Microsoft: Is The Creative Spark Burning Out?
Patrick J. RiffelJacob BabcockZach Motsch
Introduction
Did Microsoft ever come out with something that will make our computers moist and chewy like cakes where we could just eat them while we were working?
So far, Microsoft hasn’t!
However, competitors like Google and Apple have introduced innovative products.
Introduction
“Microsoft was built on innovation, and our future depends on it” – Bill Gates
2009 – Dropped in sales First year ever
May 26th, 2010 – Apple overtakes # 1 October 4th, 2010 – Stock
Downgraded
Microsoft has become known as “clumsy, uncompetitive innovator.”
Introduction
The great tech war of 2012 Apple, Facebook, Google, Amazon Microsoft not included
Problem
Why was Microsoft no longer creating the breakthrough innovative
technologies it once used to pride itself on, and how could they regain their once dominated # 1 position in
the industry?
Background
1975: Microsoft is founded by Bill Gates and Paul Allen▪ Sold computer language BASIC to MITS▪ Micro-soft is an abbreviation of
“microcomputer software”
Background
1977: Bill Gates and Paul Allen move from being "partners" to Gates as President and Allen as V.P.
1978: First international sales office – Japan 1981: Microsoft goes private
▪ Bill Gates - President and Chairman ▪ Paull Allen - Executive Vice President
1981: The 16-bit IBM personal computer is launched▪ Uses the 16-bit "Microsoft Disk Operating System"
("MS-DOS")
Background
1983: Develops the Windows graphical operating system
1983: Develops Microsoft Mouse 1986: Microsoft Works Launched
Integrates word processing, spreadsheet, database, communications, and drawing functions Public share increases by $61 million from $21 per share to $28 per share
Background
1989: IBM and Microsoft make a decade long agreement to jointly develop a range of system software offerings▪ Includes enhancements to MS-DOS, Microsoft
OS/2, and Microsoft LAN that work with Intel processors
▪ Microsoft Office is released 1990: Microsoft Windows 3.0 is released 1995: Microsoft 95 is launched
▪ Coupled with the "Microsoft Network" ("MSN"), a collection of internet services
▪ Microsoft and NBC form partnership to create a 24-hours news source on MSN
Background
1997: Microsoft Windows 97 along with Microsoft Internet Explorer 4.0 is launched
1998: U.S. Justice Department brings two antitrust cases on grounds that Microsoft's Web browser's inclusion in Windows 95 forces the browser on PC makers and violates a prior pact with the Feds
Background
2001: Windows XP is launched internationally
2001: Xbox gaming system is released 2002: Partner with Compaq, Acer, Fujitsu,
Sony, and Toshiba to release the Tablet PC 2003: Announce "Windows Mobile"
software for mobile devices 2004: Federal court approves the
settlement between Microsoft and the Department of Justice
2007: Launch globally:▪ Windows Vista▪ Microsoft Office 2007▪ Zune, digital and music entertainment device▪ Microsoft Windows Mobile 6
2008: Microsoft launches bid to acquire Yahoo!
2009: Windows 7 is launched 2009: Bing search engine is
launched 2010: Microsoft Office 2010 is
launched
Background
Background
Corporate Culture Manages to frustrate the efforts of best
thinkers Large groups shut down smaller teams
in current structure Near all executives in charge of music, e-
books, phone, search, and tablet left in past decade.▪ Interview from one of the departed execs
states, “Too many semi-competent managers, too much in-house politics”
Background
Research and Development Timing of product launch has been poor▪ Web TV- Early▪ Mobile, MP3 , Video Games – Late
Spent 9.5 Billion in 2009
Background
Innovation Focused on higher margin, lower risk
products▪ Made financial sense▪ Fell behind in integration and innovation
because of it Focused on large scale, rather than
speed
Board of Directors
Microsoft Interesting Facts Bill Gates wrote a class
scheduling program for his school. He tweaked the program’s code so that he was placed in classes with mostly female students
Microsoft employees are called “Softie” Average – 38-year old Male making
$106k Huge art collection
Over 5,000 contemporary pieces Microsoft campus is full of
bunnies Had to catch and have them
spayed and neutered
Strengths
Widely recognized Large market share - Global Diversified - OS, Browsers, Search
Engines, Media player, gaming, mobile
Dominates PC World High margin products
Weaknesses
Lagging in new creative and innovative products (Apple)
New products are more imitations then new ideas
Neglected to enter the video game industry until 2001
Poor timing to market Company culture that frustrates the
efforts of visionary thinkers
Opportunities
Large R&D budget - $9.5B Multiple different technology segments to
improve and grow in Improve in customer tastes rather then
business needs Purchase up and coming companies with
innovative ideas and employees Further develop and integrate social media
platform within businesses Combine existing business products into a social media
platform
Threats
Shift in the industry PC's to non-PC's
Phones and appliances Cloud computing
Offering services to customers Google Docs Competitors
Apple, Google
Apple
Co-founded by Steve Jobs and Steve Wozniak
Lagged behind Microsoft in the computing industry in the ’70’s and ‘80’s
Jobs quite in 1985 due to loosing a boardroom battle for control of the company
Apple started its turnaround in 1996 Jobs vision and $150M from Microsoft
Founded in 1998 by Sergey Brin and Larry Page
Internet serach engine 97% of revenue in 2008 and 2009 was
generate through search advertisement sales
Expanded its products Books, Maps, Apps, News Purchases companies – YouTube and
DoubleClick Mobile - Android
IBM
World’s largest provider of computer products and services IT infrastructure services Business processes services Business solutions requiring advanced computing
power Has more patents than any other company in
the world Created new innovative products that would
generate revenue Innovation Jam in 2006
150,000 employees and stakeholders
Yahoo!
Founded in 1994 by David Filo and Jerry Yang
Leading online portal before google Revenue generated by providing marketing
on most of its websites Published its website in 25 different
languages Became bureaucratic and slow at innovating
Brickhouse – 2006▪ Offsite incubator to create new innovations and ensure
they reached the market as soon as possible
Recommendations to Management
Continue to Invest in R&D Focus on Cloud-based technology Improve communication between R&D
and marketing departments to better align launch timing and customer needs
Recommendations to Management
Breed Innovation Take more risks to discover either flaws
or new opportunities with ideas Maintain diverse social connections Create fellowships that promote and
award innovation and new business Work with education institutions to
launch entrepreneurial-centered courses and programs
Recommendations to Management
Change work culture High monetary rewards for innovation A flatter organizational hierarchy that
cultivates ideas and lends a stronger voice to the employees
Recommendations to Management
Improve marketing strategy Shift from business focused to a
consumer focused marketing strategy Increase marketing focus from product
features to product “ease of use” Develop more customer retail locations▪ Release innovative and risky product that will
only be available in stores
Concluding Remarks
Overview of recommendations Discussed ways that Microsoft can improve corporate
culture, breed timely innovation, and improve their marketing strategy.
What has happened since 2010? Increased profits▪ 62 Billion (2010) – 69 Billion (2011)
Skype Acquisition for 8.5 billion New marketing campaign emphasizing how products connect
family Ranked #1 in social media saviness, ahead of all competitors▪ This change may have some affect on their culture.
Concluding Remarks
What does the future hold?
Can they follow through?Future Productivity (October 25th, 2011)
References
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Manjoo, F. (October 19th, 2011). The great tech war of 2012 http://www.fastcompany.com/magazine/160/tech-wars-2012-amazon-apple-google-facebook
Microsoft jerry seinfeld bill gates shoe circus commercial. http://www.youtube.com/watch?v=rIjNJZpRtj8
N.A. Apple reports 4th quarter results.http://www.apple.com/pr/library/2011/10/18Apple-Reports-Fourth-Quarter-Results.html
N.A. Microsoft annual report 2010.http://www.microsoft.com/investor/reports/ar10/index.html
References
N.A. Microsoft officially welcomes skype http://www.microsoft.com/presspass/press/2011/oct11/10-13SkypePR.mspx
Naraine, R. IT wrestles with microsoft monoculture myopia http://www.eweek.com/c/a/Windows/IT-Wrestles-with-Microsoft-Monoculture-Myopia/
O’brien, Kevin. Europe Drops Microsoft Antitrust Case. http://www.nytimes.com/2009/12/17/business/global/17msft.html?pagewanted=all
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Rosoff, M. Microsoft's 15 biggest acquisitions (until today) http://www.businessinsider.com/microsofts-15-biggest-acquisitions-so-far-2011-5
Sandbert,, Jared. "Microsoft's Six Fatal Errors." Newsweek 135.25 (2000): 22-29.EBSCO. Web. 5 Nov. 2011.
Wilcox, J. Microsoft's clever 'family' marketing campaign is exceptional http://betanews.com/2011/11/03/microsofts-clever-family-marketing-campaign-is-exceptional/.