Microsoft Diversification Strategy Define the Research Proposal

Excerpt from Research Proposal :

Thirdly there is the broader dynamic of how social computing is completely re-ordering the competitive dynamics of the two sectors that comprise this division as well.

a. Determine the extent to which Microsoft competes with other companies in its industry by assessing the levels of market commonality and resources similarity for each major competitor.

Microsoft's levels of commonality and resources similarity with other competitors are relegated to those companies who have the ability to scale enterprise-wide with systems, whether those enterprises are companies or state, regional or national governments. The future of Microsoft's competitive strength is in the.NET platform and its scalability, integration flexibility and reliability as an SOA architecture of choice for enterprises. All other aspects of development within Microsoft are centered on.NET as the basis of creating integration links to.NET, so that from any given Microsoft Office document to a wireless connection from a PDA, to the integration of enterprise applications, all can be coordination, synchronized on the.NET SOA architecture. IBM's WebSphere, Oracle's Fusion, and SAP's NetWeaver have comparable levels of scalability, integration potential and reliability. For Microsoft to be challenged corporate wide, any given competitor would need to have this level of integration inherent across all systems, software and functional components and by having this, would challenge Microsoft at the resource level as well. Another way of looking at this is that any given competitor which can produce an SOA architecture and integrate it with enterprise applications has the necessary resources to also support its continual fine-tuning and development.

In terms of market commonality, the most critical business for Microsoft is it Office product line. The market commonality between Office and open source vendors presents the most significant strategic threats to profits that Microsoft is facing today. A secondary factor from a commonality standpoint is the continued development and refinement of server-based applications that run on the Linux operating system. This is a critically important area of competitive commonality for Microsoft as well.

b. Evaluate the drivers that will influence each of the competitors' actions and responses.


Foremost for this competitor are the drivers of customer loyalty and the need to continually protect its unique iTunes strategy that includes the build-out of music and video editing on its PCs and servers. The secondary factor is the fact that Apple has its down desktop and laptop operating system which has features that put it ahead of Microsoft specifically in the area of graphic design. The continued focus on innovation to keep their customers loyal is the most critical driver for Apple. The secondary concern is how to create greater value at the operating system level compared to Microsoft and extend superiority in this regard.


The world leader in search, Google challenges Microsoft in the Platform Products and Service Division. Google's unique approach to creating an advertising-based model has given them the ability create revenue purely based on clicks and page views, a feat Microsoft had yet to accomplish in the context of the case study. These drivers of the advertising model on the one hand and the development of ancillary businesses at a very rapid pace will make Google just increase the competitive pressure on Microsoft to dominate the search arena. Google responds creatively to competition by creating entirely unforeseen applications as the case study shows.


Having defined the OnDemand initiative in the timeframe of this case study, IBM is focused on two fronts strategically relative to Microsoft. The first is WebSphere to battle against.NET and the second is on the area of hosted applications through the OnDemand initiative. IBM chose to extend a few of their enterprise-wide applications on OnDemand initially. These would be most competitive to the products in the Platform Products and Service Division. Microsoft would respond to competitive threats by making WebSphere even more broad and robust in terms of functionality.


From the case study, Oracle is the most aggressive of Microsoft's competitors in the area of mergers and acquisitions, and also has concentrated their efforts on an SOA architecture as well.

Oracle also competes against the Great Plains applications and also most significantly with the Platform Products and Service Division. Oracle's flagship products are their database servers and they often will compete on price or include applications from the acquired companies. Oracle would respond to

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