept
focusing on smoothening the customer experience to make it more
pleasant
§ Microsoft is currently following the same trend
BUSINESS DESCRIPTION OPPORTUNITY STRUCTURE EXPLORATION STRATEGY

8. High operational efficiency has already been reached, therefore it does not explain the opportunity gap 8
Revenue/costs comparison per product division
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
40.000
45.000
Revenues Costs Revenues Costs Revenues Costs
2018 2017 2016
Productivity and Business Processes Intelligent Cloud More Personal Computing
12.924
11.524
10.610
Productivity and Business
Processes
Intelligent Cloud
More Personal Computing
§ No alarming variation on the costs side
§ Operational efficiency is high and justify the huge increase in value achieved over the last 5 years
§ Devices show lowest operating profit
Operating profit per product division
BUSINESS DESCRIPTION OPPORTUNITY STRUCTURE EXPLORATION STRATEGY

9. Scratching the Surface: Microsoft’s profit gap is mainly due to unexplored devices demand (Hypotheses) 9
Can Microsoft leverage a moment
of change in the industry to reach
a trillionaire valuation?
*all hypotheses supported
Assumption Proof Analysis Data
H1: Market is changing
H2a: Not all competitors have the
resources to exploit the market
H2b: Not all competitors fully
understand the market
H3a: Microsoft fully understands
the market
H3b: Microsoft is not pushing
devices enough
Convertibles far outgrow the
industry
Some competitors have low cash
flows & market share
Some competitors score low in
growth
High growth rates
Low market share
§ Industry matrix
§ Competitors’ financial analysis
§ Trend analysis
§ Industry matrix
§ Microsoft's financial
performance
§ Microsoft’s product offering
analysis
§ Industry analysis
§ Euromonitor, tech industry
data
§ Statista
§ Competitors’ financial
statements (Bloomberg
Terminal)
§ Euromonitor
§ Bloomberg Terminal,
competitors’ costs, revenues &
market share (BMC function)
§ Own insights
§ The Verge, Forbes and other
high-tech reviews/YouTube
channels
§ Microsoft’s website, product
features
§ Euromonitor
§ Microsoft’s financial
statement, revenue growth
BUSINESS DESCRIPTION OPPORTUNITY STRUCTURE EXPLORATION STRATEGY

10. H1: Device industry is changing 10
0% 10% 20% 30% 40% 50% 60% 70%
Desktop
Notebook
Detachable Tablet
Slate tablet
2019E
2020E
2021E
Global sales growth rates per product in the hardware industry
Portable Keyboard Digital pen
High
performance
Slate tablet x
Detachable
tablet
x x x x
Notebook x x x
Desktop x x
Devices categorisation by feature
Innovationrate
Time
Hardware computing going through a transitional stage
Stage 1: Fluid Stage 3: Fluid
Stage 2: Transitional
Process
development
Product
development § Abernathy-Utterback (1978) theorize that innovation goes through 3 stages
§ In the first stage, firms experiment with design and attempt to capture customers’
consensus by implementing different features. This implies:
§ High R&D expenditures
§ High sales risk
§ Once the first phase is overcome, a dominant design is reached and customers start to
widely adopt product, leading sales to skyrocket
§ High growth rates are displayed by detachable tablets, showing in which industrial
innovation stage the industry is
High growth rate means transition
BUSINESS DESCRIPTION OPPORTUNITY STRUCTURE EXPLORATION STRATEGY

11. H2a: Not all competitors own the strategic resources to exploit the change 11
Competitors’ investment potential & size
Netincome($millions)
Financial
health
Risk of
distress
Acer
Asus
Apple
Google
HP
Lenovo
Microsoft
Artificial intelligence Cloud computing Convertible hardware Augmented reality
Competitors’ key insight: core knowledge & exploitative assets
capabilities
Tech industry: resources (tools) to win competition
-10
0
10
20
30
40
50
60
70
2015 2016 2017 2018
Acer Asus Apple Google (Alphabet) HP Lenovo Microsoft
BUSINESS DESCRIPTION OPPORTUNITY STRUCTURE EXPLORATION STRATEGY
Specific
knowledge
Complementary
exploitative assets
Space
awareness
DefinitionImplications
• Core competency,
usually software
• Distinguishes a
company from
competitors
• Company is valued by
customers
• Competitors aim to
copy
• Usually hardware,
lower margins
• Very important for
brand recognition &
product association
• Usually
underestimated
• Company is
recognised by
customers
• Understanding of fast
paced competitive
dynamics
• High competition
leads to rapid
innovation pace
• Building sustainable
competitive
advantage is
challenging
VRIO VRIO VRIO
V= valuable
R= rare
I= inimitable
O= organization needed to monetize competences
*

12. H2b: Not all competitors fully understand the market 12
Devices market share Industry tiers, inductive segmentation by “trends”
0% 5% 10% 15% 20% 25%
Lenovo
HP
Dell
Apple
Acer
Asus
Google
Microsoft
Others
Industry is now divided into 4 categories, to best capture the competitive dynamics:
§ Champions achieved high efficiency and still invest in innovation
§ Mountains own high market share, but are not investing in innovation
§ Climbers have low market share and high investments in innovation
§ Losers are losing market share and cash flows are not sufficient to invest in innovation
Software
capabilities
Hardware
capabilities
Lenovo
HP
Acer
Asus
Microsoft
Google
AppleDELL
BUSINESS DESCRIPTION OPPORTUNITY STRUCTURE EXPLORATION STRATEGY

13. H3a: Microsoft fully understands customers’ needs 13
Market behavioural segmentation per device user
Microsoft Surface Pro
Microsoft Surface Book
Microsoft Surface Laptop
Microsoft Surface Go
Microsoft’s response to customer segmentation
Productivity
PowerKeyboard usability
Pen
Lappability & Portability
Aesthetic
Battery efficiency
Affordability
Surface Book Line Surface Laptop Line Surface Pro Line Surface Go Line
BUSINESS DESCRIPTION OPPORTUNITY STRUCTURE EXPLORATION STRATEGY
§ Key features are obtained through in-depth market research
§ Microsoft shows a complete product portfolio, ready to exploit the
market
Potential
customer
Individuals
Content
creator
Gamer
Occasional
user
Student
Business
Start-Ups
Large
corporation
Consultant
Financial
professional
Programmers

14. H3b: Microsoft is not pushing devices enough, as hardware underperforms industry 14
Clustered Revenues, 2018
78%
7%
15% Office & Cloud
computing
Devices
Gaming
Microsoft’s global performance (industry benchmark)
Desktop OS market share, 2018
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Windows
MacOSX
Linux
Chrome OS
Others
2017
2018
0%
2%
4%
6%
8%
10%
12%
14%
16%
Office & Cloud
computing
Devices Gaming
Microsoft's growth rates (2018)
Industry growth rates (2018)
BUSINESS DESCRIPTION OPPORTUNITY STRUCTURE EXPLORATION STRATEGY

15. Profit gap can be closed by boosting fast-growing devices sales 15
Profit gap can be closed by boosting faster
growing devices
+10% market
share,
notebooks
+40% market
share,
detachables
Market growth (harmonized)
0
10
20
30
40
50
60
70
80
90
100
2018 2019E 2020E 2021E
Desktop Notebook Detachable Tablet Slate tablet
Billiondollars
Elements of a winning
strategy
Arena
Target
individuals
Gamers
Content
creator
Occasional
user
Student
Target
businesses
Large
corporations
Start-ups
Value
proposition
Market the
products
offline
Market the
products
online
Value creation
Upgrade
existing
products
Invest in new
products
Value
capturing
Optimize
pricing
Focus on
hardware
pricing
optimization
Offer
hardware-
software
bundles
Enhance
efficiency
Strategic levers
BUSINESS DESCRIPTION OPPORTUNITY STRUCTURE EXPLORATION STRATEGY

16. Microsoft can undertake several strategies to boost hardware sales 16
Strategic options
Legend
Impact
Feasibility
§ Scores from 0 (very low) to 5 (very high)
§ Each strategy is colour-coded
Impact-feasibility matrix
§ Targeting businesses seems the most impactful strategy to pursue
§ Targeting individual customers is also an appealing strategy
BUSINESS DESCRIPTION OPPORTUNITY STRUCTURE EXPLORATION STRATEGY
5
5
2
3
3
5
1
5
2
1
How can Microsoft
leverage the moment of
substantial change in the
industry to reach a
trillionaire valuation?
The Office
Bundle
The Surface
Momentum
The Cloud
Gaming
The Creative
Wave
The Nokia
Reboot
§ Leverage software capabilities to
enhance hardware sales
§ Provide bundles to further exploit
corporates and start-ups markets
§ Boost hardware sales focusing on
current customers
§ Fix pricing to attract more
customers
§ Cannibalize Xbox with new
premium gaming laptop
§ Focus on cloud capabilities to
compete with new entrant Google
§ Expand software capabilities by
focusing on software for creatives
§ Sell software for free to Surface
buyers
§ Expand hardware experience
with a smartphone
0
1
2
3
4
5
6
0 1 2 3 4 5 6
Impact
Feasibility
*Seen the relatively tight deadline, there is a time constraint
that makes each strategy exclusive in the short term

17. The Office Bundle strategic option offers a potential $4.8BN profit gain, with high ease of implementation 17
Microsoft should leverage its specific
knowledge to boost corporate sales, as
corporate clients already exist
Key intuitions
§ Businesses are larger
§ Microsoft owns both specific knowledge and
complementary exploitative assets to overcome
competition
§ Microsoft already has sales departments in place
selling software and cloud technologies.
Customer base therefore already exists
Strategic objectives
§ 10% increase in notebooks market share
§ 40% increase in detachables market share
Key capabilities needed
§ Effective sales departments
§ Productivity machines
§ Combined pricing strategy
§ Most key capabilities are already in place
Global markets should be soon aggressively targeted Pricing model
Global target
Large
corporations
(high income)
Start-ups (low
income)
Software-
hardware
integration
Arenas
Vehicles
Differentiators
Staging
1-year full implementation
is estimated
Apr-
May
Jun-
Aug
Sep-
May
Pricing strategy optimization &
internal communication
External communication of
new offers
Collect rewards & adjust
pricing to demand
Internal development &
optimization is suggested
§ Microsoft should invest in
training the sales
departments on the new
pricing strategy, as they
should try to combine
software and hardware
§ Increase in hardware
capacity should be
implemented
Nobody in the tech
industry can achieve the
same level of hardware-
software integration, it is
a unique opportunity to
leverageHardware is well
recognized
Office 365 is unique to
companies
Forecasted impact
Start-Up Bundle
§ Low price
§ Focus on Office essentials
§ Provide optimized Surface Pro line with
lowest specs
Premium Bundle Booster
§ Mid price – Decoy effect
§ Focus on full Office 365
§ Provide optimized Surface Pro/Laptop line
with lowest specs
Executive Bundle
§ High price
§ Focus on full Office 365
§ Provide optimized Surface Book line
with top specs
BUSINESS DESCRIPTION OPPORTUNITY STRUCTURE EXPLORATION STRATEGY
Profit gap Forecastedprofit gain
$3 BN $4.8 BN

18. The Surface momentum strategic option might lead to $2 BN profit gain 18
BUSINESS DESCRIPTION OPPORTUNITY STRUCTURE EXPLORATION STRATEGY
Microsoft should adjust its current offering
to better match customers’ needs and
requests
Key intuitions
§ Individual customers already show high
appreciation for Microsoft’s products, as
Microsoft’s scores in tech reviews are excellent
(for more, see The Verge or TechRadar)
§ However, several are the complaints about how
Surface products are priced
§ This is because customers are forced to pay the
Surface keyboard and the Surface pen separately,
while they are perceived as “standard” elements
that should come by default
Strategic objectives
§ 10% increase in notebooks market share
§ 40% increase in detachables market share
Key capabilities needed
§ Economies of scale, achievable by
increasing production
§ Creation platform products (following the
automotive industry business model)
§ Each product has the same
production platform, which is
subsequently customized. This
offers large economies of scale
Global markets should be soon aggressively targeted Pricing model
Global target
Content creator
Gamer
Occasional user
Student
Add-ons
poorly
perceived
Arenas
Vehicles
Differentiators
Staging
6-months full
implementation is
estimated
Apr-
May
Jun-
Aug
Sep
Pricing strategy optimization
Setting up PPE for increased
production, hire workforce
Collect rewards & adjust
pricing to demand
Economies of scale need to
be set up
§ Microsoft should attempt
to standardize production
of the Surface line
§ Leveraging relationship
with suppliers and building
product platforms are
vehicles to achieve such
target
Surface products are
already well perceived in
the individual customer
segment, however
pricing is an issue
Hardware is well
recognized
Offering an optimized
pricing can lead sales to
skyrocket
Forecasted impact
Integrated primary tools
§ Include keyboard in one-time purchase
§ Include the Surface Pen in one-time
purchase
Accessories to pay for
§ Sell additional accessories such as earbuds
and mice, following the current strategy
Discount policy
§ Offer discounts on key accessories
when purchasing a laptop/computer
BillionDollars
3
2 0
3
Bull case Mid-case Bear case Profit gap
0
1
2
3
4
5
6

19. Strategic options require a set of assumptions to be tested 19
4,8
1,7
3
The Office Bundle The Surface Momentum Profit gap
BUSINESS DESCRIPTION OPPORTUNITY STRUCTURE EXPLORATION STRATEGY
Potential profit gain (USD BN)
Impact
Feasibility
Impact feasibility matrix for selected strategies
0
1
2
3
4
5
6
0 1 2 3 4 5 6
Strategy 1 can lead to a 4,8 USD billion increase in profit
Strategy 2 can lead to a 1,7 USD billion increase in profit
Assumptions Analysis Data
Assumptions Analysis Data
§ Profit margins on Office products
are substantial
§ Internal profitability analysis
§ Microsoft’s customer base analysis
§ Microsoft’s financial data, Office
products revenue stream
§ Sales department can easily
incorporate bundling offer
§ Internal human resources analysis § Survey sales people through HR
§ Competitors would not be able to
respond (true)
§ Market analysis § Data from Euromonitor, Statista
and competitors’ VRIO analysis
§ Surface products are more appreciated
than competitors in the market
§ Market analysis
§ Customers’ preferences
§ Online reviews
§ Client’s insights on Surface line
§ Pricing is misperceived by
customers
§ Customers analysis
§ Interviews
§ Test rooms
§ Marketing trends
§ Economies of scale can be
optimized on the Surface line side
§ Internal operations analysis § Microsoft’s data on each Surface
line processes, only obtainable
from the client

20. Appendix & References

21. Appendix 1, multiples analysis
Market cap.
Earnings
= Price/Earnings Multiple
§ Solving for Microsoft’s FY 2018 adjusted data
898
30
= 30
§ Setting multiple as outcome, solving for a trillion dollars market cap
1000
target profit
= 30
§ Finding the profit gap
1000
30Target profit = = 33
Profit gap = Target profit – Current profit = 33 – 30 = 3
The multiples analysis is the widely adopted technique in the financial sector. Underlying reasons for this are the quick access, ease of use and understandability. This
technique is clearly a simplification of a proper discounted cash flow approach to public company valuation. However, the simplicity is the key strength of this
methodology, as it requires a very limited number of assumptions. Key assumptions to the model are:
- Market efficiency: The market is efficient; no information asymmetries are assumed;
- Law of one price: Two equivalent assets will be priced exactly and proportionally the same.

22. Appendix 2, Microsoft’s operating income per division and costs calculation
Revenues Costs Revenues Costs Revenues Costs
Productivity and Business Processes 35.865 22.941 29.870 18.481 25.792 14.036
Intelligent Cloud 32.219 20.695 27.407 18.280 24.952 15.703
More Personal Computing 42.276 31.666 39.294 30.479 40.410 34.227
2018 2017 2016

23. Appendix 3, Microsoft’s revenues rreakdown (2016-18, BN)
2018 2017 2016 % Change 18-17 % Change 18-17
Office products and cloud services 28316 25573 23868 11% 7%
Server products and cloud services 26129 21649 19062 21% 14%
Windows 19518 18593 17548 5% 6%
Gaming 10353 9051 9202 14% -2%
Search advertising 7012 6219 5428 13% 15%
Enterprise services 5846 5542 5659 5% -2%
Devices 5134 5062 7888 1% -36%
LinkedIn 5259 2271 0 132% N/A
Other 2793 2611 2499 7% 4%
Total 110360 96571 91154 14% 6%
All data in this appendix was gathered from Microsoft’s latest annual report

24. Appendix 4, Detailed revenues segmentation
Revenues Breakdown, 2018
26%
24%
18%
9%
6%
5%
5%
5% 2%
Office products and cloud services
Server products and cloud services
Windows
Gaming
Search advertising
Enterprise services
Devices
LinkedIn
Other
0%
5%
10%
15%
20%
25%
Office
products
and cloud
services
Server
products
and cloud
services
Windows Gaming Search
advertising
Enterprise
services
Devices Other
Revenues growth rates, 2018

25. Appendix 5, Industry data (2017-2021E)
2017 2018 2019E 2020E 2021E
Cloud computing 145 166 200 220 268
Gaming 121 138 152 165 180
Devices 156 166 177 188 200
Projections on the 3 segments were found on reliable sources and not adjusted

26. Appendix 6, DesktopOS Market Share
2018 2017
Windows 75% 83%
MacOSX 12% 13%
Linux 2% 2%
Chrome OS 1% 1%
Others 9% 2%

27. Appendix 7, Devices’ estimates (by 2021) 27
Product category Share (2018) Size (2018) Share (2021) Size (2021)
Desktop 23% 38 21% 42
Notebook 40% 67 44% 88
Detachable Tablet 5% 8 7% 14,8
Slate tablet 32% 52 28% 55,2
Total 100% 166 100% 200
Total growth
Desktop 10%
Notebook 31%
Detachable Tablet 75%
Slate tablet 5%

28. Appendix 8, Harmonized growth of devices (global)
Harmonized growth 2018 2019E 2020E 2021E
Desktop 38 39 41 42
Notebook 67 74 81 88
Detachable Tablet 8 11 13 15
Slate tablet 52 53 54 55
Yearly growth rate 2019E 2020E 2021E
Desktop 3% 3% 3%
Notebook 10% 9% 9%
Detachable Tablet 25% 20% 17%
Slate tablet 2% 2% 2%
I only managed to gather data regarding 2018 and estimates to 2021. Therefore, I harmonized the growth by assuming it constant
throughout the years. This is a safe assumption, as such estimates do not include market externalities it is possible to adopt a constant
growth throughout the forecast horizon.

29. Appendix 9, Microsoft’s target share per segment
The calculation of the profit increase has been perform using previous market guesstimates (e.g. harmonized market growth) and the methodology provided on Canvas.
Firstly, I calculated the potential revenue increase, by forecasting the revenues using different market shares.
Secondly, I calculated the costs-to-revenues ratio, as follows:
2018 2017 2016 % Change 18-17 % Change 18-17
Revenue
Productivity and Business Processes 35.865 29.870 25.792 20% 16%
Intelligent Cloud 32.219 27.407 24.952 18% 10%
More Personal Computing 42.276 39.294 40.410 8% -3%
Total 110.360 96.571 91.154 14% 6%
Operating Income
Productivity and Business Processes 12.924 11.389 11.756 13% -3%
Intelligent Cloud 11.524 9.127 9.249 26% -1%
More Personal Computing 10.610 8.815 6.183 20% 43%
Total 35.058 29.331 27.188 20% 8%
Revenues Operating income
Guesstimate: Cost = Revenue – operating income = 32.000
Cost-to-revenue ratio = Cost/Revenue = 74%
To close the profit gap,
Microsoft should attempt to
increase sales for both
notebooks and 2 in 1 devices.
This is because those are the
fastest growing devices 0
20
40
60
80
100
2018 2019E 2020E 2021E
Desktop Notebook Detachable Tablet Slate tablet
Fast growing
Fast growing
Industry growth per segment, BN dollars

30. Appendix 10, Office annual subscription prices
These prices do not include the
hardware. As it can be noticed,
each license comes at a price
per user and varies depending
on the subscription

31. Appendix 11, Market sizing (Strategy n°1)
Large corporations market sizing guesstimate
N° of listed companies (global, millions) 0,043
Ratio executive to employee 0,25
Average N° of employees per listed firm 100
Total executives in listed firms 25
Start-Ups market sizing guesstimate
Global population (millions) 8200
Unemployed (10%) 820
Students (around 20%) 1640
Under 18 (25% estimated) 2050
Over 65 (retirement age, 8%) 656
Remainder 3034
Average size of a company 20 employees
N° of companies worldwide (millions) 151,7
Of which, listed 0,043
Start-ups/Mid-sized firms 151,7
Assuming to adopt
the “start-up” price
for non-listed
companies, the
total market size for
hardware-software
bundles is 60
billions, of which 44
billions coming from
laptop sales
Sources:
% of students worldwide gathered from
https://www.census.gov/newsroom/press-
releases/2017/school-enrollment.html
% of people under 18 and over 65 gathered from
https://www.indexmundi.com/world/demographics_profil
e.html
Average size of a company gathered from
http://answers.google.com/answers/threadview/id/27984
3.html
Managers to employee ratio gathered from:
https://www.quora.com/How-many-managers-per-
employee-should-a-mid-sized-company-have
N° of total companies listed gathered from:
https://data.worldbank.org/indicator/CM.MKT.LDOM.NO

32. Appendix 12, Strategy matrix for “The Office Bundle”
Strategic lever Strategic option 1 Strategic option 2 Strategic option 3 Strategic option 4 Strategic option 5
Arena
Target (all)
individuals
Target gamers
Target content
creators
Target occasional
user students
Target
corporates*
Value proposition
Market products
offline
Market products
online
N/A N/A N/A
Value creation
Upgrade existing
products
Invest in new
products
N/A N/A N/A
Value capturing
Optimize
pricing**
Enhance
efficiency
N/A N/A N/A
*The pricing strategy I design allows to target both low-income start-ups and larger corporations
**Price optimization consists of bundling products together

33. Appendix 13, Strategy matrix for “The Surface Momentum”
Strategic lever Strategic option 1 Strategic option 2 Strategic option 3 Strategic option 4 Strategic option 5
Arena
Target (all)
individuals
Target gamers
Target content
creators
Target occasional
user students**
Target corporates
Value proposition
Market products
offline
Market products
online
N/A N/A N/A
Value creation
Upgrade existing
products
Invest in new
products
N/A N/A N/A
Value capturing Optimize pricing*
Enhance
efficiency
N/A N/A N/A
*Price optimization is necessary, as several customer reviews seem unhappy with the way Microsoft markets their products (selling accessories separately)
**Occasional users are considered a subcategory of customers with very sporadic purchases. While they are included for precision and completeness, they should not be the target of
any strategy

34. Appendix 14, Strategy matrix for “The Cloud Gaming”
Strategic lever Strategic option 1 Strategic option 2 Strategic option 3 Strategic option 4 Strategic option 5
Arena
Target (all)
individuals
Target gamers
Target content
creators
Target occasional
user students
Target corporates
Value proposition
Market products
offline
Market products
online
N/A N/A N/A
Value creation
Upgrade existing
products
Invest in new
products*
N/A N/A N/A
Value capturing Optimize pricing
Enhance
efficiency
N/A N/A N/A
*High investments would be needed to develop a disruptive product. As of now, Microsoft already committed to the production of new hardware (non-laptop) to market in the next 2
years. Therefore, while this strategy has certainly a degree of creativity, it would lead to severe product cannibalization and an overall decline in profits, seen from a cost-benefit
analysis

35. Appendix 15, Strategy matrix for “The Creative Wave”
Strategic lever Strategic option 1 Strategic option 2 Strategic option 3 Strategic option 4 Strategic option 5
Arena
Target (all)
individuals
Target gamers
Target content
creators
Target occasional
user students
Target corporates
Value proposition
Market products
offline
Market products
online*
N/A N/A N/A
Value creation
Upgrade existing
products
Invest in new
products
N/A N/A N/A
Value capturing Optimize pricing
Enhance
efficiency
N/A N/A N/A
*The base idea would be to target creatives, artists and content creators such as YouTubers, musicians etc. By becoming industry standard, Microsoft could gain in branding and
image. However, this strategy seems long-term and a quick look at the numbers show to be targeting an audience that is niche and quite out of the scope of the firm, that is more
oriented towards productivity and efficiency in the workplace

36. Appendix 16, Strategy matrix for “The Nokia Reboot”
Strategic lever Strategic option 1 Strategic option 2 Strategic option 3 Strategic option 4 Strategic option 5
Arena
Target (all)
individuals
Target gamers
Target content
creators
Target occasional
user students
Target corporates
Value proposition
Market products
offline
Market products
online
N/A N/A N/A
Value creation
Upgrade existing
products
Invest in new
products*
N/A N/A N/A
Value capturing Optimize pricing
Enhance
efficiency**
N/A N/A N/A
*I explained that customers need a uniquely integrated experience, such as that provided by Apple or towards which Google is moving. Notwithstanding the high performances of
Microsoft’s hardware, the firm is still lacking full integration, which makes their products relatively less appealing to the mass audience. However, I gave a very low score to this
strategy because of some reasons:
§ Current C.E.O.’s first move was to sell off Nokia, therefore he might not enjoy the idea of a reboot
§ The market is saturated with lowering contribution margins, due to the Chinese incumbents who produce at a lower price providing good products to the end customer
§ Microsoft incurred into several issues to adapt Windows to smartphones, thus there is no reason why they would not encounter the same issues again
§ The operation would be costly and with an uncertain result, therefore I would not feel confident suggesting such strategy
**Such strategy would require production efficiency (e.g. produce in China) and capital efficiency (find right ways of financing and explain choice to investors in order to not lose value
and market confidence)

37. Appendix 17, The Office bundle impact calculation
I adopted the following formula to calculate the profit gain for the hardware segment:
Profit gain formula (per market) = Subscription fee * (hardware percentage of the bundle/total
value of the bundle) * N° of employees or managers per company * N° of companies worldwide
* (1- cost ratio) * Mkt share of Office Suite worldwide
Bundles and data are provided hereby:
Surface product
revenue
Office
component
Cost stickiness ratio 74%
Start-Up price 19,99 14,99 5
Middle price 29,99 21,74 8,25
Executive price 49,99 30 19,99
According to Statista, Office Suite has a 41% market share in the US. This market share is
used as proxy for the global market

38. Appendix 18, The Surface momentum impact calculation
Current revenues 5
Cost ratio 0,74
Costs 3,7
Current profit 1,3
Total laptop industry 166
Bull case (20% mkt share) 8,632 20%
Mid-case 6,9056 16%
Bear case (current mkt share) 5,1792 12%
Bull case 3
Mid-case 2
Bear case 0
Profit gap 3

39. References
Microsoft is on the right path to reach a trillion dollars valuation
Company timeline gathered from Microsoft’s website, “Facts about Microsoft”
Microsoft’s stock performance (Adjusted closing values) gathered from Yahoo! Finance
Estimate of losses arising from Nokia gathered from The Verge and Forbes
On Satya Nadella: Relevant information on the C.E.O. found on BBC and Business Insider
Profit gap is estimated to be $3BN, with a potential $102 billions increase in value
All the calculations are based on data gathered from Microsoft’s latest annual report.
The multiples’ valuation approach was gathered from the CFA curriculum, level 1: ”equity valuation & fixed income”. More on multiples in the appendix
Microsoft’s multi-faced platform-based business model is in line with competitors
On platform-based business models: Van Alstyne, Parker & Choudary, “Pipelines, Platforms, and the New Rules of Strategy”, Harvard Business Review, April 2016
On customer experience: Simone Gammeri & Raffaele Breschi , “Customer experience: New capabilities, new audiences, new opportunities”, McKinsey, 2017
High operational efficiency has already been reached
All data in the slide was gathered from Microsoft’s Annual Report, FY 2018
Microsoft should push devices, given competitors’ low understanding of the market
Market growth for specific product was deducted by combining data found on Euromonitor with estimates from notebookcheck.net
Abernathy, W. J., & Utterback, J. M. (1978). Patterns of industrial innovation. Technology Review, 80(7), 40–47.
Not all competitors own the strategic resources to exploit the change
Graphical layout idea gathered from the BCG: “Data analysis”
Financial & innovation data gathered from companies’ annual reports
Not all competitors fully understand the market
I gathered data on global market share from Statista
I implemented calculations regarding Microsoft’s market share using backwards calculation based on data gathered from the annual report 2018
I further implemented data using data on total worldwide shipments found on idc
I completed the analysis using data from Alphabet’s yearly annual report and Tech Times. Calculations can be found in the appendix
Information regarding the competitive landscape gathered from Investopedia and Business Insider
Microsoft fully understands the market
To perform the market segmentation, I used own knowledge, several customers’ reviews (e.g. Marquees Brownlee)
Market segmentation procedure gathered from “An Introduction to Customer Segmentation”, Magento (Adobe), 2019
Laptop market segmentation gathered from Majid et al., “Marketing strategy of Lenovo laptops”
Microsoft is not pushing devices enough, as hardware underperforms industry
Cloud computing market size and growth gathered from Forbes (Gartner Forecasts)
Computer electronics market size and growth gathered from Euromonitor (Passport), Erasmus University Databases
Desktop OS market share gathered from Statista