About Microsoft

• Created in 1975 by Paul Allen and Bill Gates

• Two main products:

• Other products:

Microsoft’s Current CEO

Steve Ballmer

5W 1H

• Who – Microsoft• What – Falling behind its competitors• When – January of 2000• Where – Worldwide• Why – Leadership that is afraid to take risk• How – Innovative projects are being rejected

The P’s of Marketing

• Product – Windows Operating System• Price – Upgrades start from $130, Full versions

start from $230• Promotion – Not much promotion needed as it

comes standard with all PCs; “I’m a PC and Windows 7 was my idea” commercials

• Place – Downloaded online, purchased in stores, pre-installed

BCG Matrix

The 5 C’s of Pricing

• Customers- Customers are very elastic to prices. If set too high, they will get hardware & software through other means.

• Costs- High initial cost to develop. Low cost to produce.• Competition- Practically monopolizing in PC operating

system.• Channel Members- Relatively consistent between

channels, with some special pricing. • Company Objectives- Lowering prices and therefore

cutting profit margins ; Offering versions of Office for free to compete with Google's Clouding applications suite

Porter’s Five Forces

1. Threat of New Entrants• Windows is the standard operating system in PCs• Customer Loyalty to Microsoft• Global brand name recognition• Development costs

2. Power of Suppliers• Not much due to Microsoft monopoly• No substitutes for PC manufacturers• Included in every out-of-the-box PC sold

Porter’s Five Forces (cont.)

3. Power of Buyers• Not much due to Microsoft’s monopoly on the PC• More buyers = less purchasing power per person

4. Availability of Substitutes• Not many comparable products• Mac OS (Inconvenient to completely change the

computer hardware)• Linux (Not user friendly and does not come

preloaded)

Porter’s Five Forces (cont.)

5. Competitive Rivalry• Computer O.S:

- Windows vs Mac OS vs Linux• Smartphone O.S:

- Windows Phone 7 v iOS(Apple) vs Android (Google)• Web Browsers:

- Internet Explorer vs Firefox vs Chrome• Game Consoles:

- Xbox 360 vs Sony PS3 vs Nintendo Wii

SWOT Analysis

Strengths:• Pioneers of the computer industry• Global name recognition and strong reputation• One of the most established IT brands in the world• Diverse market of products

Weaknesses:• Lack of recent innovation• Bad public perception• Software compatibility issues• Bugs and no open source

SWOT Analysis

Opportunities:• Demand for PCs remains strong• Increasing market of computer users• Smartphone market with Windows Phone 7• Game design, development, publishing, and production

of game consoles

Threats:• Apple and Linux• Rapid development of mobile devices replacing PCs• Software piracy• Open source software

Market Size, Market Penetration, and Market Share

85.01%

6.40% 4.38%1.38% 1.07% 1.75%

Operating System for Computers February, 2012

Windows

Mac

iOS

Android

Linux

Other

Month Windows Mac iOS Android Linux Other

April, 2011 88.91% 5.40% 2.24% 0.66% 0.94% 1.85%August, 2011 86.58% 5.62% 3.38% 1.02% 1.00% 2.41%October, 2011 86.49% 6.54% 3.40% 1.04% 1.12% 1.41%

February, 2012 85.01% 6.40% 4.38% 1.38% 1.07% 1.75%

• Courier

• Kin

• IE

• XBox

• Zune

• Bing

• Skype

75.68%

11.95%

5.92%4.24% 0.51% 1.70%

February, 2012

Google - Global

Baidu

Yahoo - Global

Bing

Ask - Global

Other

• In both the Mobile OS market and the Mobile Maker market; Microsoft’s attempt’s in Market Pentration have been failures

• Microsoft released the Kin in April 2010.• The phones were stylish• at a minimum cost of $70 a month D• Device aimed at

– It didn't have instant messaging– it couldn't play YouTube videos– users couldn't buy online games.

• Only 48 days after the Kin hit stores, Microsoft discontinued the sales• Spent 1-2 billion on R&D into the Kin

Consumer Reaction

• "There's no chance that the iPhone is going to get any significant market share“

• Courier was never launched• Zune was a commercial failure

discontinued Oct 2011• Kin: discontinued just 48 days after

launch

• Xbox• Skype• MS Word• MS Windows