Microsoft Business Strategy and Competitive Advantage
Microsoft business strategy integrates the following 3 elements:
1. “Cloud-first, mobile-first”. Intelligent cloud represents one of the solid sources of Microsoft competitive advantage and Microsoft business strategy places a great emphasis on cloud segment of the business. ‘Mobile first’ part of this strategy stands for the mobility of experiences[1] and the technology giant pays a due attention to this direction as well. Nadella’s bet on cloud has paid off handsomely. By October 2018, Microsoft surprised Amazon in 12-month cloud revenues. Specifically, while Microsoft earned USD 26,7 billion revenues, Amazon’s revenues totalled to only USD 23,4 billion for the same period.[2]
2. Growing through mergers and acquisitions. Mergers and acquisitions play an important role in Microsoft business strategy and the multinational technology company engages in mergers and acquisitions to increase its capabilities, product range and value offering. The list of the most notable recent acquisitions include Nokia Corporation’s Devices and Services business for USD 9.4 billion in 2014 and Mojang Synergies AB the Swedish video game developer of the Minecraft gaming franchise, for USD 2.5 billion.[3]
Moreover, in June 2016, Microsoft acquired LinkedIn for USD 196 per share in an all-cash transaction valued at USD 26.2 billion.[4] This particular acquisition plays an instrumental role to connect the world’s professional cloud and the world’s professional network – creating new experiences and new value for business users. With more than 1.2 billion Office users and 433 million LinkedIn members, the combined data graphs is expected to improve how Sales, HR, and other professionals get work done.[5] In 2018 alone, Microsoft completed 16 acquisitions of companies ranging from video games producers to artificial intelligence to employee engagement.
3. Focusing on augmented and virtual reality (VR). CEO Satya Nadella has placed augmented and virtual reality at the core of Microsoft business strategy. It has been noted that “while a majority of the augmented and virtual reality players are focused on consumer gaming, Microsoft has spent considerable time and effort defining the potential business use cases for HoloLens”[6]. Moreover, Microsoft has been able to demonstrate how VR could be usedto improve the shopping experience, in education and automotive design. It can be argued that leadership in augmented and virtual reality in the global scale can become one of the solid sources of Microsoft competitive advantage, similar to its leadership in cloud segment, with positive implications on long-term perspective.
4. Promoting ‘Tech Intensity’. Focus on ‘tech intensity’ can be mentioned as a recent addition to the business strategy of Microsoft. The term ‘tech intensity’ can be described as “a fusion of cultural mindset and business processes that rewards the development and propagation of digital capabilities that create end-to-end digital feedback loops, tear down data silos and unleash information flows to trigger insights and predictions, automated workflows and intelligent services.”[7]
At the same time, it has been noted that “as encouraging as the buzzword “tech intensity” sounds, it is not about empowering others for the sake of its own advancement.”[8] Instead, the actual and ultimate goal behind company’s ‘tech intensity’ idea is to make Azure world’s computer, by adding increasing numbers of companies into this platform.
Microsoft Corporation Report contains a full analysis of Microsoft business strategy. 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, Ansoff Matrix and McKinsey 7S Model on Microsoft. Moreover, the report contains analyses of Microsoft leadership, organizational structure and organizational culture. The report also comprises discussions of Microsoft marketing strategy, ecosystem and addresses issues of corporate social responsibility.
[1] Ward, J. (2017) “Microsoft leadership: Here’s who is accountable for what in Redmond” Windows Central, Available at: https://www.windowscentral.com/whos-who-microsoft-success-or-failure-heres-whos-accountable
[2] 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
[3] Annual Report (2016) Microsoft Corporation
[4] Annual Report (2016) Microsoft Corporation
[5] Annual Report (2016) Microsoft Corporation
[6] Lopez, M. (2016) “7 Reasons to Give Microsoft’s Strategy Another Look” Forbes, Available at: https://www.forbes.com/sites/maribellopez/2016/04/19/7-reasons-to-give-microsofts-strategy-another-look/#13558b4a7dd0
[7] Evans, B. (2018) “Microsoft CEO Satya Nadella Unveils New Digital Strategy For Businesses: ‘Tech Intensity’” Forbes, Available at: https://www.forbes.com/sites/bobevans1/2018/09/24/microsoft-ceo-satya-nadella-unveils-new-customer-weapon-tech-intensity/#14bed2124d2f
[8] Ward, J. (2018) “Microsoft’s ‘tech intensity’ is all about assimilating companies into its cloud” Windows Central, Available at: https://www.windowscentral.com/microsofts-noble-tech-intensity-push-really-about-building-its-global-cloud-computer