SWOT Analysis

Strengths 1. Brand loyalty. Over the years, Microsoft has been the leading operating system and software provider, which resulted in more than 90% market share for PC operating systems. Most people grew up using its easy to use operating system, are familiar with it and will keep using it. Few other brands are capable to compete with Microsoft for this reason. Even open source operating systems, which are completely free and well suited to use for common user, find it hard to attract users. 2. Brand reputation. According to Interbrand, Microsofts brand is the 5th most valuable brand in the world, valued at $ 57.8 billion. Forbes listed the company as the 7th most reputable company in the world. Brand reputation leads to higher sales and greater market share. 3. Easy to use software. Windows operating systems and office software products are so popular not just because of Microsofts exclusive control of the market, strong distribution channels and good brand reputation but also because its products are of great quality and really easy to use. 4. Strong distribution channels. The company works with all the major computer hardware producers such as Lenovo, Dell, Toshiba and Samsung and major computer retailers to make sure computers would be sold with already pre-installed Windows software. The company also invested in Dell and Nokia to tighten its relationships with these companies. 5. Strong financial performance. Microsoft grew its revenues by 20% from 2008 to 2012 and holds more than $63 billion of cash and cash equivalents that can be used for acquisitions and substantial investments into research and development. 6. Acquisition of Skype. With nearly 300 million users, Skype is a significant boost to Microsofts online presence and have a lot of potential in generating income from online advertising. Weaknesses 1. Poor acquisitions and investments. Few of Microsofts acquisitions were successful and brought not just revenues and products but new skills and competencies to the company. Massive, LinkExchange, WebTV, Danger are just few examples of multimillion acquisitions made by Microsoft but soon shut down or divested. 2. Dependence on hardware manufacturers. Microsoft is a giant software corporation but it does not produce its own hardware and depends on computer hardware manufacturers to develop products that run Windows operating system. If cheap and popular alternative operating systems would appear, hardware manufacturers may simple choose the alternative and Microsoft could do little to change the situation. 3. Criticism over security flaws. Windows operating systems, the main Microsoft product has been heavily criticized for being so weak against various viruses attacks. Compared to other OS, Windows is the least protected against such attacks.

4. Mature PC markets. Only recently has Microsoft entered the mobile technology sector and still heavily depends on its operating systems and software sales for standalone and laptop computers. The market for these products has matured and Microsoft will find it harder to grow revenues in these sectors. 5. Slow to innovate. Microsoft has huge research and development resources and great position to enter new markets with innovative products but constantly failed to do so. It had an opportunity to be the first player in online advertising but missed the opportunity. Its entrance to mobile operating systems was also too late, while Google and Apple captured the market share. Opportunities 1. Cloud based services. Microsoft could expand its range of cloud services and software as the demand for cloud-based services is expanding. 2. Mobile advertising. Mobile advertising markets are expected to grow in double digits over the next few years and Microsoft has a great opportunity to tap into these markets with its mobile operating systems. 3. Mobile device industry. Smart phones and tablets markets will grow steadily over the next few years and Microsoft could exploit this opportunity by introducing more of its own tablets and a new company phone. 4. Growth through acquisitions. With a huge reserve of cash Microsoft could start acquiring new startups that would bring new technology, skills and competences to the company. Threats 1. Intense competition in software products. Microsoft is more than ever on the pressure to introduce successful operating systems both in PC and mobile markets as such competitors like Google and Apple have already established positions. 2. Changing consumer needs and habits. Customers shift from buying laptops and standalone PCs to buying smart phones and tablets, the markets, where Microsoft has only a modest market share and may never establish itself. 3. Open source projects. Many new open source projects are coming to the market and some of them became quite successful, such as new Linux operating systems and open source office. Open source projects are free and so they can become an alternative to expensive Microsofts products. 4. Potential lawsuits. Microsoft has already been sued for many times and lost quite a few large scale lawsuits. Lawsuits are expensive as they require time and money. And as Microsoft continues to operate more or less the same way, there is high probability for more expensive lawsuits to come.

Industry Analysis
Microsoft has been in competition with the likes of Apple Inc., Google Inc., Samsung Electronics Co., Ltd., International Business Machines Corporation and many others for years now in the computer software and electronics industries. But as of late Microsoft has stepped into a new industry the mobile industry. In late 2010, Microsofts Windows Phone platform burst onto the scene and was billed as the savior that would make the Redmond, Washingtonbased company relevant in mobile once again. But that didnt happen. In early 2012, Microsoft and Nokia launched the first real Windows Phone that would make Windows Phone a real competitor after a year and a half on the market with little to show for it. But that didnt happen. Now, the game is different and Microsoft has created a mobile platform that potentially offers deep integration with its core product Windows 8. Forbes says yes, but not for some time. According to a number of industry watchers speaking with Forbes contributor Tom Groenfeldt, Windows 8 and Windows Phone 8 finally pose a real threat to Apple and its dominant position in mobile. Thats the good news. The bad news, however, is that users arent yet convinced that Microsoft will deliver on the promise of a secure, integrated experience across computers, tablets and smart phones. According to research analyst Maribel Lopez, sales might not really begin to pick up until sometime in early 2014. As far as the computer software industry goes Microsoft Corporation is one of the best-known software companies in the world. The company is famous for its Windows and Office software. In addition to software products the company manufactures and develops consumer electronics such as tablets and game system.

Competitor Analysis
In the personal-computer operating-system software market, Microsoft reigns supreme with disk operating systems and Windows. It has been able to establish its dominance in this industry because of superior marketing and research as well strategic partnerships with a large majority of the hardware vendors that produce personal computers. This has allowed disk operating systems and Windows to become the operating environment, maybe not of choice, but of necessity for the majority of personal computers on the market. Microsofts primary competitors, Apple and IBM, both have competing operating systems with a great deal of marketing to accompany them; however, both suffer from weaknesses that Microsoft has been able to exploit. Apple's operating system for its Macintosh line of computers, while superior in many ways to disk operating systems and Windows, is limited to the Macintosh personal computers; therefore, it doesn't run many of the popular business applications that are readily available to disk operating systems and windows. To an extent, IBM's OS/2 operating system suffers from the same problem. While it will run on all of the personal computers disk operating system and Windows can run on and even handle Windows applications, the number of programs produced for OS/2 in its native environment is very small.

Competitors 1. Apple Strengths Customer loyalty combined with expanding closed ecosystem Apple is a leading innovator in mobile device technology Strong financial performance ($10,000,000,000 cash, gross profit margin 43.9% and no debt) Brand reputation Retail stores Strong marketing and advertising teams

Weaknesses 2. Google Strengths Open source products and services Quality and customer experience are the primary objects Financial situation Access to the widest group of internet users worldwide Strong patents portfolio Product integration Culture of innovation High price Incompatibility with different OS Decreasing market share Patent infringements Further changes in management Defects of new products Long-term gross margin decline

Weaknesses Relies on one source of income Unprofitable products Patent litigations

Company Analysis
Microsoft is the leading IT brand in the UK. Its Windows operating system is used by around 60% of the population on PCs and its software packages including Office are also successful. The company has recently enhanced its online offerings including Bing, MSN and Hotmail. In 2012 Microsoft gained revenues of $ 73.72 billion with a profit of $ 16.97 billion. Even with their tremendous success Microsoft is still trying to improve the companys success. In 2013 they have made a slight subtle change in their marketing strategy and how they market there company to its partners and the outside world. They are humanizing their marketing, messaging and products. Gone is the Spock-like precision of presentations packed with roadmaps, mindnumbing metrics and intricate feature analysis. Microsoft is learning that telling a good story trumps terabytes of metrics.

Customer Analysis
Microsoft is deeply influenced by the feedback they receive from studies such as their Microsoft Customer and Partner Satisfaction Survey, Enterprise Customer Satisfaction Survey, as well as their product satisfaction surveys, usability studies, online feedback forms, research forums, and more. Many customers also choose to give them feedback through the Customer Experience Improvement Program, a product-based technology that lets you provide real-time feedback about your experiences with Microsoft products. It helps them and their partners resolve bugs, prioritize content for service packs, and identify new features for future product releases. Customer and partner feedback is integrated throughout the product development process, helping us build value into every product we make. Extensive feedback from customers and partners fuels key innovations in every major Microsoft product area, from Microsoft cloud services, Windows Internet Explorer, the Windows operating system, Windows Phone, and Bing. This feedback has also shaped their partner support programs, their product licensing and pricing, and joint business planning efforts with many of their large enterprise customers. Microsoft was named a finalist for 2012 Temkin Group Customer Experience Excellence Award.

Target Markets
Microsofts target clientele is young teens and adults. As young adults leave the nest for college and beyond, they go through extraordinary life changes. Constant through all of this change is young adults connection to media and technology. This always-on relationship with devices

makes it challenging to efficiently break through to these media-centric consumers. Theyre technically savvy and have grown up multi-tasking. Nearly 40 percent of Young Adults (ages 1834) earn over $75,000 per year. Because they are voracious consumers of media, theyre exposed to a high volume of marketing messages. Therefore, its critical ads are delivered at the right time and through the right channels to be most effective.

Points of Difference
The operating system is the main difference separating Apple and Microsoft computers. Microsoft releases its operating systems in different levels. For example, you could buy Vista Home Basic, Vista Home Premium, and Vista Ultimate. Each different version of Vista has more features. Also, Microsoft sells upgraded operating system software which allows will allow you to upgrade your current Windows operating system for a somewhat lower price. Apple releases their operating systems in one basic level. Microsoft is using privacy as a differentiator in a major attack on its rival Google. The technology company has launched a comprehensive online, television and print campaign in the US, taking aim at Googles handling of users personal information. The Scroogled campaign has so far targeted Google Play, Gmail and Google Shopping in a five-month crusade that shows no sign of slowing. The campaign accuses Google of, among other things, scanning users emails for key words that will determine relevant ads to place alongside the messages. It also says it is sharing personal information that it gathers from people who buy applications that will run on Googles android software, including names, email addresses and the neighborhoods where users live. It also claims that Google does not clearly warn users that this is happening. Some have labeled Microsofts campaign as anti-Google propaganda and a scare campaign, countering that Dont get Scroogled by Gmail is just an advertisement for Outlook.com, Microsofts new email service. Microsoft works to provide a better product at a lower price. Apple makes you pay extravagant prices for the same hardware as most computer manufactures and your getting a subpar operating system to boot.

Positioning
Microsoft might never be as sexy as Apple and its sleek consumer products, but as this analysis will illustrate it has a network of products and a market position that can be leveraged into some serious money-making if viewed on a few years' time horizon. Never mind the Surface, let's talk Microsoft essentials - Office and Windows. First, let's have some context. Microsoft has looked very pale over the last 5 years. Market cap has been essentially flat which many believe is not "fair love" from the market. However, Microsoft is extremely well-positioned to capitalize on its current position and the recent market trends during the next 5 years. This is based on the following hypothesis: Microsoft has a unique opportunity to leverage its existing market dominance with Windows and Office, and new user behavior and technology (smart phones,

collaboration, connectedness), to build an unrivalled enterprise ecosystem. Microsofts dominance is a well-known truth so its no need to expand about that. Instead, we'll focus on Microsoft's new products and how they align with modern user behavior and play together to form an enterprise ecosystem.