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Microsoft Aligning resources and initiatives and defining competition

Microsoft Aligning resources and initiatives and defining competition. Competitive Strategies for Network Economies Dallas Thornton, David Kleinman, Marck Vaisman, Ken Song, Ashish Khamar. Microsoft & the history of leverage. OS/Browser Integration

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Microsoft Aligning resources and initiatives and defining competition

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  1. MicrosoftAligning resources and initiatives and defining competition Competitive Strategies for Network Economies Dallas Thornton, David Kleinman, Marck Vaisman, Ken Song, Ashish Khamar

  2. Microsoft & the history of leverage • OS/Browser Integration • In 1995 Microsoft began its quest for market dominance with a product code-named Chicago (Windows 95). • Soon after, O’Hare was released (Internet Explorer 1.0) in the Windows Plus! Pack • In IE 4.0+, IE is integrated into the operating system. • Office Suite • Office 97 was first launched in 1997 after MS aquired or developed various productivity applications. • Office 2000 was later released as an integrated application using shared code. • On the development side, MS has invested heavily in “developer relations,” spending millions on special events, gifts for developers, training and certification programs, and technical support

  3. Problems Facing Microsoft • Divergent Product Line • Sprawling Operations • Enormous if Not Undefined Market and Competition • Antitrust Considerations • Software Security/Stability Concerns

  4. Operating Systems Server Consumer Consumer Software Office MS Visio MS Project MS Money Internet Explorer MSN Messenger Internet Service Provider MSN Developer Support Visual Studio MSDN Web Services msn.com ESPN .NET Passport Current MS “Product Lines”

  5. Service Integration Service Delivery Core Platform Operations MS Enterprise Servers

  6. What does MS do? • Bill Gates – “We make software.” • Our Opinion: • They are scavengers. • They find weakly developed markets or markets in which they can leverage their existing applications to dominate the competition. • Is this a bad business model?

  7. The benefits to Microsoft • A unified code base for all its programs, allowing developers to easily build upon existing code without “re-inventing the wheel.” • Allows MS to define the standards by which its products will operate, independent of the rest of the software industry. • The investment on developers has allowed MS to control developers and mold them into MS-loving, MS-standards-adopting people.

  8. What are Standards? • MS’s integration strategy has obviously paid great dividends. (Apart from anti-trust concerns). • While standards proponents will gripe about Microsoft not conforming to standards set by “the industry” (a.k.a. MS’s competitors), it can do this—it is not against the law. • Because it does not always conform to standards, it is able to bring new technologies to market more quickly. • Developers embrace the Microsoft technology, develop for MS products, and grow MS market share. • What obligations are there to standards?

  9. The Future • MS has seen its growth stall as its initial core markets become saturated. • To continue to grow, it must latch on to and develop emerging technologies, overtake competitors’ markets, or create new markets. • Enter the .NET initiative… • MS plans to offer centralized authentication, secure services, easy application development, and multi-platform support.

  10. Early 80’s Mid 80’s and 90’s Now Network Evolution

  11. Microsoft .NET • The web-services concept allows companies to easily develop applications that communicate with each other over the Internet (and are dependent on Microsoft-controlled technologies). • .NET provides rich new features that link in to other MS client applications such as Office and Windows and server applications such as Exchange and SQL Server. • In short, .NET is MS’s attempt to link all its products into a central platform, from which developers can program, companies can leverage the technologies, and MS can make money.

  12. Limitations • Microsoft must be wary of consumer confidence. Like Mike said, you’re not a monopoly until consumers are afraid. • This “integration strategy” is like putting all your eggs in one basket. • If one of the underlying components is flawed or has a security hole, any product that uses it is vulnerable. • MS must address stability and security

  13. Security/Stability Concerns • Introduce a new quality control and auditing division that reports directly to the top of the organization. • The division would have at least one FTE developer assigned to each project. • The main goal of this employee would be to ensure code stability and test applications during their development. • Assuming annual costs of $250K/field employee x 100 employees, MS would incur costs of at least $25M . • This really is a small price to pay.

  14. DOJ/Antitrust Issues • Dominance over the market will lead to further scrutiny from the DOJ. • One possibility is spinning off complementary business units—support services, consulting services, and hardware development would be atop the list. • Long-term contracts with these spin-offs should be worked out to ensure the stability of the MS empire. • Downsizing will not reduce MS’s dominance but will ease tensions with the DOJ

  15. Questions?

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