Microsoft Case Study

Company Background :

Microsoft was started by two friends Bill Gates and Paul Allen .They started by writing a programming language for a machine and selling that program and licensed it to Altair. Later they formed the company together and named to Micro-soft an abbreviation for microcomputer software. Company touched a major milestone in 1981 when they licensed MS-DOS. In 1986 Microsoft went public with an initial offering of $21 per share.

In the fiscal ending year June 2009 company reported its first ever drop in sales. The net profit dropped by 17% and company attributed this to the global recession and weak PC market worldwide.

The company operates in five divisions:

Clients : Includes windows product family .Contributes 25% of the overall revenue which comes from the PC manufacturer.

Server and tools: Comprises for server software license and client license. Recorded an annual growth of 8% even during the recession period.

Online services business : Provides advertising platform for publishers and advertisers eg. email,instant messaging and other web based services. During 2009 revenue decreases by 4% in this segment.

Microsoft business division : Largest contributor in terms of revenue primarily includes MS OFFICE and MS dynamics.

Entertainment devices division : Includes services like XBOX video games, Zune music , Mediaroom , mobile and embedded device platform.

Key Competitor:

Apple : Declared world's most admired company third time in a row. Apple is a biggest threat to Microsoft in the PC manufacturing, operating system, online application market. Its product like iPhone and iPad the leading products in the market and has better market coverage in comparison to Microsoft products. They are known for their constant innovation which is one of the major differentiator between Apple and Microsoft.

IBM : World's largest provider of computer services and products. They have most number of patents than any other company in the world. Their intellectual capital portfolio is huge and they have taken various initiatives for constant innovation in the company.

Google : Company started in 1998, nearly 97% of the revenue came from online search advertising in 2008-2009.Accquired various major firms and despite the recession they increased their revenue from $21 B to $23 B in 2009. Their android OS is a huge threat to Apple's iOS platform.

Yahoo : Yahoo formed by two graduate students. Generates from their marketing services provided to advertisers across their websites. Known for their slow innovation process in the market.

Innovation at Microsoft:

When launched MS products are