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Case Study: Microsoft Corporation

Professor Rajendra K. Lagu Department of Electrical Engineering e-mail: rklagu@ee.iitb.ac.in Case Study: Microsoft Corporation Outline of the Presentation Historical Perspective Corporate Fundamentals Products Processes and Organizational Culture Financial Performance Future

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Case Study: Microsoft Corporation

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  1. Professor Rajendra K. Lagu Department of Electrical Engineering e-mail: rklagu@ee.iitb.ac.in Case Study: Microsoft Corporation

  2. Outline of the Presentation • Historical Perspective • Corporate Fundamentals • Products • Processes and Organizational Culture • Financial Performance • Future

  3. Historical Perspective: Dateline • Company incorporation • Growth • Market Dominance • Saturation • Decline

  4. Corporate Fundamentals: Dimensions • Products • Processes and Organizational culture • Financials

  5. Timeline • January 1975: Popular Electronics announces the release of Intel 8080 based microprocessor kit -- Altair • August 1975: Microsoft Corp incorporated by Bill Gates and Paul Allen in Albuquerque, New Mexico • October 1975: Basic compiler for Altair • April 1978: Intel announces 8086 processor, Microsoft adds COBOL compiler to its range • January 1979: Microsoft moves to Seattle, Washington • February 1980: Microsoft ports Unix to microcomputers under the name Xenix • August 1980: IBM managers visit Microsoft

  6. Timeline... • February 1991: MSDOS runs for the time on an IBM PC prototype • March 1982: Microsoft released FORTRAN compiler for IBM PC • March 1983: Microsoft creates its publishing division -- Microsoft Press • January 1985: IBM releases “TopView” • April 1989: Microsoft releases SQL server • May 1990: Microsoft releases Windows 3.0 • June 1995: Microsoft releases Windows 95

  7. Products • Operating Systems -- DOS, Windows 98/2K/XP • Office Productivity Suite: Word, Excel, Powerpoint, Front Page • Back-office: SQL Server, MTS, IIS, SBS • Developmental Platforms: VC++, .Net • Web services bandwagon • Games and entertainment: Flight simulator, Encarta

  8. Processes and Organizational Culture • Chaos and lack of structure • Emphasis on quality hiring • Extremely hard working staff, privacy • Pride in the company and its products; almost bordering to arrogance • Global mindset • Infighting, cannibalization, giant egos • Non-existent software engineering processes

  9. Financial Performance • Market Capitalization • Revenues per employee per year • Number of millionaires through stock options • Growth: revenue growth, earnings growth

  10. Numbers… • Stock price on NASDAQ: USD 45-55 • Market Capitalization: USD 254 Billions • Number of shares: 5.4 Billions • P/E ratio: 34.8 • Book Value / Share: 10.03 • Sales: USD 28.3 Billion • Earnings (Net Profit): 7.83 Billions • Net Profitability: 27.6 % • Head Count: 50,000 • Revenue per employee: USD 600,000 • Reference: http://www.cnbc.com --- MSFT

  11. Future • End of Client-Server paradigm • Saturation of growth in desktop penetration • Mobile computing: hand-helds, cell phones • Web services: Sun ONE vs .NET vs IBM ?? • Refusal of customers for Office upgrades • Do have to upgrade to Windows XP?? • Linux and free software movement

  12. References • Daniel Ichbiah and Susan Knepper,”The Making of Microsoft”, BPB Publications, 1992 • G. Pascal Zachary,”Show-Stopper”, Little, Brown and Company, 1994 • Michael A. Cusumano and Richard Selby,”Microsoft Secrets”, The Free Press, 1995 • Julie Buick,”The Microsoft Edge”, Pocket Books, 1999

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