CEO: Satya Nadella
Year founded: 1975
Headquarter: Redmond, Washington, USA
Number of Employees (2018): 134,944
Public or Private: Public
Ticker Symbol: MSFT
Market Cap (2018): $776.35 Billion
Annual Revenue (2018): $110.36 Billion
Profit | Net income (2018): $16.57 Billion
Products & Services: Bing | Bing Video | Cortana | docs.com | LinkedIn | Microsoft Azure | Microsoft Dynamics |Office | Microsoft Money | Microsoft Office Online | Microsoft Office 365 | Microsoft Windows | Apps for iOS | Apps for Android | Surface Pro |
Competitors: Apple | Google | Oracle | HP | SAS | Salesforce | Sony | SAP | Oracle Netsuite
Did you know that the first ever mention of Microsoft was in a letter addressed to co-founder Paul Allen from Bill Gates?
An Overview of Microsoft
The captain of the ship Bill Gates and his business partner Paul Allen founded Microsoft in 1975. It is dominating the software market since then, offering software and hardware products, operating systems, apps and devices, Cloud computing, and office software suites.
Satya Nadella is currently in charge of Microsoft Corporation. The company is headquartered in Redmond, Washington, USA.
Microsoft is inevitably the world’s most renowned American multinational technology company. It’s been at the forefront of technological advancement for more than 40 years and has made significant contributions to the technology industry.
The world would really be a different place without Microsoft!
Let’s take a look at this technological giant’s operations and examine them through a Microsoft SWOT analysis.
SWOT Analysis of Microsoft
Following is the Microsoft SWOT analysis:
Strengths – Internal Strategic Factors
- Leading Software Company – Microsoft is the undisputed global market leader in software technology specifically in cloud computing. It’s the world’s largest developer of Windows OS and the leading cloud player. Its commercial cloud (Azure, Office 365 commercial, dynamics 365) generated annual revenue of $23.2 billion in 2018.
- World’s largest Company with dominant market share– Microsoft ranks 4th with a market value of $750.6 billion in the world’s largest companies in 2018. It also owns the largest market share with a 3% point gain among the five largest cloud service providers(Microsoft, AWS, IBM, Oracle, Google).
- Vast market reach – Microsoft operates in more than 190 countries worldwide. After launching the promoted version of Windows 10, it has over 700 million installs worldwide.
- Constant growth – The latest earning results of Microsoft clearly demonstrate its strong growth in the cloud business. According to the analysts, Microsoft will be worth $1 trillion in the near future.
- Addition of newer SKUs (Stock Keeping Units) – Microsoft has recently added newer SKUs to its brand portfolio. This includes Microsoft 365 combining Office 365 and Windows 10. Its M365 is a multi-billion dollar business.
- Reputed Brand with superior customer loyalty – Microsoft has 1.2 billion Office users and 60 million Office 365 commercial customers. It has undoubtedly the greatest loyal customer base. Customers trust the brand and remain loyal to it.
- Huge Market Capitalization – With 776 billion U.S. dollars of market capitalization, Microsoft is one of the biggest hi-tech company on the planet. It has a steady presence and was also listed in the Top 10 Global Companies in PriceWaterhouseCoopers’ report updated on 31st March 2018.
- Effective Adverting platform – With its strong and effective marketing strategies, Microsoft has influenced people all over the world. Its emotive advertisement aired in July with the title ‘The future starts now’ touched many worldwide.
- Brand reputation – Microsoft was ranked 4th by Interbrand as the world’s most valuable brand with the highest brand strength and brand equity in the digital industry.
- Easy to use software – Microsoft is known for its hi-tech and quality products offerings. Windows OS and Office software products are quite user-friendly with highest quality standards.
Weaknesses – Internal Strategic Factors
- Overexposure to the PC market – PC shipments are often subjected to frequent falls due to vendors’ rising prices and currency fluctuations. It has landed Microsoft in a vulnerable position.
- Cybercrime theft – The increasing cybercrime cases have left Microsoft in a vulnerable state. Hackers have reportedly attacked the cybersecurity of the Windows Operating System several times.
- Lacking innovation – Microsoft has been failing to grow its hardware products sales such as surface pro computers and phones. It has been lagging in innovation and advanced technology, whereas, Apple, Google, and Amazon are quickly blazing trails.
- Lacking market leadership in Internet browser segment – While Google, Safari, and Firefox have been gaining the market share in internet browser segment, Microsoft is losing the market. Microsoft IE & Edge didn’t even make a list in 2018’s most popular web browsers.
- Unsuccessful acquisitions – Microsoft’s fewer acquisitions like WebTV, LinkExchange, Massive, and Danger resulted in failures and divestitures. Such unprofitable investments are the biggest weaknesses of Microsoft.
Opportunities – External Strategic Factors
- Cloud business growth – Its cloud-based services have gained immense growth and success in recent years. Thus, there’s an opportunity for Microsoft to expand its cloud business.
- Innovation and Artificial Intelligence – Microsoft has a massive opportunity in many innovative areas like AI and game technology. Investing in these areas can give an upper hand to Microsoft.
- Partnerships and Acquisitions – Microsoft can focus on entering into new strategic alliances and partnerships. It will enable the company to gain high market share. Acquiring major hi-tech firms will also be a profitable opportunity for Microsoft.
- Smartphone industry – The fast-growing market of smartphones and tablets offer an excellent opportunity for Microsoft. It can capitalize on the rising demands of these products.
- Cost leadership strategy – Microsoft can gain the opportunity of increasing its sales and revenue by offering its products at low prices. It may also prevent the hackers to use its software illegally.
Threats – External Strategic Factors
- Workforce’s related criticisms – Microsoft’s 2018 workforce diversity statistics showed an imbalance in its recruited workforce. The number of women and minorities working was quite low, fuelling severe criticism and arguments against the company’s HR policy.
- Gay reference controversy – Microsoft has faced many criticisms for its Xbox Live game service. Reference to homosexuality and gays can’t be used in the Gamertag and user’s profile, as the company considers this matter ‘unsuitable’ and ‘offensive’ for other users.
- Aggressive competition – Microsoft is in intense competition with Google and Apple. These companies’ established positions can be a threat to Microsoft’s market position.
- Changing preferences of consumers – People are highly attracted to the market of smartphones, notepads, and laptops. Microsoft has modest shares in these markets.
- Open source projects – Like Linux OS and Open Source Office, many new open source projects have successfully entered into the market offering similar services for free. It can threaten Microsoft that offers these products at an expensive rate.
- Cybercrime and piracy – Rising cybercrime thefts and software piracy issues have dramatically affected Microsoft’s security network system.
To remain the leading software provider, Microsoft needs to work on its weak aspects and embrace opportunities. Few recommendations are given below in this regard:
- Upgrade its software and bring innovation. Microsoft must take radical steps to successfully embrace the future of innovation.
- Continue enhancing its brand reputation through effective marketing tools.
- Update its internet browser market and take initiatives to increase the market share in this segment.
- Build more competitive advantages to compete with technology rivals like Google and Apple.
- Increase partnerships, strategic alliances, and acquisitions to strengthen its market standing.
- Resolve the cybersecurity issues and address the global cyber thefts by advancing its security network systems.
- Decrease the prices to reduce the illegal use of its software systems.
- Diversify its business to enhance potential growth and market share.
Tell us what you think? Did you find this article interesting?
Share your thoughts and experiences in the comments section below.