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Microsoft and their market strategy

Introduction

Founded in 1975 Microsoft (NASDAQ “MSFT”) Microsoft is the worldwide leader in computer software technology that is used by millions of people around the world. Microsoft windows operating system Windows 95, Windows 98, Windows 2000 and Windows XP and other business related softwares are extensively used by Microsoft customers. The success of Microsoft is apparent with its indomitable source code that is used in designing of operating system which is extremely useful for beginners and computer professionals who work on computers all through the day. Today, not a single computer works without Microsoft product and such is the benefit and use of Microsoft products. On one side, Microsoft is growing and continues to receive reputation from across the world about its products and usage and on the other side, Microsoft is encouraging and paving the way for global growth in computer technology which is absolutely outstanding and none can stand without appreciating the works of Microsoft. In fact Microsoft has already acclaimed with the global leadership in computer software technology  and is the key source for finding latest technologies.

Preparation of word documents, power point presentations, excel data sheets are extremely useful for businesses to prepare documents, present project reports and store financial data and other technical data.  Prior to the development of windows operating system, in many countries the data was stored in manual files by using typewritten documents and by using various techniques of printing to store financial records. It used to be quite a laborious job for business people and staff members to maintain manual filing system and there was no question of retrieving a copy of document, in case if the document was lost. Such as these hurdles, were many faced by businesses and corporate companies and there was no solution until  the launch of Windows 95 by Microsoft Company. A user-friendly operating system with a number of features for keeping a document in tact, neat and facility to take a print was an outstanding and commendable product that was launched by Microsoft.  Microsoft began its marketing strategy for supplying its products around the world and the demand for Microsoft products is a never end as customers are still growing and there is a growing demand for Microsoft products.  The turnover of Microsoft in the year 2005 was $39,788 million having 44,298 employees within U.S and 27,255 employees outside U.S. The Microsoft headquarters are situated at Redmond, Washington.  As on today, Microsoft is one of the 100 best companies that employees would like to get placement for the purpose of work.  Each year there are new jobs created and there is a job growth and there are always applicants nearly totaling to 947250 waiting to get recruited in Microsoft. The Average annual pay in Microsoft is $118,500 for a software developer and for administrative support hourly average annual pay is $52,560.  The company is absolutely professional in work environment and in finding new talents in every area which keeps the freshness of Microsoft. Microsoft has enabled to the growth directly or indirectly with the medium of its products to the entire world and many nations and governments must admit and accept this fact that growth in GDP is not possible without setting up businesses and products. Exchange of communication, exchange of goods and services leads to import and export of businesses through which the people receive consumer goods and products and with the purchases made by consumers businesses grow leading to the growth of GDP of a nation. Without computer technology, the system of working was absolutely slow and so also the process of business whereas with the launch of Windows 95 and other operating systems, the functioning of working system has become much faster and in every country, there are massive expansion programs in software development, industries, factories and other production centers. The success of Microsoft is also apparent in meeting the need which was vacant up to the year 1990 wherein electronic typewriters, manual typewriters, fax machines were replaced by Windows 95 with much more facilities of storing documents, retrieving documents, printing documents and sending documents as an attachment via email from one place to another with a matter of a mouse click. Microsoft  products are user-friendly, need no excessive training, great facilities to store large amounts of data and another great feature to deliver the product over web sources. Windows operating system are multi-user, mutli-facilitated and extremely efficient in functioning.  In many parts of the world, there are computers in homes, offices, businesses, government offices, schools, colleges, universities and the software used in computers is Microsoft Windows operating system with many features. Microsoft products have further lead to create new jobs in computers viz., data entry workers, typists,  programmers, LAN analysts, data analysts and system analysts.  There are other jobs created in administrative support by virtue of the launch of Microsoft products.  In order to work on computer, one must necessarily know how to use Microsoft products and without this knowledge, it is very difficult to carry on jobs in offices.  The benefit of home jobs is massive with the fact that stay-at-home moms bring work from companies, prepare documents and deliver to the companies which is again another wonderful source of income.  There is no area that does not give scope for growth with the usage of Microsoft products, such is the immense success of Microsoft products.  In a way the development of Microsoft products has lead to the creation of jobs, needs, businesses, growth in companies, less paper work, growth in employment and a reduction in poverty in various countries. In this manner, Microsoft has performed an extremely commendable job with its products and is continuing to perform a great job while strengthening its reputation from end to the other.

Every successful company has a marketing strategy to maintain the demand, supply and delivery of its products.  Microsoft company strategy was to create a need and that need was to have a facility to own a computer and use Microsoft products which was a massive success throughout the world and as on today there is no rural area that does not have a computer or Microsoft products.  In the year 2007, Microsoft unveiled new online facilities as a part of CRM viz., Microsoft Office Live Workspace which permits people to access documents online and share work with others, Microsoft Exchange Labs, for the purpose of exchange of communication for those who are in research and development programs, Continued Customer and Partner support for Microsoft Dynamic (CRM) Microsoft Live support for business services and Microsoft BizTalk Services to develop greater business opportunities for small enterprises.  The strategy of Microsoft here is to bring people together to coordinate with Microsoft for various business solutions as well to develop new software products. Customers of Microsoft completely rely on Microsoft for finding solutions and to buy new products launched by Microsoft.

Tying is another marketing strategy that is adopted by Microsoft which is basically referred to as a situation wherein a firm makes a purchase of one of its products on a condition to purchase one of its products.  A case in this context was between U.S vs. Microsoft.   According to the leverage theory “tying provides a mechanism whereby a firm with monopoly power in one market can use the leverage provided by this power to foreclose sales in, and thereby monopolize, a second market” (Whinston 1990)  Tying is also considered as one of the basic concepts in anti-trust laws and policies.  Microsoft tying of Word, Excel, Access, PowerPoint and other programs into O±ce was also a case of tying. Bundling is more general than tying  and refers to a situation wherein a package containing at least two different products are offered.  If a company is offering a particular offer only, it is called as pure bundling whereas there are offers on some other products it is called as mixed bundling. This strategy of bundling and tying leaves a great scope to gain monopoly position with the fact that there is no scope for a competitor to give away products as all the products required by a customer are already available within Microsoft. U.S. Government particularly raised an issue against Microsoft in the aspects of bundling and tying as a marketing strategy.  The Government claimed that Microsoft was heading towards monopoly with the bundling tying of Microsoft Internet explorer with Microsoft Operating System.  The bundling of two distinct products by Microsoft as its marketing strategy was not required as it was extending the monopoly power of Microsoft to both business houses and to personal computer segment of customers.  In reply to this, Microsoft contended that the feature of browsing by Microsoft Internet Explorer was not a distinct product as it was a desired feature that was demanded by Microsoft customers. The District court was in favor of U.S. Government whereas the Court stated Microsoft was a monopolist in personal computer operating system and that the bundling of Internet Explorer with operating system was termed as an illegal arrangement as a part of marketing strategy.  In continuation of this, the Court ordered that the Microsoft be divided into two companies, one to distribute operating system and the other to distribute all other products that are developed by Microsoft. The Microsoft appealed to the Court’s ruling.  After several discussions and negotiations, a final negotiated settlement was made between U.S. Government along with other States with Microsoft. Further Court Appeals also determined that bundling of an Internet Browser or other features of Microsoft products does not constitute to a monopoly power system and illegal tying arrangement. The Court further concluded a fact that it is the customer who is benefited with this arrangement while evaluating the linkage of the products by Microsoft.  Antitrust bundling laws continue by competitors against Microsoft whenever a new generation of Microsoft products are launched.   For instance new Vista operating system and Office 2007 was launched and objections to Vista products had been raised by competitors McAfee and Symantec.  Microsoft is built with intellectual property and not with any business motive and therein lies the company’s success.  Companies which are commenced only with the motive of profits do not stay for longer period of time in the consumer market.  The professional expertise of Microsoft is absolutely strong and knowledge-based and the workforce continue to grow and the company is expanding its operations even to the field of takeovers as in the recent months of the 2008, Microsoft placed a bid on takeover of yahoo.com with $47 billion and which is yet to be finalized and settled at both ends.  This once again reiterates a fact that Microsoft is not concentrating on just personal computer products whereas it is also concentrating on takeovers, mergers and other innovative products that are useful in computer technology.  Microsoft is playing a vital role in the field of computer technology whereas a portion of market share is still available for its competitors which reinstates a fact that the motive behind Microsoft product development is not covering the entire consumer market whereas to sell products that meet the needs of different customers, business and offices.  Further the company abides by the corporate rules, legal frameworks of U.S. Federal Government and is also shoulders Corporate Social Responsibility in funding to various organizations.  In this aspect, the Courts and competitors must consider a lenient view and not impose any unregulated legal practices on Microsoft for the benefit of customers and for upholding the reputation of Microsoft.

Microsoft shares the wealth of the company with U.S economy through the software business that is internationally supportive in marketing of Microsoft products. In the recent years, Microsoft expanded its marketing in China, Brazil and Russia.  U.S economy is passing through a period of recession whereas the business and profits of companies including Microsoft are going very strong with the fact that for the year 2007 the sales for Microsoft were recorded at $51,122 million quoting $22.46 per share in NASDAQ.  The company foresees no negative impact either from U.S economy or vice-and further there are greater opportunities for Microsoft to expand its operations in a wider perspective throughout the world by launching its new products.  Microsoft has 44th place in FORTUNE 500 and #3 in FT Global 500.  Microsoft competitors are Google, IBM and Oracle.  The U.S economy is heavily influenced by business spending on software products and the success of programming companies are strongly dependent on technical and professional expertise.  The chief financial officer of Microsoft Chris Liddell stated “We certainly are conscious of the fact we might see some economic slowdown, but overall, our business hasn’t been substantially impacted to date. We won’t be insulated from it. But having said that, our overall view is that technology spending remains relatively well intact, software spending will probably outgrow technology spending, and we believe we can outgrow software spending,” [1]

Microsoft does foresee economic slow down in U.S and this does not leave any impact on the business of Microsoft.  As U.S is a land of many opportunities, there is a great scope for more American businesses to be commenced and creation of new jobs in order to bring an end to economic slow down. Futurist Mark Anderson stated about Microsoft as a company that is “making plumbing”  whereas Google is a “river of money” which gives a fact that Microsoft prepares technology that businesses and consumers use for everyday tasks while Google is at success gate of macro stage on advertising and making dollars online.  Anderson also emphasized that Microsoft impact on U.S economy is bigger than Google with the fact that Microsoft is a giant company for IT businesses and IT global market. [2]

Conclusion

Marketing strategy for every product that is adopted by a company is distinct and cannot be compared with another product or by another company.   Marketing always carries stiff competition, demand for quality service and good customer relation management and whichever company offers good products, quality service and CRM that company prevails in market dominance and no other issue that is outside the purview of marketing is not a matter of interest either for consumers or for companies.  It is a fact that Microsoft is playing an important role to the U.S economy either directly or indirectly which indicates another important fact more number of successful business for U.S indicate economy growth for U.S economy  which is at present is 0.60%  and inflation at 3.88 as on date. [3]

References

Books

Luís M. B. Cabral

Accessed May 16, 2008
Introduction to Industrial Organization

George B. Delta, Jeffrey H. Matsuura

Law of the Internet
Accessed May 18, 2008
http://books.google.co.in/books?id=huqb4yxV01MC&pg=RA1-PA55&lpg=RA1-PA55&dq=case+against+microsoft+for+bundling+and+tying&source=web&ots=8oZPTPGqoj&sig=i2hJBViv_pWg7fNcBkNWJIIckLg&hl=en

Web sources

Bundling, tying and portfolio effects

Accessed May 18, 2008

http://www.berr.gov.uk/files/file14774.pdf

Product bundling and tying in competition

Accessed May 18, 2008

http://www.uni-bonn.de/~kovac/papers/bundling_kovac1.pdf

[1] http://www.businessspectator.com.au/bs.nsf/Article/Microsoft-feeling-no-major-impact-from-US-economy-CE3KL?OpenDocument
[2] http://www.informationweek.com/blog/main/archives/2007/01/who_helps_the_e.html
[3] http://www.forecasts.org/gdp.htm