Microsofts Diversification

Strategy
moving beyond the personal computer
(PC) software business and into other
devices such as mobile phones, television
set-top boxes and game consoles.

Major issues
What are the key drivers in the software
industry?
What drove Microsofts diversification?
The essence of Microsofts old and new
strategies.

What are the main differences between the two?

Microsofts new diversification strategy

What are its main features?

The key competitors

How would Microsoft compete with these players?

Driver of diversification
The change of IT industry
The ways of using and purchasing PC
The growth of the market
Slow in mid-2000s but may grow again

Technological concerns
Open access OS
Broad internet technology

Social culture changes

Economic concerns
The crisis of late 1990s
The dot-com bubble
Sept 11

Change of IT industry

Driver of diversification (cont.)

Technology
Windows: complicated giant with everything included
Long delay of launch of Vista
Consumer vs. enterprises

Business model
Free vs. Charge
Legal concerns
Anti-trust law

Growth Factor of IT
Service oriented architecture and web service
Enterprise software
IT infrastructure

Applications as services
Web based applications
Free access
Desktop and internet bridge

Extended internet
Social computing

Microsoft: the trajectory

Founded in 1975 by Bill Gates and Paul Allen
DOS: 1980
Outsourcing from IBM
Bought QDOS

Windows: mid-1980s
A graphic-based DOS Borrowed from Apple

IPO: 1986
Windows NT: 1993
Compete with UNIX

Microsoft: the trajectory (cont.)

1995: MSN
Netscape , Yahoo etc.

1998: Anti-trust Charge

stifled internet browser competition and limited
consumer choice
Restrictions on the licensing policies for its operating
systems
Settlements with Netscape, Sun Microsystems and
IBM

2004: EU anti-trust charge

2006: Vista , a long delay

Diversification
Moving beyond Windows-based PCs
From low level of diversification to moderate
diversification

Re-organized company into three

divisions
Platform product and service division
Business division
Entertainment and device division

How?
Platform
MSN: Search, game, webTV, mail, music, radio etc.
Acquired Groove network , Sybary software, Front bridge

Business
Acquired Great Plains
Free online services
Applications for accounting, E-commerce etc.

Enterteinment and devices

Video gaming: Xbox launched in 2001
Mobile c communication
IPTV, MSNBC

What is missed?
Monopoly in OS: good or bad
Strategy of diversification
Kill one competitor and then?
Buy next and then?
What is the innovation generated by Microsoft?
What is led by Microsoft?
Tradeoffs: the costs and benefits of seeking for
synergies