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Industry Analysis:
Microsoft Corporation

Prepared under the direction of:
Dr. Mary Tucker in Management 691.

Authors: Jonathan Leal, Sonya Faust, Kiesha Gasparac, Kumi Takimoto

Date submitted: August 1, 2000

Executive Summary

Purpose of the Report

The purposes of this report are to (1) present a comprehensive analysis of Microsoft Corporation, and to (2) present recommendations for changes. Given the recent anti-trust ruling, many observers are waiting and watching to see how the company will react on a long-term basis.

Recommendations for the Company

 First, begin a public relations campaign to improve Microsoft's public image. This has already begun, but we have some additional suggestions, including focusing on achievements and contributions, using "real people" in advertising campaigns, developing a trademark image, and spotlighting the company's charitable activities.

 Next, we believe that Microsoft could increase its concentration on the hardware market. More companies are beginning to install their own software on their own hardware, thus cutting into Microsoft's market share. By going into hardware Microsoft could develop its own wireless products, create alliances with mobile phone manufacturers, and open a permanent hardware division at the company's headquarters.

 Currently, Microsoft only holds a small five percent of the applications market share. In turning the focus on applications, Microsoft would avoid further legal action from the government. The company could earn a higher profit margin by selling applications separately instead of in pre-bundled packages. Microsoft could also improve the universality of its applications and develop special versions for individual companies.

 Finally, we believe that if Microsoft works on conduct relations in the operating systems division there will be great benefits. Since the operating system's control of 86 percent of the market brought about the antitrust lawsuit, making compensations could prevent further litigation. Revealing the source codes for the Windows program, creating cheaper alternative versions of Windows, lessening the licensing restrictions, and overall simplification are several possibilities.

Microsoft's long-term future

Since Judge Thomas Jackson's order that Microsoft be split into two companies has been postponed until the company has finished its appeals, the chance of having to split up is only five percent, especially if Microsoft is willing to settle out of court. In the settlement, Microsoft will most likely have to make some concessions, but they would have far less of an impact than would a split into two companies.

Industry Analysis

Click here to access the main report
Bibliography

Appendices

SWOT analysis
Microsoft history
Current financial data and top competition

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