Microsoft SWOT Analysis

SWOT is an acronym for strengths, weaknesses, opportunities and threats related to organizations. The following table illustrates Microsoft SWOT analysis:

Strengths

1.      Global leadership in cloud sector

2.      Effective leadership by Satya Nadella

3.      High profitability of the business and solid financial position

4.      Diversified product portfolio

5.      Strategic collaboration with other companies in e-commerce and IT industry

Weaknesses

1.    Lack of innovation

2.    Weak position of Internet Explorer browser application

3.    Occasional technical issues with Windows updates

4.    Dependence on hardware manufacturers

5.    Security issues of Microsoft products

Opportunities

1.      Engagement in mergers and acquisitions

2.      Developing innovative products and services

3.      Focusing on smartphone segment

4.      Developing mobile advertising

5.      Enhancing security against cybercrime

Threats

1.    Exchange rate risks

2.    Emergence of new competitors

3.    Anti-monopoly and other lawsuits

4.    Economic crisis

5.    Emergence of CSR-related scandals

Microsoft SWOT analysis

Strengths

1. Microsoft is an undisputed leader in global marketplace in cloud segment. Microsoft offers a wide range of cloud-based computing services that include Bing, Microsoft Azure, Microsoft Dynamics CRM Online, Microsoft Office 365, OneDrive, Skype, Xbox Live, and Yammer. Moreover, public announcement of plans by Satya Nadella that Microsoft will be earning USD 20 billion per year from cloud business by 2018 is a clear illustration of further commitment of the company to further increase its presence in highly profitable cloud business.

As it is illustrated in figure below, Microsoft has maintained its leadership position in the cloud segment according to the amount of revenues for the last several years, followed by Amazon, Salesforce and Oracle. Leadership in cloud segment is a major strength for the multinational technology company taking into account its increasing popularity and long-term growth prospects.

Microsoft SWOT analysis

Cloud leadership by revenue[1]

2. Effective and visionary leadership by Satya Nadella is one of the factors that sets apart Microsoft from competition in positive terms. Since taking over from Steve Ballmer as Microsoft CEO in 2014, Nadella has been bold and effective in restructuring and reinvention of the company. Initiatives such as refocusingMicrosoft’s mobile-based efforts and expanding many of its services to be offered on other platforms like Mac introduced by Nadella has proved to be effective up to date.[2] It has been noted that leadership principles of Satya Nadella are based on the values of learning, choosing to create a positive, impact, finding ways to innovate and making meaning a priority.[3]

3. High profitability of the business and solid financial position is a notable strength possessed by Microsoft. In fiscal year 2016 Microsoft generated USD 85.3 billion in revenue, USD 52.5 billion in gross margins, and USD 20.2 billion in operating income. Commercial cloud annualized revenue run rate exceeded USD 12.1 billion, up more than 50 percent year-over-year. Moreover, during the last financial year revenue from cloud platform, Azure grew triple digits, with usage of key computing and database workloads more than doubling year-over-year.[4]

Microsoft’s high level of profitability and solid financial position of the company is a considerable strength from multiple points of view. Particularly, solid financial position of the business can play an instrumental role in terms of facilitating new product development with positive implications on the long-term growth of the business.

4. Diversified product portfolio is another considerable strength possessed by Microsoft. Unlike the portfolio of some of its direct competitors such as Apple and Samsung, Microsoft’s portfolio of products and services is vast comprising operating systems for computing devices, servers, phones, and other intelligent devices; server applications for distributed computing environments; productivity applications; business solution applications; desktop and server management tools; software development tools; video games; and online advertising. Additionally, Microsoft designs and sells hardware including PCs, tablets, gaming and entertainment consoles, phones, other intelligent devices, and related accessories. Such a diversified portfolio protects and company against downturns in any specific product or service segment.

5. Strategic collaboration with other companies in e-commerce and IT industry is an additional notable strength that Microsoft benefits from. The multinational technology company has entered into strategic cooperation with a number of companies in IT and e-commerce industries on a mutually beneficial basis. Microsoft’s cooperation with Red Hat, Docker, Mesosphere and other companies can be mentioned to illustrate this point. Microsoft has partnered with Rolls Royce, the PGA Tour, Japan Airlines, and Volvo to install Microsoft HoloLens and the Windows Holographic platform, transforming the way they work by breaking down the barriers between virtual and physical reality.

Weaknesses

1. Lack of innovation is one of the Microsoft’s major weaknesses. It has been noted that “right now people are sitting on a huge installed base of old Windows XP and Windows 7 computers. These users seem to be happy right now even though Microsoft has virtually abandoned Windows XP, their most solid operating system ever. They are temporarily happy because nothing on the market has shown them a good reason to upgrade.”[5]

In other words, Microsoft has lagged behind of its major competitors such as Apple and Samsung in terms of introducing innovative products and services and adding innovative features and capabilities to its current portfolio of products and services. While competitors have been busy to introduce innovative products such as Apple Watch and Samsung SMART TV, Microsoft has not launched an innovative product or services during the past several years.

2. Loss of leadership position in internet browser segment is a noteworthy weakness associated with Microsoft. Microsoft’s Internet Explorer was a leading browser application with market share of more than 90% for about two decades since the beginning of the 1990s. However, Internet Explorer has been quickly losing its market share since the launch of Google Chrome in September 2008. As it is illustrated in Figure 3 below, currently total Microsoft market share in internet browser segments accounts for only 20,57% and leadership spot has been lost to Alphabet’s (Google) Chrome, which possesses 42,47% of the global market share…

Microsoft SWOT analysis

Market Share of Internet Browser Applications[6]

Microsoft Corporation Report contains a full version of Microsoft SWOT Analysis. The report illustrates the application of the major analytical strategic frameworks in business studies such as PESTEL, Porter’s Five Forces, Value Chain analysis and McKinsey 7S Model on Microsoft. Moreover, the report contains analyses of Microsoft leadership, organizational structure, business strategy and organizational culture. The report also comprises discussions of Microsoft marketing strategy and addresses issues of corporate social responsibility.

Microsoft Corporation Report

[1] Source: TBR Estimates, Company Data

[2] Pyne, S. (2016) “Leadership lessons from Microsoft CEO Satya Nadella” Business Insider, Available at: http://www.businessinsider.in/Leadership-lessons-from-Microsoft-CEO-Satya-Nadella/articleshow/51528081.cms

[3] Marques, F. (2014) “SATYA NADELLA’S LEADERSHIP PHILOSOPHY: MEANING, INNOVATION, AND COLLABORATION” IMS, Available at: http://www.ims.gs/blog/satya-nadella-leadership-philosophy-meaning-innovation-collaboration/

[4] Annual Report (2016) Microsoft Corporation

[5] HAVE HP, DELL, APPLE, MICROSOFT AND OTHERS FORGOTTEN HOW TO INNOVATE?

HOW CAN STARTUPS BENEFIT? (2016) 3R Cubed Group, Available at: http://rcubedgroup.com/have-hp-dell-apple-microsoft-and-others-forgotten-how-to-innovate-how-can-startups-benefit/

[6] Source: Net Market Share (2017) Available at: https://www.netmarketshare.com/browser-market-share.aspx?qprid=2&qpcustomd=0