Microsoft Ansoff Matrix

Microsoft Ansoff Matrix is a marketing planning model that helps the multinational technology company to select its product and market strategy. Ansoff Matrix distinguishes between four different strategy options available for businesses.  These business growth strategies are market penetration, product development, market development and diversification.

Microsoft Ansoff Matrix

Microsoft uses all four strategy options within the scope of Ansoff Growth Matrix in an integrated way.

1. Market penetration. Market penetration refers to selling existing products to existing markets. Microsoft uses market penetration strategy to sell its Windows software and devices and other products in 116 Microsoft stores worldwide as well as through online channels and authorised distributors. The multinational technology company uses Microsoft Rewards loyalty program to pursue its market penetration strategy.

2. Product development. This growth strategy involves developing new products to sell to existing markets. Microsoft engages in product development strategy systematically. The tech giant’s research and development expenses increased USD 1.7 billion or 13% in 2018 compared to the previous year.[1]

Microsoft develops most of its products and services internally through three engineering groups.

• Applications and Services Engineering Group, focuses on broad applications and services core technologies in productivity, communication, education, search, and other information categories.
• Cloud and Enterprise Engineering Group, focuses on our cloud infrastructure, server, database, CRM, enterprise resource planning, management, development tools, and other business process applications and services for enterprises.
• Windows and Devices Engineering Group, focuses on our Windows platform across devices of all types, hardware development of our devices, and associated online marketplaces.

3. Market development. Market development strategy is associated with finding new markets for existing products. Microsoft enters a new market whenever it sees there potential for its products and services. For example, HoloLens was made initially available only in 10 countries such as United States, United Kingdom, Canada, Australia and Germany. Once demand for this product increased in the global scale, the company made HoloLens available to an additional 29 markets with comparably lesser purchasing power such as Croatia, Poland and Turkey starting from November 2017.[2]

4. Diversification. Diversification involves developing new products to sell to new markets and this is considered to be the riskiest strategy. Microsoft uses diversification strategy occasionally. Entering the cloud business in 2006, the same year as its rival Amazon launched Amazon Web Services can be mentioned as the most notable example of diversification strategy engaged by Microsoft. This bet proved to be highly successful though.

By October 2018, Microsoft surpassed Amazon in 12-month cloud revenues, becoming an undisputed leader in cloud in the global scale. Specifically, while Microsoft earned USD 26,7 billion revenues, Amazon’s revenues totalled to only USD 23,4 billion for the same period.[3]

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

[1] Annual Report (2018) Microsoft Corporation

[2] Bowden, Z. (2017) “Microsoft is bringing HoloLens to 29 new markets starting today” Windows Central, Available at: https://www.windowscentral.com/microsoft-bringing-hololens-29-new-markets-starting-today

[3] Evans, B. (2018) “#1 Microsoft Beats Amazon In 12-Month Cloud Revenue, $26.7 Billion To $23.4 Billion; IBM Third” Forbes, Available at: https://www.forbes.com/sites/bobevans1/2018/10/29/1-microsoft-beats-amazon-in-12-month-cloud-revenue-26-7-billion-to-23-4-billion-ibm-third/#510bdfb82bf1