Microsoft’s financial project And its volatility

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MICROSOFTS FINANCIAL PROJECT

AND ITS VOLATILITY

New York University : Stern School of Business

Professor: Robert F. Engle ([email protected])

Class: B40.2332 Financial Theory II

Students:

Jay Gurkan ([email protected]) Stern(MBA)/Law (J.D) 12

Jessica Gonzales ([email protected]) Stern (MBA) 11
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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I. Historical Analysis:

A. Business:

Microsoft is an American multinational company that is specialized in the

computer technology, softwares and computer games. Microsoft

dominated the home computers software industry with their most popular

software called Windows after they invented MS-DOS in the 1982. The

latest polls show that every 8 out of 10 computer in todays world has

Windows as an operating system. One of the most popular softwares that

Microsoft ever created were Microsoft Office as well as operating system

Windows along with some computer games. Microsoft has been accused of

monopoly few times in the history but U.S Justice Department and others


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have ruled against Microsoft for these violations. The owner of the

Microsoft is known as Bill Gates and hes known as richest man in the

world for past 11 years according to Forbes Magazine. Following the

launch of the Altair 8800, William Henry Gates III, (known as Bill Gates)

called the developers of a new microcomputer, Micro Instrumentation and

Telemetry Systems (MITS), offering to demonstrate an implementation of

the BASIC programming language for the system. After the demonstration,

MITS agreed to distribute Altair BASIC.[16] Gates left Harvard University,

moved to Albuquerque, New Mexico where MITS was located, and

founded Microsoft there. The company's first international office was

founded on November 1, 1978, in Japan, titled "ASCII Microsoft"[17][18]

(now called "Microsoft Japan").[16] On January 1, 1979, the company

moved from Albuquerque to a new home in Bellevue, Washington.[16]

Steve Ballmer joined the company on June 11, 1980, and later succeeded

Bill Gates as CEO.[16]

Among pre-IBM-PC products were the software package TASC (The

AppleSoft Compiler), which compiled a BASIC program into Apple

machine language, and the hardware product Microsoft Softcard, an add-
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on Z80 processor card for the Apple II and compatible computers which

allowed the use of the CP/Moperating system instead ofApplesoft and

Apple DOS. In 1980, Microsoft entered the operating system business with

its own version ofUnix, called Xenix, which it licensed to various computer

vendors. In 1995, Microsoft released Windows 95, a new version of the

company's flagship operating system which featured a completely new

user interface, including a novel start button; more than a million copies of

Microsoft Windows 95 were sold in the first four days after its release.[34]

The company also released its web browser, Internet Explorer, with the

Windows 95 Plus! Pack in August 1995 and subsequent Windows versions.

[38]

On, May 26, 1995, following Bill Gates's internal "Internet Tidal Wave

memo",[39] Microsoft began to redefine its offerings and expand its

product line into computer networking and the World Wide Web. On

August 24, 1995, it launched a major online service, MSN (Microsoft

Network), as a direct competitor to AOL. MSN became an umbrella service

for Microsoft's online services.[16][34][40] The company continued to

branch out into new markets in 1996, starting with a joint venture with
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NBC to create a new 24/7 cable news station, MSNBC.[34][41] Microsoft

entered the personal digital assistant (PDA) market in November with

Windows CE 1.0, a new built-from-scratch version of their flagship

operating system, specifically designed to run on low-memory, low-

performance machines, such as handhelds and other small computers.[42]

Later in 1997, Internet Explorer 4.0 was released for both Mac OS and

Windows, marking the beginning of the takeover of the browser market

from rival Netscape. In October, the Justice Department filed a motion in

the Federal District Court in which they stated that Microsoft had violated

an agreement signed in 1994, and asked the court to stop the bundling of

Internet Explorer with Windows.[16]

The year 1998 was significant in Microsoft's history, with Bill Gates

appointing Steve Ballmer as president of Microsoft but remaining as Chair

and CEO himself.[16] The company released Windows 98, an update to

Windows 95 that incorporated a number of Internet-focused features and

support for new types of devices.[16] On April 3, 2000, a judgment was

handed down in the case ofUnited States v. Microsoft,[14] calling the

company an "abusive monopoly"[43] and forcing the company to split into
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two separate units. Part of this ruling was later overturned by a federal

appeals court, and eventually settled with the U.S. Department of Justice in

2001.

In 2001, Microsoft released Windows XP, the first version that

encompassed the features of both its business and home product lines.

Before XP was released, Microsoft had to maintain both the NT and the 9x

codebase. XP introduced a new graphical user interface, the first such

change since Windows 95.[16][44] In late 2001, with the release of the Xbox,

Microsoft entered the multi-billion-dollar game console market dominated

by Sony and Nintendo.[16] Microsoft encountered turmoil in March 2004

when antitrust legal action was brought against it by the European Union

for abusing its current dominance with the Windows operating system (see

European Union Microsoft antitrust case), eventually resulting in a

judgment to produce new versions of its Windows XP platformcalled

Windows XP Home Edition N and Windows XP Professional Nthat did

not include its Windows Media Player, as well as a fine of497 million

($613 million)

On June 27, 2008, Bill Gates retired from day-to day activities in the
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company, following a two year transition period from his role as Chief

Software Architect, which was taken by Ray Ozzie, but remained the

company's chairman, head of the Board of Directors and would act as an

adviser on key projects.[47]Windows Vista, released in January 2007, was

Microsoft's latest operating system and had sold 300 million copies by

December 2008.[48]Microsoft Office 2007, released at the same time,

features a "Ribbon" user interface which is a significant departure from its

predecessors. Relatively strong sales of both titles helped to produce a

record profit in 2007.[49]

Microsoft announced on February 21, 2008 that it will share information

about its products and technology to make it easier for developers to create

software that works with its products.[50] and followed that up by

providing such information.[51] However, the European Union continued

to demonstrate its dissatisfaction with the company for its lack of

compliance with the March 2004 judgment and subsequently, on February

27, 2008 imposed a fine of899 million ($1.4 billion), then the largest fine in

the history of EU competition policy.[52]

In its January 2009 report of financial results, Microsoft announced
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layoffs of up to 5,000 employees in response to slowing economic activity

due to the ongoing financial crisis.[53] Despite this, on February 12, 2009,

Microsoft announced its intent to open a small chain of Microsoft-branded

retail stores. David Porter, a former executive at Wal-Mart and

DreamWorks, was named corporate vice president of Retail Stores.[54][55]

On October 22, 2009 the first retail Microsoft Store open in Scottsdale,

Arizona, the same day Windows 7 was officially released to the public.

Microsoft focused on refining Vista with ease of use features and

performance enhancements with Windows 7, rather then a large reworking

of Windows. This division produces Microsoft's flagship product, the

Windows operating system. It has been produced in many versions,

including Windows 3.1, Windows 95, Windows 98, Windows 2000,

Windows Me, Windows Server 2003, Windows XP, Windows Vista,

Windows Server 2008, Windows 7 and Windows Server 2008 R2 . Almost

all IBM compatiblepersonal computers come with Windows preinstalled.

The current desktop version of Windows is Windows 7. The online service

MSN, the search engine Bing (formerly Windows Live Search and MSN

Search)[6], the Windows Live family of products and services[4], the cable
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television station MSNBC and the Microsoft online magazine Slate are all

part of this division. (Slate was acquired by The Washington Post on

December 21, 2004.) At the end of 1997, Microsoft acquired Hotmail, the

most popular webmail service, which it rebranded as "MSN Hotmail" and

later "Windows Live Hotmail". In 1999, Microsoft introduced MSN

Messenger, an instant messaging client, to compete with the popular AOL

Instant Messenger. Alongside the release of Windows Vista, MSN

Messenger became Windows Live Messenger.[9]

Microsoft Visual Studio is the company's set of programming tools and

compilers. The software product is GUI-oriented and links easily with the

Windows APIs. The current version is Visual Studio 2008. The previous

version, Visual Studio 2005 was a major improvement over its predecessor,

Visual Studio.Net 2003, named after the .NET initiative, a Microsoft

marketing initiative covering a number of technologies. Microsoft's

definition of .NET continues to evolve. As of 2004, .NET aims to ease the

development of Microsoft Windows-based applications that use the

Internet, by deploying a new Microsoft communications system, Indigo

(now renamed Windows Communication Foundation). This is intended to
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address some issues previously introduced by Microsoft's DLL design,

which made it difficult, even impossible in some situations, to manage,

install multiple versions of complex software packages on the same system

(see DLL-hell), and provide a more consistent development platform for all

Windows applications (see Common Language Infrastructure). In addition,

the Company established a set of certification programs to recognize

individuals who have expertise in its software and solutions. Similar to

offerings from Cisco, Sun Microsystems, Novell, IBM, and Oracle

Corporation, these tests are designed to identify a minimal set of

proficiencies in a specific role; this includes developers ("Microsoft

Certified Solution Developer"), system/network analysts ("Microsoft

Certified Systems Engineer"), trainers ("Microsoft Certified Trainers") and

administrators ("Microsoft Certified Systems Administrator" and

"Microsoft Certified Database Administrator").[9]

Microsoft offers a suite ofserver software, titled Windows Server System.

The Windows Server operating system for network servers is the core of

the Windows Server System line. The Systems Management Server product
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is a collection of tools providing remote-control abilities, patch

management, software distribution and a hardware/software inventory.

Microsoft has attempted to expand the Windows brand into many other

markets, with products such as Windows CE for PDAs and its "Windows-

powered" Smartphone products. Microsoft initially entered the mobile

market through Windows CE for handheld devices, which today has

developed into Windows Mobile 6.5.3. The focus of the operating system is

on devices where the OS may not directly be visible to the end user, in

particular, appliances and cars.

The company produces MSN TV, formerly WebTV, a television-based

Internet appliance. Microsoft used to sell a set-top Digital Video Recorder

(DVR) called the UltimateTV, which allowed users to record up to 35 hours

of television programming from a direct-to-homesatellite television

provider DirecTV. This was the main competition in the UK for British Sky

Broadcasting's (BSkyB) SKY + service, owned by Rupert Murdoch.

UltimateTV has since been discontinued, with DirecTV instead opting to

market DVRs from TiVo Inc. before later switching to their own DVR

brand.[9]
http://en.wikipedia.org/wiki/Windows_CEhttp://en.wikipedia.org/wiki/Personal_Digital_Assistanthttp://en.wikipedia.org/wiki/Handheld_devicehttp://en.wikipedia.org/wiki/Windows_Mobilehttp://en.wikipedia.org/wiki/MSN_TVhttp://en.wikipedia.org/wiki/WebTVhttp://en.wikipedia.org/wiki/Internet_appliancehttp://en.wikipedia.org/wiki/Digital_Video_Recorderhttp://en.wikipedia.org/wiki/Microsoft_TVhttp://en.wikipedia.org/wiki/Direct-To-Homehttp://en.wikipedia.org/wiki/Satellite_televisionhttp://en.wikipedia.org/wiki/DirecTVhttp://en.wikipedia.org/wiki/British_Sky_Broadcastinghttp://en.wikipedia.org/wiki/British_Sky_Broadcastinghttp://en.wikipedia.org/wiki/Rupert_Murdochhttp://en.wikipedia.org/wiki/TiVohttp://en.wikipedia.org/wiki/Digital_video_recorderhttp://en.wikipedia.org/wiki/Microsoft#cite_note-2005annual-8http://en.wikipedia.org/wiki/Windows_CEhttp://en.wikipedia.org/wiki/Personal_Digital_Assistanthttp://en.wikipedia.org/wiki/Handheld_devicehttp://en.wikipedia.org/wiki/Windows_Mobilehttp://en.wikipedia.org/wiki/MSN_TVhttp://en.wikipedia.org/wiki/WebTVhttp://en.wikipedia.org/wiki/Internet_appliancehttp://en.wikipedia.org/wiki/Digital_Video_Recorderhttp://en.wikipedia.org/wiki/Microsoft_TVhttp://en.wikipedia.org/wiki/Direct-To-Homehttp://en.wikipedia.org/wiki/Satellite_televisionhttp://en.wikipedia.org/wiki/DirecTVhttp://en.wikipedia.org/wiki/British_Sky_Broadcastinghttp://en.wikipedia.org/wiki/British_Sky_Broadcastinghttp://en.wikipedia.org/wiki/Rupert_Murdochhttp://en.wikipedia.org/wiki/TiVohttp://en.wikipedia.org/wiki/Digital_video_recorderhttp://en.wikipedia.org/wiki/Microsoft#cite_note-2005annual-8


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Microsoft sells computer games that run on Windows PCs, including

titles such as Age of Empires, Halo and the Microsoft Flight Simulator

series. It produces a line ofreference works that include encyclopedias and

atlases, under the name Encarta. Microsoft Zone hosts free premium and

retail games where players can compete against each other and in

tournaments.

Microsoft entered the multi-billion-dollar game console market

dominated by Sony and Nintendo in late 2001,[59] with the release of the

Xbox. The company develops and publishes its own video games for this

console, with the help of its Microsoft Game Studios subsidiary, in addition

to third-party Xbox video game publishers such as Electronic Arts and

Activision, who pay a license fee to publish games for the system. The

Xbox also has a successor in the Xbox 360, released on November 22, 2005

in North America and other countries.[60][61] With the Xbox 360, Microsoft

hopes to compensate for the losses incurred with the original Xbox.

However, Microsoft made some decisions considered controversial in the

video gaming community, such as releasing the console with high failure

rates, selling two different versions of the system (one without the hard
http://en.wikipedia.org/wiki/Computer_gameshttp://en.wikipedia.org/wiki/Age_of_Empireshttp://en.wikipedia.org/wiki/Halo_(video_game_series)http://en.wikipedia.org/wiki/Microsoft_Flight_Simulatorhttp://en.wikipedia.org/wiki/Reference_workhttp://en.wikipedia.org/wiki/Encyclopediahttp://en.wikipedia.org/wiki/Atlas_(cartography)http://en.wikipedia.org/wiki/Encartahttp://en.wikipedia.org/wiki/Microsoft_Zonehttp://en.wikipedia.org/wiki/Game_consolehttp://en.wikipedia.org/wiki/Sonyhttp://en.wikipedia.org/wiki/Nintendohttp://en.wikipedia.org/wiki/Microsoft#cite_note-BizWire-2001Ent-58http://en.wikipedia.org/wiki/Xboxhttp://en.wikipedia.org/wiki/Microsoft_Game_Studioshttp://en.wikipedia.org/wiki/Third-party_developerhttp://en.wikipedia.org/wiki/Video_game_publisherhttp://en.wikipedia.org/wiki/Electronic_Artshttp://en.wikipedia.org/wiki/Activisionhttp://en.wikipedia.org/wiki/Xbox_360http://en.wikipedia.org/wiki/Microsoft#cite_note-Wolfe-59http://en.wikipedia.org/wiki/Microsoft#cite_note-BBC-Xbox360-60http://en.wikipedia.org/wiki/Xbox_360http://en.wikipedia.org/wiki/Gaming_Communityhttp://en.wikipedia.org/wiki/Xbox_360_technical_problemshttp://en.wikipedia.org/wiki/Xbox_360_technical_problemshttp://en.wikipedia.org/wiki/Hard_disk_drivehttp://en.wikipedia.org/wiki/Computer_gameshttp://en.wikipedia.org/wiki/Age_of_Empireshttp://en.wikipedia.org/wiki/Halo_(video_game_series)http://en.wikipedia.org/wiki/Microsoft_Flight_Simulatorhttp://en.wikipedia.org/wiki/Reference_workhttp://en.wikipedia.org/wiki/Encyclopediahttp://en.wikipedia.org/wiki/Atlas_(cartography)http://en.wikipedia.org/wiki/Encartahttp://en.wikipedia.org/wiki/Microsoft_Zonehttp://en.wikipedia.org/wiki/Game_consolehttp://en.wikipedia.org/wiki/Sonyhttp://en.wikipedia.org/wiki/Nintendohttp://en.wikipedia.org/wiki/Microsoft#cite_note-BizWire-2001Ent-58http://en.wikipedia.org/wiki/Xboxhttp://en.wikipedia.org/wiki/Microsoft_Game_Studioshttp://en.wikipedia.org/wiki/Third-party_developerhttp://en.wikipedia.org/wiki/Video_game_publisherhttp://en.wikipedia.org/wiki/Electronic_Artshttp://en.wikipedia.org/wiki/Activisionhttp://en.wikipedia.org/wiki/Xbox_360http://en.wikipedia.org/wiki/Microsoft#cite_note-Wolfe-59http://en.wikipedia.org/wiki/Microsoft#cite_note-BBC-Xbox360-60http://en.wikipedia.org/wiki/Xbox_360http://en.wikipedia.org/wiki/Gaming_Communityhttp://en.wikipedia.org/wiki/Xbox_360_technical_problemshttp://en.wikipedia.org/wiki/Xbox_360_technical_problemshttp://en.wikipedia.org/wiki/Hard_disk_drive


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disk drive) and providing limitedbackward compatibility with only

particular Xbox titles.[62][63]

In addition to the Xbox line of products, Microsoft also markets a number

of other computing-related hardware products as well, including mice,

keyboards,joysticks, and gamepads, along with other game controllers, the

production of which is outsourced in most cases. As of November 15, 2007,

Microsoft announced the purchase of Musiwave, Openwave's mobile

phone music sales business

Microsoft Corporation:

Microsoft has been founded in 1975 by Bill Gates.

Microsoft stock goes to public in March 13, 1986.

August 24, 1995 Windows 95, in Feb 17, 2000, Windows 2000, Oct 25,

2001 Windows XP and Jan 30, 2007 Microsoft Vista have been launched.
http://en.wikipedia.org/wiki/Hard_disk_drivehttp://en.wikipedia.org/wiki/Backward_compatibilityhttp://en.wikipedia.org/wiki/Microsoft#cite_note-Thorsen-360play-61http://en.wikipedia.org/wiki/Microsoft#cite_note-Thorsen-360compat-62http://en.wikipedia.org/wiki/Computer_mousehttp://en.wikipedia.org/wiki/Computer_keyboardhttp://en.wikipedia.org/wiki/Joystickhttp://en.wikipedia.org/wiki/Gamepadhttp://en.wikipedia.org/wiki/Game_controllerhttp://en.wikipedia.org/wiki/Openwavehttp://en.wikipedia.org/wiki/Hard_disk_drivehttp://en.wikipedia.org/wiki/Backward_compatibilityhttp://en.wikipedia.org/wiki/Microsoft#cite_note-Thorsen-360play-61http://en.wikipedia.org/wiki/Microsoft#cite_note-Thorsen-360compat-62http://en.wikipedia.org/wiki/Computer_mousehttp://en.wikipedia.org/wiki/Computer_keyboardhttp://en.wikipedia.org/wiki/Joystickhttp://en.wikipedia.org/wiki/Gamepadhttp://en.wikipedia.org/wiki/Game_controllerhttp://en.wikipedia.org/wiki/Openwave


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Over the past 16 years, Microsoft Research has evolved into an

organization with more than 800 researches, studying more than 55 areas

of research.

According to Forbes Magazine, Microsoft Corporation was richest #2

corporation in the world for 9 years in a row.

Microsoft has over 91,200 employees in the world. %48 of them are

from United States while the rest of them are from different locations in the

world.

Microsofts revenue was $60.42 billion with a growth of %18; net

income was $17.68 billion with a growth of %26, their net sales were $78

billion with a %19 growth as of June 30, 2008.

The founder of Microsoft is known as Bill Gates retires his day to day

role from Microsoft as of June 27, 2008 to devote more time to his work at

The Bill & Melinda Gates foundation.

Sic Codes:

7372 - Prepackaged Software

7371 - Computer Programming Services

7379 - Computer Related Services, Not Elsewhere
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Classified

7373 - Computer Integrated Systems Design

7389 - Business Services, Not Elsewhere Classified

3577 - Computer Peripheral Equipment, Not

Elsewhere Classified

2731 - Book Publishing & Printing

2741 - Miscellaneous Publishing

7812 - Motion Picture, Video Tape Production

NAICS

Codes

511210 - Software Publishers

334119 - Other Computer Peripheral Equipment

Manufacturing

511130 - Book Publishers

511140 - Database and Directory Publishers

512110 - Motion Picture and Video Production

541511 - Custom Computer Programming Services

541512 - Computer Systems Design Services
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icrosoft+Corp.&mst=microsoft&bConts=3http://galenet.galegroup.com/servlet/BCRC?vrsn=unknown&locID=nysl_li_hofs&srchtp=glbc&cc=1&iType=sic&ste=82&mode=i&tab=1&tbst=tsIS&cind=2741+-+Miscellaneous+Publishing&ccmp=Microsoft+Corp.&mst=microsoft&bConts=3http://galenet.galegroup.com/servlet/BCRC?vrsn=unknown&locID=nysl_li_hofs&srchtp=glbc&cc=1&iType=sic&ste=82&mode=i&tab=1&tbst=tsIS&cind=7812+-+Motion+Picture%2C+Video+Tape+Production&ccmp=Microsoft+Corp.&mst=microsoft&bConts=3http://galenet.galegroup.com/servlet/BCRC?vrsn=unknown&locID=nysl_li_hofs&srchtp=glbc&cc=1&iType=naics&ste=82&mode=i&tab=1&tbst=tsIS&cind=511210+-+Software+Publishers&ccmp=Microsoft+Corp.&mst=microsoft&bConts=3http://galenet.galegroup.com/servlet/BCRC?vrsn=unknown&locID=nysl_li_hofs&srchtp=glbc&cc=1&iType=naics&ste=82&mode=i&tab=1&tbst=tsIS&cind=334119+-+Other+Computer+Peripheral+Equipment+Manufacturing&ccmp=Microsoft+Corp.&mst=microsoft&bConts=3http://galenet.galegroup.com/servlet/BCRC?vrsn=unknown&locID=nysl_li_hofs&srchtp=glbc&cc=1&iType=naics&ste=82&mode=i&tab=1&tbst=tsIS&cind=334119+-+Other+Computer+Peripheral+Equipment+Manufacturing&ccmp=Microsoft+Corp.&mst=microsoft&bConts=3http://galenet.galegroup.com/servlet/BCRC?vrsn=unknown&locID=nysl_li_hofs&srchtp=glbc&cc=1&iType=naics&ste=82&mode=i&tab=1&tbst=tsIS&cind=511130+-+Book+Publishers&ccmp=Microsoft+Corp.&mst=microsoft&bConts=3http://galenet.galegroup.com/servlet/BCRC?vrsn=unknown&locID=nysl_li_hofs&srchtp=glbc&cc=1&iType=naics&ste=82&mode=i&tab=1&tbst=tsIS&cind=511140+-+Database+and+Directory+Publishers&ccmp=Microsoft+Corp.&mst=microsoft&bConts=3http://galenet.galegroup.com/servlet/BCRC?vrsn=unknown&locID=nysl_li_hofs&srchtp=glbc&cc=1&iType=naics&ste=82&mode=i&tab=1&tbst=tsIS&cind=512110+-+Motion+Picture+and+Video+Production&ccmp=Microsoft+Corp.&mst=microsoft&bConts=3http://galenet.galegroup.com/servlet/BCRC?vrsn=unknown&locID=nysl_li_hofs&srchtp=glbc&cc=1&iType=naics&ste=82&mode=i&tab=1&tbst=tsIS&cind=541511+-+Custom+Computer+Programming+Services&ccmp=Microsoft+Corp.&mst=microsoft&bConts=3http://galenet.galegroup.com/servlet/BCRC?vrsn=unknown&locID=nysl_li_hofs&srchtp=glbc&cc=1&iType=naics&ste=82&mode=i&tab=1&tbst=tsIS&cind=541512+-+Computer+Systems+Design+Services&ccmp=Microsoft+Corp.&mst=microsoft&bConts=3


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541990 - All Other Professional, Scientific and

Technical Services

B. Goal Clarification - C. Strategies and Tactics fulfilling the Goals:

Goal #1 To outperform their rivals in the computer industry.

Exception of year 2001 and 2002, Microsoft always had growth in

their net income. In 2001, they had negative %22 growth and in 2002, they

had negative growth of %28. Other than these consecutive two years,

Microsoft always had increase in their net income. But in 1999, Microsoft

had a record net income with %73. Everybody thought that Microsoft

would be the only company who leads the industry alone but as Steve Jobs

got back to Apple for his second term in early 2000s, Apple had

magnificent come back with the invention of iPods. From 2001 to 2007,

Apple had more growth than Microsoft. Their invention of iPod made a big

impact Apples revenues as well as their net income. As of today, Microsoft

feel that Apple made a good back with Steve Jobs and they feel that they

should be get back on tracks just like they did mid 1990s when they had no

rivals in computer industry at all. Some may accused them doing a
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universities within United States have an access to this software because it

is necessary for students to use this program. This is Microsofts biggest

and most important plan to spread out their softwares throughout

everybody in the world. Their goal is to serve more than 2 billion copies of

softwares by 2015. This is not a philanthropic effort, this is business, said

Orlando Ayala who is a senior vice president at Microsofts emerging

segments market development group in an interview with Reuters.

Microsoft is aiming to hit 2 billion people by at the end of 2015 with

Windows, Windows Office and with so many software programs.

D. Environmental Analysis:

Economic Recession:

One of the major problem that we are going through is a recession. We

are not fully in recession but there are some signs that we have a great

threat of recession in front of us. FED is constantly buying securities to

inject money into market to prevent us going to recession. FED is doing

everything in their power to prevent recession in United States. When there

is little money in the economy, this is known as recession. People are afraid


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to spend money because they cannot see future in terms of economy and

they dont know what will happen in the future, therefore they demand

more exchange of their money.

Political/Legal Monopoly & Anti-Trust:

Microsoft has been accused of doing monopoly in computer industry.

Windows is extremely popular throughout the world, Windows are

favorably using by %90 of the home computer owners. In May 18, 1998,

United States Department of Justice alleged that Microsoft abused

monopoly power in its handling of operating system sales and web brower

sales. Joel Klein was the lead prosecutor for this case. In monopoly, one can

set prices artificially high because it has no serious competitors to force it to

do otherwise.

Judge Jackson stated on November 5, 1999 that Microsofts dominance on

operating systems and therefore it is a monopoly. Then on April 3, 2000, he

issued two part ruling: he said that Microsoft had committed

monopolization and asked Microsoft to break into two separate units as a


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remedy. One to produce the operating system and one to produce other

software components.

Therefore, Microsoft has been accused of monopoly before and they

really have to watch out for other threats in the future.

E. Competitive Analysis:

Windows:

Windows is the most popular operating system in the world. Every 8 out

of 10 home computers have a Windows as their operating system. They

announced as their first version of Windows in November 1985. One of the

most popular Windows versions are Windows 95, Windows 2000,

Windows XP and Windows XP. MAC OS came in to market before than

Windows but Windows completely took over worlds market for operating

system software. It is Microsofts number one and most popular software

in the world. Microsoft had even lost a case in United States because of

Windows because they have been accused of monopolized on operating

systems and judges stated that Microsoft attempted to monolopolized


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operating systems and became a threat to other operating system

companies.

Windows Office:

This is Microsofts second most popular software program throughout

the world. It has multiple programs inside of it such as World, Excel,

Powerpoint, Access, Groove and so on. This software is generally using at

educational venues such as universities, schools and in any industry that

has to do with publishing texts. One of the most popular Office versions

are Office 97, Office 2000, Office XP, Office 2003 and Office 2007. Even

though Microsoft sees Apple as a rival, they also announced MAC version

of Microsoft Office.

XboX:

One of the most significant invention of Microsoft is Xbox. It is

Microsofts first game console in the history. They came up with idea of

Xbox against Playstation and Nintendos Gamecube. It was released on

November 15, 2001. Microsoft announced that they have sold over 24


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million Xboxs as of May, 2006. In same year, Microsoft stated that they had

$4 billion loss because of high selling rates. Microsofts strategy was to not

charge as high as it costs them to make Xbox. They thought that they could

gain their loss back from games that they would make. Therefore, they

tried to sell consoles for cheaper price than they had cost them. They

reaches their goal within 5 years and they sold more than 20 millions as of

2006 and this number is increasing every year. Microsoft think that whole

Xbox mission is a successful try.

F. Strengths and Weaknesses of the Organization

Strengths

Marketing:

Few of their products are top seller softwares in the world such as

Windows and Microsoft Office.

There are lots of variety and supports customers needs.

It is extremely easy to use compared against equivalents.


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Advertising highly and everybody who knows about computers well

know that there are software made by Microsoft exist.

Has Windows version over 20 languages in the world and makes it

easy to use it for all people around the world.

Finance:

Makes high net income recent years.

Growing increases every year except 2001 and 2002.

Human Resources:

Encourage new ideas from employees

Has high standards and get best specialized people on their field.

Have a positive manners because of the remarkable founder Bill

Gates

Have employees from 113 different countries.

E-Commerce:

Easy to buy from any web site.


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Able to find any upgrade or any versions of any software from

Microsoft.com

More affordable when people buy it from online

Has live chat help service that makes everything easier if a customer

has a problem or concerns about the software

Weaknesses:

Marketing:

Doesnt advertise often, their rivals such as Apple is catching up.

Increase prices to increase profits and stock prices.

Finance:

Have not reached to their growth goal in past three years.

Rivals made a come-back and increased their growth more than

Microsoft.

Have not reached their goal of growth in recent years.

Production and Operations:


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Even though there are one of the most successful programs that made

by Microsoft, they are not looking for anything new like Apple. Same

softwares with new versions.

Couldnt come against anything spywares and pop-ups effective.

Crashes unexpectedly and reboot is the only way to get system back.

E-Commerce:

Official web site is slow compared to others.

It is complex and cannot be found updates for every software out in

the market.


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saving money in their checking account. This is the one of the biggest

reason why Microsoft didnt reach their net income and net growth rate in

2008. They lowered their goals for growth and net income rate for year of

2009.

Political/Legal Anti-Trust Act:

Microsoft has been accused of monopolized the industry in 1999. Since

Microsoft hold %90 of the operating systems softwares, they should be

more careful on their marketing strategies in the future. Even though, their

marketing net volume is decreasing in past 8 years because Apple came up

with more new innovations than Microsoft and thats why Microsoft

started to see Apple as their new rival nowadays. As court ruled and most

people hate Microsoft because they monopolized the industry for many

years without having a competition in the industry. This made them to

charge people a price whatever they felt like it and people who are using

Linux, Apple and other companies customers hate Microsoft for doing that.

They already had a bad fame on monopolizing and not obeying anti-trust

act and they should be extremely to watch out about on these issues.


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Technological Computers are taking over:

We have computers in our lives than ever before. In todays world,

computers are doing most of the work regardless the industry we work in.

This has many advantages such as there is less margin error about the

work, save money and saving time. But it also has a disadvantage because

its cutting the labor work for the country. As computers are involved in

our lives more than before, we rely on softwares more and this is where

Microsoft come in as a biggest company in that industry.

Since people are using more computers in their life, Microsoft has to

come up with new program that satisfy peoples needs. We almost use

computer in everyday in our lives such as getting train ticket from

computers to buying snacks from vendors. Therefore, we will need more

softwares in the future to use to satisfy our work.

B. Strategic Targets:

Since Microsoft is the biggest and most profitable company in softwares

industry, I think they would have money to invest more money than any

other company in that industry to improve their net sales. Even though


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they have not reached their goals of sales last year, if they come up with

new ideas to improve their sales, eventually they will be able to reach their

goals easier than any other company out there. In my opinion, Apple has a

great marketing system in United States as well as in the world. Microsoft

should take an example of Apple and do the things they do because

Apples growth is 4 times bigger than what Microsoft has been

accomplished.

More Microsoft Stores in Most Locations:

Just because Microsoft doesnt build computers, it doesnt necessarily

mean that they cannot open stores in big cities such as Miami, New York or

Los Angeles. Microsoft has variety of softwares that people need. People

usually go to big electronic stores to buy Microsofts softwares such as Best

Buy or Staples Center. It would be more beneficiary for Microsoft to open

up their stores in every state like Apple because as soon as someone steps

into a store, they would be aware of what a great product line that

Microsoft has and be able to find sales person to discuss what he really

needs. In big stores like Best Buy, sales people dont really care about if

they sell any Microsoft products or not because their goal is to sell


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something. But if Microsoft has stores all over the states, their ultimate goal

would be to sell Microsoft products to consumer and help out them to

discover what they have for customers to discover.

Workshops and Tutorials:

Unlike Apple, Microsoft is not a fan of workshops. In every Apple store,

there is workshops everyday to teach Apple users what they can do with

their Apple softwares. On the other hand, Microsoft doesnt have this

option at all. They think that to make software easier to use, most people

will eventually know how to use and how to take an advantage of the

softwares that they make. But most people that I know dont even know

how to use any other softwares than Explorer, Office and Windows itself.

There are so many softwares to discover for Microsoft but most people

arent even aware of it. In my opinion, Microsoft should come to

universities and many other big cities to give out workshops to teach

people what they are missing by not know how to use it. This is what

Apple does and they came to Hofstra University for workshop last year, for

example.


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Other thing that Microsoft doesnt do is that their web site is not

helpful as Apple. Once we go to Apples web site, there are lots of tutorials

about Apples softwares as well as iMacs. But Microsoft web site is more

complex than Apples web site and its more confusing. As soon as people

go to web site, they cannot find any tutorials to find out about any software

are that Microsoft created.

C. Implementations:

2005:

Microsoft should aim big cities in United States as of their first step. The

cities should include New York, Orlando, Boston, Chicago, Los Angeles

and so on. They should not have more than ten stores to see if this really

works out and help to increase their sales by big margins.

2006:

Microsoft has been successfully opened ten stores in United States with

lots of variety of softwares programs as well as of their whole full product

line. They were able to see that they wouldnt lose any money by opening

new stores in United States because people are willing to buy their


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products. They should aim to increase their store numbers by 3 in the

second year. This will be big step for Microsoft because at the end of 2006,

they should be around 30 or more stores in the United States and after this

year, numbers should give an exact answer to Microsoft if opening stores

all over the United States really helps them.

2007:

Microsoft has opened over 30 stores all over the United States and they

didnt lose money at all. People come to stores to buy products and they

are doing well in overall. They should add new features to their stores to

get more attention to their stores. They would set up workshops to tell

people how to use Microsofts softwares throughout the United States.

Since most people dont know how to use most programs that Microsoft

made, it would be smart idea to teach them what Microsoft has more than

Microsoft Office and Explorer.

People would come to Microsoft stores not to buy softwares only but

to learn also. They learn what they have been missing out by having

Microsoft Windows.


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2008:

Microsoft successfully created over 50 stores around the world and

they should be increasing their store number by two every year. Now, they

have been doing workshops every day in their stores and people actually

have a habit to come to stores to learn new tricks and softwares that

Microsoft has. They see an increase in net sales as of 2008 and understand

what people exactly want from Microsoft. The idea of opening stores all

over the United States is not a bad idea. This makes Microsoft to increase

their number of stores within the United States as well as doing more

workshops at the stores.

2009:

Microsoft now has over 100 stores in United States and at least one

store in every state. They now know that stores help to increase their net

sales and profits by large margins. They have workshops in every stores

that they have and they see people attending to their workshops. Their

mission now is to go to colleges to give workshops and let students know

that what they can do with Microsoft softwares and how they can help


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themselves using Microsoft in their education. Other goal that Microsoft

has that they should be going to Europe to open up stores.

2010:

Microsoft has been created stores in big countries in Europe such as

Italy, Spain, England, France, Germany and Turkey and now they have

over 200 stores in United States as well as having 6 stores in Europe.

Workshops have been a big success because it actually made people to buy

Microsoft products because they know that they can do with it. Their net

sales almost tripled compared to years when they didnt have stores.

REFERENCES

1) http://www.microsoft.com/MSFT/DEFAULT.MSPX

2) http://www.microsoft.com/presspass/inside_ms.mspx

3) http://research.microsoft.com/aboutmsr/presskit/MSResearchFS04

.aspx

4) http://msdn.microsoft.com/en-us/esp/cc824927.aspx
http://www.microsoft.com/MSFT/DEFAULT.MSPXhttp://www.microsoft.com/presspass/inside_ms.mspxhttp://research.microsoft.com/aboutmsr/presskit/MSResearchFS04.aspxhttp://research.microsoft.com/aboutmsr/presskit/MSResearchFS04.aspxhttp://msdn.microsoft.com/en-us/esp/cc824927.aspxhttp://www.microsoft.com/MSFT/DEFAULT.MSPXhttp://www.microsoft.com/presspass/inside_ms.mspxhttp://research.microsoft.com/aboutmsr/presskit/MSResearchFS04.aspxhttp://research.microsoft.com/aboutmsr/presskit/MSResearchFS04.aspxhttp://msdn.microsoft.com/en-us/esp/cc824927.aspx


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5)_http://msdn.microsoft.com/en-us/esp/cc824927.aspx

6) http://www.iht.com/articles/2005/11/15/yourmoney/msft.php

7) http://en.wikipedia.org/wiki/Microsoft

8) http://en.wikipedia.org/wiki/United_States_v._Microsoft

9)

http://www.wikipedia.ws/wikipedia/mi/Microsoft_antitrust_case.html

10) http://www.eksisozluk.com/microsoft

11)

http://www.knowledgerush.com/kr/encyclopedia/Microsoft_antitrust_c

ase/

12) http://news.cnet.com/2100-1001-975656.html

13) http://www.microsoft.com/msft/financial/default.mspx

14)

http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?

symbol=us%3Amsft
http://msdn.microsoft.com/en-us/esp/cc824927.aspxhttp://msdn.microsoft.com/en-us/esp/cc824927.aspxhttp://www.iht.com/articles/2005/11/15/yourmoney/msft.phphttp://www.iht.com/articles/2005/11/15/yourmoney/msft.phphttp://en.wikipedia.org/wiki/Microsofthttp://en.wikipedia.org/wiki/Microsofthttp://en.wikipedia.org/wiki/United_States_v._Microsofthttp://en.wikipedia.org/wiki/United_States_v._Microsofthttp://www.wikipedia.ws/wikipedia/mi/Microsoft_antitrust_case.htmlhttp://www.eksisozluk.com/microsofthttp://www.eksisozluk.com/microsofthttp://www.knowledgerush.com/kr/encyclopedia/Microsoft_antitrust_case/http://www.knowledgerush.com/kr/encyclopedia/Microsoft_antitrust_case/http://news.cnet.com/2100-1001-975656.htmlhttp://news.cnet.com/2100-1001-975656.htmlhttp://www.microsoft.com/msft/financial/default.mspxhttp://www.microsoft.com/msft/financial/default.mspxhttp://msdn.microsoft.com/en-us/esp/cc824927.aspxhttp://www.iht.com/articles/2005/11/15/yourmoney/msft.phphttp://en.wikipedia.org/wiki/Microsofthttp://en.wikipedia.org/wiki/United_States_v._Microsofthttp://www.wikipedia.ws/wikipedia/mi/Microsoft_antitrust_case.htmlhttp://www.eksisozluk.com/microsofthttp://www.knowledgerush.com/kr/encyclopedia/Microsoft_antitrust_case/http://www.knowledgerush.com/kr/encyclopedia/Microsoft_antitrust_case/http://news.cnet.com/2100-1001-975656.htmlhttp://www.microsoft.com/msft/financial/default.mspx


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15) http://finance.google.com/finance?fstype=bi&q=NASDAQ:MSFT
http://finance.google.com/finance?fstype=bi&q=NASDAQ:MSFThttp://finance.google.com/finance?fstype=bi&q=NASDAQ:MSFThttp://finance.google.com/finance?fstype=bi&q=NASDAQ:MSFT

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Microsoft’s financial project And its volatility

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