WINDOWS 8 CASE STUDY

SWOT

PESTLE

PORTERS FIVE FORCES

VALUE PROPOSITION

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SWOT

Strengths
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User friendly software (Easy-to-use software)

At least visually, Windows 8 is the simplest version of the operating system
ever. While operating systems have largely seen only incremental
innovations on the basic formula, i.e. the user interface mimics a real-life
desktop, with documents filed in folders and pictographic icons that act as
visual metaphors of a software programs function, since Windows 1.0,
Windows 8 represents a rupture with this blueprint. The new face of
Windows is a grid of tiles; clicking on a tile will bring up your news, or your
inbox, or your documents. Even the famous start button, which had been
occupying the lower left corner since Windows 95, is gone. Though users
can still access the old desktop, it has been relegated to an application within
Windows 8. (http://www.fastcodesign.com/1670705/microsoft-new-designstrategy)

Highly qualified team/staff

Microsoft hires a mix of university and industry talent worldwide and try to
retain them by offering an exceptional working environment, scale in
resources, broad customer reach, competitive compensation and benefits.

Large market capitalisation

Microsoft is in the top 20 largest US companies by market capitalisation, or
the market value of a company's outstanding shares.
(https://www.theonlineinvestor.com/slideshows/?
slideshow=largecaps&page=6)

Strong Research and Development

Microsoft employs approximately 128,000 people, of which 44,000 are in
product research and development.

Image: Research and development expenses

Source: http://www.microsoft.com/investor/reports/ar14/index.html

Strong partnership with hardware manufacturers

Microsoft does not focus on hardware development. It distributes software
through Original Equipment Manufacturers (OEMs) that pre-install
Microsofts software on new PCs, tablets, servers, smartphones and other
devices that they sell to end customers. Therefore, Microsoft needs
partnerships, which will pre-install Windows operating system on computing
devices. Microsoft have distribution agreements with all of the multinational
OEMs, such as Acer, ASUS, Dell, Fujitsu, HTC, Hewlett-Packard, LG,
Lenovo, Samsung, Sony, Toshiba, and with regional and local OEMs.

Advanced pressure sensitivity technology in touch system

Windows 8 features touch technology is in a state of advancement that is
unprecedented in any of its competitors. The platform allows pressure
sensitivity to an extent that has made some third-party party app developer
choose the system exclusively for providing full technological support for
their ideas, despite the popularity of Apples iPad, which carries iOS as its
operating system. One example is the app StaffPad, which has been built
solely for Windows 8, as the developer did not wish to compromise the apps
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functionality by adopting a more popular platform with the wrong kind of

technology. StaffPad creator David Hearn states in StaffPads blog:
One of the questions we get asked the most is: Why did you build this only
for Windows 8?. It can seem strange at first glance, especially considering
the popularity of iOS and Android. Right from the start, we knew that
Windows 8 was the only platform that would let us build our dream the way
we wanted to, and it's the only OS that supports pen input in a meaningful
way.

Weaknesses
-

Criticism over security flaws

Microsofts operating systems have the greatest number of vulnerabilities, as
illustrated in Figure X, and according to National Vulnerability Database
(NVD).

Figure X: Number of vulnerabilities of different operating systems

Source: http://www.gfi.com/blog/the-most-vulnerable-operating-systemsand-applications-in-2011/
-

Dependence on hardware manufacturers

Former Microsoft chief executive officer Steve Ballmer has declared that
Microsoft was considering making more of its own software, as the company
had not been able to find a reliable design partner. That is the main
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difference between Microsofts and Apples business models, and Apples

share price has outperformed Microsofts consistently. Moreover, if a cheap
software that was able to match Windows popularity were to appear,
hardware manufacturers that formerly developed products that run Windows
may choose the alternative. (http://www.informationweek.com/itleadership/does-microsoft-really-need-to-make-its-own-hardware/d/did/1107701?)
-

Bugs in first releases of products

Microsoft confirmed and then fixed a widespread bug in the Windows 8
release preview, which causes PCs based on newer Intel chipsets to freeze on
a seemingly random basis, and once it happens, there is no course of action
but a hard reset of the machine. Google also found and published a bug on
Windows 8.1 which consisted of a security flaw that allowed lower-level
users to become administrators, giving them access to sensivitive server
functions they would normally have no right to.
(http://www.engadget.com/2015/01/02/google-posts-unpatched-microsoftbug/ )(http://windowsitpro.com/windows/microsoft-fixes-serious-windows8-release-preview-bug)

Occasional technical issues with Windows updates

Automatically installed Windows updates can cause system malfunctions,
such as result in missing drivers. There are number of occasions where
Windows updates have caused technical disadvantages to users with negative
implications to their brand image. The most notable case is the Windows 7
update of KB 3004394 in December 2014 that automatically blocked the
installation or update of graphics drivers such as AMDs new Catalyst
Omega and caused difficulties in installing GeForce drivers and a set of
other drivers and software
[http://www.forbes.com/sites/jasonevangelho/2014/12/13/new-windows-7patch-is-effectively-malware-disables-graphics-driver-updates-andwindows-defender/]

Internet Explorer, which is Windows browser application, has been

losing market
From January 2011 to December 2011, while Chrome and Firefox have
increased its market share and have dominated the market, IEs market share
has been decreasing, as can be seen in Figure X.

Figure X: Market share distribution of browser applications

Source: http://www.w3schools.com/browsers/browsers_stats.asp
Threats
-

Piracy
At the beginning of 2011, Steve Ballmer, who was the Microsoft CEO, met
government officials, including United States president Obama, and Chinese
president Hu Jintao to discuss how only 1 in every 10 copies of Windows in
China was legit (http://www.neowin.net/news/ballmer-9-out-of-10-copiesof-windows-in-china-is-pirated).

Currency exchange rates

Currency exchange rates affect demand for application/operation software
and hardware, and fluctuating currencies can negatively impact revenues in
the global marketplace.

Antitrust law
In 1998, the United States Department of Justice accused Microsoft
Corporation of becoming a monopoly and taking abusive practices contrary
to the Sherman Antitrust Act 1890
(http://www.stern.nyu.edu/networks/Microsoft_Antitrust.final.pdf)

Emergence of competitors
Microsoft Corporations primary competitors include some of the most
prominent technology companies in the industry. Well-known brands such as
Apple, Google and IBM are examples. The company faces stiff competition
in several key areas of the technology sector, as it is a diversified corporation
that provides many types of products and services.

PESTLE

Economical
-

Changes of labour costs and costs of other resources

Particularly, the global economic and financial crisis of 2007 2009 had
proved to have highly detrimental impact on Microsoft, leading to layoffs of
more than 5,000 employees in
2009[http://money.cnn.com/2014/07/17/technology/enterprise/microsoft-jobcuts/] and this illustrates the potential impact of economic factors on
business performance. Changes in exchange rates between USD and other
currencies is another significant factor affecting Microsoft profit reports due
to the fact that the company generates substantial part of its revenues from
international markets.

Social
Microsoft is greatly impacted by a range of social factors such as demographic
changes, changes in consumer attitudes and opinions towards consumer
electronics products and services, media perception of the brand and health and
welfare of target customer segment. It can be argued that the impact of the
majority of modern social factors can be positive in relation to Microsoft
products and services.
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Accessibility of technology to disabled people

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Microsoft has a commitment to promoting accessibility, thus making it easier for

everyone to see, hear, and use technology, and to personalise their computers to
meet their needs and preferences. Accessibility is what makes computer use
possible for many people with impairments. Microsofts mission is to enable
people and businesses to realise their full potential, and the company claims to
deliver on that commitment by striving to create technology that is accessible to
everyone of all ages and abilities.
http://www.microsoft.com/enable/microsoft/mission.aspx
Legal

Antitrust laws
http://www.reuters.com/article/2014/08/26/china-antitrust-microsoftidUSL3N0QW1C520140826
A recent probe by Chinas State Administration for Industry and Commerce
into the ways Microsoft distributes its Internet Explorer browser and
Windows Media Player and sells its Office and Windows software in
China[1] can be mentioned as a relevant example of impact of a political
factor.

Environmental
-

Carbon Neutral Company

Microsoft made a commitment to make their operations carbon neutral in May

2012, and thus achieve net zero emission for their data centers, software
development labs, offices, and employee business air travel.
https://www.microsoft.com/environment/our-commitment/our-footprint.aspx
-

Greener IT initiative

Microsoft is committed to developing software and technology that helps people

and organisations reduce their impact on the environment. Some projects include
Energy-smart buildings and Reducing Travel and Carbon with Unified
Communications.
-

Cloud Computing

Cloud computing is about using a network of remote servers hosted on the

Internet to store, manage, and process data, rather than using a local server or
personal computer. Microsoft Azure is Microsofts cloud computing platform,
which allows the building, deploying, and managing of applications and services
through a global network of Microsoft managed datacenters.
PORTERS FIVE FORCES
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Threat of new Entrants

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Windows is the standard operating system in PCs, as can be seen in Figure

X. Basically, Windows competes against itself with its outdated operating
systems (http://readwrite.com/2012/08/03/microsofts-biggest-windows-8competitor-itself). It has many partnerships and alliances with Original
Equipment Manufacturers (OEMs) that help maintain its position. Besides
that, other competitors, such as Apple, have small operating system market
share. To effectively compete, Microsoft affirms that they provide choice,
value, flexibility, security, an easy-to-use interface, compatibility with a
broad range of hardware and software applications, and the largest support
network for any operating system to customers.

Figure X: Operating systems market share

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Source: http://www.netmarketshare.com/operating-systemmarketshare.aspx?
qprid=9&qpcustomb=0&qptimeframe=M&qpsp=143&qpnp=13
-

Power of suppliers
Suppliers do not possess much bargaining power, considering that Windows
is the most reliable operating system in the market, and PC manufacturers
find it hard to sell their products with any other system.

Power of Buyers
Microsoft has a large number of faithful customers and it sells a
comparatively low volume of its products to each buyer, so that they have
little significance as individuals. Companies, however, have more
significance as potential buyers due to larger volumes, and they are usually
resistant to change of their operating system, especially from Windows 7,
which maintains the basic format of former Windows versions, to Windows
8, an operating system that has had dramatic changes in relation to past
versions and is more tablet-oriented. There is a higher bargaining power for
these customers.

Availability of Substitutes
Operating systems such as Linux and Mac OS have experienced increasing
acceptance in the market, though it is still primarily dominated by Windows.
Windows XP and Windows 7 actually represent the most fierce competition
for Windows 8, as some users are just comfortable with the old interface and
reliable system.

VALUE PROPOSITION
http://www.financial-planning.com/video/The-Windows-8-Value-Proposition2683336-1.html
http://www.onwallstreet.com/video/The-Windows-8-Value-Proposition-2683336-1.html
Tom Feher, Microsofts Financial Services Industry Director states that Windows 8
value proposition consists of providing a platform to achieve the capabilities of being
productive, proactive and flexible. Additionally, Windows 8 can run all Windows 7 and
Windows XP applications, which reaches out to those who still have core applications
on this system. Windows Store and Marketplace allows the user to run new Windows 8
applications. Core Microsoft applications customers are used to are also still available,
like Office, Outlook, and business apps.
Windows users, who are accustomed to the desktop on the previous versions of
Windows, will have access to it as an application, and also be able to pin applications or
documents which are most frequently run on the start-up screen. This allows Windows 8
to be configured to the look and feel the user wants, whether it be on Surface
(Microsofts tablet), a full-blown PC or Windows Phone.

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