Assessing Microsoft's Future

Paper Summary:

In this article, the writer notes that Microsoft today is more challenged than ever before in several major areas of its business. The most significant risk is in its server and enterprise divisions due to the widespread adoption of open source operating systems throughout enterprise accounts, which is the main source of revenue for Microsoft in their operating systems business. The writer also points out that the several threats that Google poses to Microsoft are just as significant yet have implications for the company's search, advertising revenue and increasingly, office productivity products including Microsoft Office. In addition, the writer discusses that Microsoft's lack of ability to deliver products on schedule and the scrapping of the early edition of the Windows Vista operating system in 2005 only to completely re-write and release it by 2007 illustrates the company's difficulty in synchronizing the efforts of thousands of developers. The writer maintains that Microsoft is clearly at a crossroads in its future direction based on the escalating competitive threats externally and the apparent lack of synchronization internally. All of these factors contribute to an uncertain future for Microsoft today. This paper includes PDF links to references.

Outline:
Still Strong in Core Businesses
Microsoft's Weaknesses
Microsoft's Critical Decisions
Summary

From the Paper:

"First and foremost the lack of adoption for the Microsoft Windows Vista operating system, and the lack of consistent adoption across all customer segments, is a major concern within the company today. Microsoft has not successfully positioned Windows Vista as fulfilling the integration and interoperability needs of enterprises; yet it has successfully communicated security features as part of the unique value proposition of the Vista operating system. Second, both the Xbox 360 and Windows Vista product development cycles were each delayed, eroding consumer confidence in the gaming system and leading to longer evaluation cycles for the operating system in enterprise accounts globally. Third, the company's struggles in the areas ensuring its pricing models are specifically how difficult they are to implement in enterprise accounts is an area that needs to be addressed. Finally both the geo-political stance of the European Union and the U.S. Department of Justice have created difficult competitive dynamics for Microsoft, as have what appears to be organizational entropy, or the lack of being able to stay as agile as the company once was, according to Credit Suisse."

Sample of Sources Used:

• Bear Stearns (2007) - Bearn Stearns Equity Research. John DiFucci. November 22, 2006. Bear Stearns Research. New York, NY.
• Credit Suisse (2007) - Microsoft Corporation. Jason Maynard. April 26, 2007. Credit Suisse First Research. New York, NY.
• PacificCrest (2007) - Microsoft Corporation Morning Research Note. May 29, 2007. PacifiCrest Research. Bernard Barnicle and Matthew Coss.

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