Company Overview
Microsoft Corporation is an American multinational technology company headquartered in Redmond, Washington that develops, manufactures, licenses, supports, and sells computer software products. Founded by Bill Gates and Paul Allen on April 4, 1975, to develop and sell BASIC interpreters for Altair 8800 computers. Microsoft is the world’s largest software maker measured by revenues. It is also one of the world’s most valuable companies with a market capitalization of $223 billion. Let us know more about “Microsoft Swot Analysis & Competitors”.
Product Summary
The company mainly provides products for personal computers running the Windows operating system. Microsoft’s most well-known product is the Microsoft Windows operating systems, Microsoft Office suite for word processing and spreadsheet programs, and Internet Explorer web browser. The company also produces software development tools. Their best-selling programming language tools are the Visual Studio suite of products for various programming languages including C++ and JavaScript. Other tools include the SQL Server database engine and Windows Server systems for developing network programs to provide or access file-sharing or other file storage or networking services.
Markets Geographic Analysis
North America, Asia-Pacific, Europe, and Rest of World (RoW)
Key Players: Microsoft Corporation, Adobe Systems Inc., Oracle Corporation, Google Inc., Symantec Corporation, McAfee Provider, Nikon Corporation, Nikon Corp. Nikon is a Japanese multinational corporation headquartered in Tokyo that produces electronics, precision optics, and photo imaging products also sells equipment. The Company was started in 1917 by Masaru Kato. Some of their well-known products are NIKKOR lenses for DSLRs and mirrorless cameras. It is one of the world’s largest manufacturers of optical lenses for consumer and professional use. Nikon Corporation is a world-leading manufacturer of cameras, lenses, and photo imaging equipment. It also provides medical systems and machine vision optics. The Company was founded in 1917 by Mikio Kodaira, a former university professor who invented the modern Nikon camera. Nikon is a Japanese word for “photography”.
Microsoft’s strengths
1. Microsoft’s greatest asset is that it has top-of-mind brand recall among all PC (personal computer) users throughout the world. Microsoft and its iconic founder, Bill Gates, are well-known to everyone with even a passing interest in computers. This has allowed the corporation to stay ahead of its competitors, even though, as we’ll see later, the Microsoft brand has lost some of its lusters in recent years.
2. A large portion of its business can be seen in the personal computer market, which is highly competitive. But it has proven to be one of the most profitable businesses.
3. Its business is well-suited to international expansion. It has a large presence in China and other markets, and Microsoft’s software is popular there.
4. It can lean on its vaunted brand name; the name “Microsoft” has become synonymous with computing and software applications.
5. The company has a highly capable management team in place, with several people in key positions who have been with the company for more than 25 years.
6. Microsoft’s business is customer-driven. In the face of fierce competition from IBM and others, Microsoft has created a consistent set of features across all versions of its Windows operating system, making it easier for customers to upgrade from one version to the next one when they are ready to do so. This makes it easier for customers to remain within its product line.
7. The company has built brand-name recognition around its operating system, so people are likely to buy Microsoft products even if they don’t have any particular loyalty to the company. But brand equity isn’t everything. The recent failure of Microsoft’s Zune music player shows that most people don’t care about the company’s brand name enough to give it another chance, even if the product is close to being competitive.
8. It can be considered low-risk. It is solid enough that Microsoft makes money most years, but it isn’t so dominant in its market as to be an obvious takeover target (at least not during the last two decades).
Microsoft’s weaknesses
1. Although Microsoft has focused on Windows in recent years, there is also a considerable portion of its revenue that comes from what it refers to as the “cloud”. As with any part of the industry, however, this can be extremely volatile. For example, in June 2013 (when it made this portion of its revenue $720 million), Microsoft’s cloud revenue was down significantly from where it had been over the prior year ($1.41 billion) and down big from its peak in 2008 ($2.22 billion).
2. With its image as a proprietary leader, it would come as no surprise to hear that it has been accused of maintaining a high-handed corporate culture that makes it difficult for employees who want to go head-to-head with the company’s big rivals to succeed at their jobs.
3. Although it has been an astute buyout strategy, Microsoft’s tendency to buy up the rights to use the latest intellectual property from smaller rivals at premium prices means that it often ends up spending more than it should on such acquisitions.
4. It has not done a particularly good job of translating its Windows operating system to other operating systems, and it also does not have a great reputation in its ability to consistently deliver time-to-market on all of its products.
5. The company is highly dependent upon sales and marketing and is extremely susceptible to economic swings, which is both a strength and a weakness.
6. History has been a poor guide for Microsoft’s future profitability. It has been trying to move into new markets as technology has changed, but as the market shifts, Microsoft gets it wrong time and again.
7. The company gets blamed for influencing the Windows UI to the detriment of its users’ experience.
8. Every generation of PC users complains that Microsoft bundles too many features with their operating system. There is often no way to turn them off because they are “integrated” into the operating system by default whether you want them or not.
Microsoft’s opportunities
1. Just like Gillette grew its business by franchising out its brands, Microsoft was able to do the same by licensing out the right to use its Windows operating system to other manufacturers of personal computers. This made it possible for many more manufacturers to enter the market and escape the high costs of R&D for adding support for their own proprietary operating systems.
2. It has proven difficult for new entrants into its market because Microsoft is particularly good at keeping customers within its product line; once they’ve bought one product, they have a much greater likelihood of buying another product from the same manufacturer again in the future.
3. It has a strong, well-funded, and eminently capable management team in place and will continue to add to that team (especially in the future with the retirement of key executives, such as Bill Gates).
4. It has proven to be extremely adaptive in its business model. For example, it has made use of the cloud concept without completely abandoning its traditional business model.
5. It can (and probably should) create a tablet-based on Windows 8.0; this would be restricted to Windows users and would likely be priced higher than an Apple iPad or comparable Android tablets.
6. It has a highly capable management team in place, with several people in key positions who have been with the company for more than 25 years.
7. It has proven to be a left-field inventor of innovations such as its Kinect motion control system and the Zune music player.
8. Microsoft has already produced several digital media devices; it can make them better by designing them from scratch and not having to rely on software features it included in its operating system instead of its devices.
Microsoft’s threats
1. A number of its core technologies are not widely accepted by end-users, which in turn has raised the risk that rivals will be able to co-opt Microsoft’s software in ways that hurt the company in the future.
2. The mobile phone market tends to be extremely volatile, particularly over fairly short periods, which makes it difficult for any company to predict what will happen to its revenues over the next few quarters.
3. There are strong criticisms of how it leverages its proprietary operating system technologies to establish lock-in on customers’ platforms and architectures, thereby lowering their flexibility and increasing their cost of operations.
4. Its business model is very dependent upon its reputation, which can be tarnished by being blamed for issues that are more due to the products it sells.
5. There are pockets of resistance in its market that have proven difficult to conquer so far, even when the product in question is technically superior to what it competes with.
6. It has not done a particularly good job in being able to provide products in a timely fashion, which in turn makes it difficult for them to keep up with competitors in terms of price or perceived performance.
7. In the past, it has been rather reluctant to add features that other operating systems have popularized, such as sharing files and folders over a local area network.
8. It has been relying upon other product providers to do much of its work for it by making use of its ActiveX interface so that other developers can use its code without having to reinvent it.
9. Although a lot of what Microsoft does is proprietary, being so can create a situation where large numbers of customers are deserting because they dislike the direction in which the company is going.
Microsoft’s Major Competitors
1. Apple: Microsoft’s biggest competitor in the operating system market, because it sells systems that run Microsoft’s products.
2. Google: The search giant has developed its operating system for smartphones and tablets, so it is directly competing with the Windows OS products.
3. IBM: It competes with Microsoft in the enterprise software market by selling operating systems for servers, storage systems, and PCs to large organizations. IBM also sells its hardware to use these software products. IBM could become a significant threat to Microsoft if it sold cheaper versions of Windows XP or Windows Vista that are customized for desktop or laptop use, free of charge for PCs.
4. Linux: It is a free operating system that can be used on several products. It is a direct competitor to the Windows OS. By using open-source technology, Linux allows anyone to use it without paying for it. So, in effect, it is also competing with Microsoft’s software licensing business model.
5. Oracle: Like IBM, Oracle competes against Microsoft in the enterprise software market by selling customized versions of its database and application software on the company’s hardware; MySQL and MariaDB are competing directly with Microsoft SQL Server and Access database products.
6. Sun Microsystems has also historically competed with Microsoft in the enterprise software line. It offers its versions of operating systems, databases, applications, and development tools to large organizations.
7. Unix vendors: They use their version of the Unix operating system to sell servers and storage systems to large organizations. A number of them also sell custom versions of their hardware running the Unix OS for these products.
8. VMware is another independent company that competes directly against Microsoft by offering virtualization software that runs on top of an existing OS; this allows multiple OSs to run on a single piece of hardware instead of requiring separate hardware for each one.
Conclusion
It is difficult to predict how the company’s future will play out. Microsoft’s enterprise software is the largest business in its market, but even here its competitors are making advances in areas that affect the company’s bottom line. For example, they can derive more value from their products because they can make better use of cloud computing, or since they only charge for what is used instead of for each software product, they can make better use of their consulting businesses.
It is also unlikely that any competitor has enough power to take over Microsoft in any one area. The company has an extremely capable management team that has managed to adapt the business model when the market situation changed in a way that favored them. The company also has a large number of very loyal customers who will defend the company to death.
