Microsoft SWOT Analysis
Company Name: Microsoft Corporation
Industry: Software (Windows Operating System, Microsoft Office 365, Internet Explorer (currently Microsoft Edge), Bing)
Consumer Electronics (Xbox, Microsoft Surface)
Video Games
Cloud computing and storage (OneDrive and Azure)
CEO: Satya Nadella
Founded: April 4, 1975
Founders: Bill Gates and Paul Allen
Number of Employees: 163,000 (2020)
Headquarters: Redmond, Washington, U.S.
Revenue (USD$): 143 billion USD (2020)
Microsoft Corporation (or known shortly as Microsoft) was founded by two childhood friends Bill Gates and Paul Allen in 1975. While Gates and Allen got into Harvard University and Washington State University, respectively; they both dropped out before they could graduate. The two friends wanted to establish business using their computer programming skills they have acquired and studied on from an early age.
They programmed a BASIC (Beginners’ All-purpose Symbolic Instruction Code) interpreter for an Altair 8800 computer in 1975. Altair 8800 was one of the microcomputers for the MITS (Micro Instrumentation and Telemetry Systems) company. The two ambitious friends presented their work to MITS and established a company called Microsoft. The name came from the shortened version of ‘microcomputer software’. Bill Gates became the first CEO of the company.
Microsoft created an operating system called Xenix in 1980 for IBM computers which were the most popular technological hardware at the time. Before the company could release their own graphical extension Microsoft Windows to the operating system in 1985, co-founder Paul Allen had to resign from the company due to his Hodgkin’s disease. Although, he kept his shares and became a billionaire when the company went public in 1986. He later invested in sports teams, real estate and other tech companies.
And after numerous tech creations, hundreds of acquisitions of companies around the world and with the humble leadership of a philanthropist who is devoted to change the world, the company became ‘the Microsoft’ we know it today.
Mission
Microsoft’s official mission statement is that they work “to empower every person and every organization on the planet to achieve more”. As you can see from the statement, there is no mention of ‘technology’, but there is ‘empowerment’. The company, as with its founder and longtime CEO Bill Gates, strive to access people and organizations to give them the support and power they need. This empowerment process is crucial for the growth of communities and subsequently, ‘the success of the planet’ itself.
Vision
The vision statement of the company is “to help people and businesses throughout the world realize their full potential”. Again, you can see that the aim is to ‘help’. Additionally, the target itself is not a specific society, country or culture… it is the world! Microsoft wants to support individuals and organizations to clearly see their full potential and ‘achieve’ what they want to accomplish.
SWOT Analysis of Microsoft
Strengths
The Windows Loyalty
There is a big chance that you are reading this blog post from a Windows operating system installed desktop or a laptop. In fact, the desktop operating system market share is nearly a monopoly due to the fact that 77% of the users worldwide use Windows still in 2020. The reason for that is Windows users are very loyal. It is quite hard for someone who is using and operating their computer with a Windows OS to switch to macOS or OS X which are operating systems for Microsoft’s rival Apple.
In March 2019, it was reported that 800 million devices around the world were using Windows 10. And more than 1.5 billion devices are using a version of the Windows operating system for their desktop or laptop computers.
The Brand Value
Microsoft’s value grew 30% in 2020, making the biggest jump in value amongst the tech companies of the world. The company became a 327 billion USD corporation, passing Google and taking the third place right behind Amazon and Apple in the list of most valuable brands in the world. In a year filled with quarantines and mandatory stays at home, Microsoft got into everyone’s homes in order to communicate, work or study behind a computer.
Access to Computer Hardware Companies
Can you think of a major computer retailer (other than Apple and Google) who does not use Windows as their operating system? It can be hard to think of an answer to this question because almost all the major companies that manufacture computers work with Microsoft. The desktop or laptop computers of Samsung, Lenovo, Toshiba, Dell, Asus (and many more) are actually sold with the Windows operating system installed in the device itself.
Microsoft even purchased Nokia’s mobile hardware patents and that division of the company in order to ‘get into’ the market of mobile phone operating systems in 2013. The acquisition was worth 3.79 billion EUR and unfortunately, it resulted in a failed attempt. Other than this deal, Microsoft invested in Dell as well in order to reassure their relationship and the continuation of Dell computers with Windows operating systems. So, it would not be wrong to say, Microsoft is a favorite not only among the computer buyers but also computer sellers as well.
Founder of the New Age
The co-founder Bill Gates, as well as Steve Jobs of Apple, with the software and additional programs they created, changed the technological landscape. They ushered in a new era of microcomputing and helped to get everyone’s home a computing machine. The term ‘microcomputer’ was increasingly used in 1970’s and 1980’s because at that period of time, computers were physically quite large. ‘Portable’ sized computer systems came with IBM microcomputers, Commodore 64 and Apple II in mid-1980’s.
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With the increasing popularity of the Windows operating system and software such as Microsoft Excel and Microsoft Word included in the Microsoft Office suite, the term ‘personal computer’ began to be used instead of ‘microcomputer’. And now, shortly ‘PC’ is used in daily life and became common while talking about computers in general thanks to tech companies such as Microsoft.
Tech Creations
- Xbox
Other than the dominating Windows OS and Microsoft Office, Microsoft dove into a lot of different industries. For example, Xbox game consoles. Even though Xbox is the second most popular console operating system in the world, behind PlayStation, it still is a successful company. Its sales rose when most of the countries around the world began their quarantine periods back in March 2020. As of November 2020, 37% of the console users continue to use Xbox and the latest version of the console Xbox Series X is expected to hit 30 million sales in 2023 (compared the estimated sales of 50 million by 2023 of PlayStation 5).
- Zune
In addition, Microsoft also launched Zune in 2006 which was a portable media player mainly focused on music. It was created as the competitor of iPod and was planned to be used in Windows Phones. It was discontinued in 2012, failing to perform against Apple’s iPods.
- MSN (Microsoft Network)
One of the most used web portals was MSN which was launched in 1995 with Windows 95. Microsoft Network (or MSN) provided a number of services: an email service, a messenger service and a web search engine. Later in 2005, Microsoft began a huge rebrand of each of the services in order to compete with its tech competitors such as Yahoo! and Google. The email service became MSN Hotmail (and now it is called Outlook); the messenger service named MSN Messenger became Windows Live Messenger (and later added into Skype); the web search engine became MSN Search (currently Bing). From that point on MSN focused on its website, providing mostly news and entertainment.
Tech Acquisitions
Hotmail.com was one of the first and at the time its biggest acquisition in 1997 for 500 million USD. It became a free webmail service and was the most used email service until the 2010’s. After its transformation into Outlook and the rising number of Gmail users, the number of Outlook users stayed around 400 million (according to data by Microsoft in 2013). On the other hand, Gmail accounts reach 1.5 billion throughout the world.
In fact, the first acquisition of Microsoft was a computer software company called Forethought in 1987. The company operated under Microsoft and later developed a presentation software named Microsoft PowerPoint.
In 2011, Microsoft bought Skype Technologies (parent company of the Skype VoIP service) for 8.5 billion USD. Microsoft focused heavily on the software and developed new versions as Skype Business.
Microsoft also acquired Mojang, a video game developer. The Swedish company produced the best selling game of all time: Minecraft. Xbox Game Studios (a division of Microsoft) bought the video game company for 2.5 billion USD and still publishes new versions of the game and updates.
Under the new CEO Satya Nadella, the company undertook its biggest acquisition to date: buying LinkedIn. The professional social networking website was purchased for 26.2 billion USD and it was decided to keep it as a separate entity.
Additionally, Microsoft owns SwiftKey, the virtual keyboard mobile app; GitHub, the code repository website; and recently, Affirmed Networks and Metaswitch Networks which are 5G network development companies.
Humble and Sympathetic Leaders
- Bill Gates
Everybody has heard of Bill Gates but not everyone knows what Gates does outside of Microsoft. Gates stepped down in 2000 as CEO, after becoming the world’s richest person (first) in 1995. He stayed as a board member and ‘technical advisor’ to the company but devoted his time, energy and money to philanthropy work. He was taken over as the world’s richest person by Jeff Bezos, founder and CEO of Amazon.
Gates founded The Giving Pledge with the billionaire Warren Buffet, promising to give half of his wealth to philanthropy. He has founded scientific researches, financially supported vaccine development and delivery around the world and also donated to charities under his and his wife’s Bill & Melinda Gates Foundation.
He even talked about the risk of a global pandemic in a TED talk in 2015. Saying that ‘the world is not ready or prepared for a pandemic’, foreseeing the spread of the COVID-19 virus.
- Steve Ballmer
Steve Ballmer became the CEO from 2000 to 2014. The company gradually doubled and tripled its revenue but Ballmer was criticized for ‘wrong acquisitions’ and ‘staying behind on the tech race’. He is known as an energetic and eccentric businessman and has videos of himself dancing which went viral.
- Satya Nadella
The current CEO Satya Nadella has transformed Microsoft’s ‘corporate and competitive’ style into a ‘collaboration and continual growth’ culture. He gave specific attention to reaching out to their rivals such as Apple, Linux and Dropbox in order to showcase the company’s changed identity. The mission and vision statements were revised by him as the current ones were included above in this blog post.
Weaknesses
Not So Successful Acquisitions
There are great and lucrative acquisitions of Microsoft (such as LinkedIn and Mojang) that can be considered as ‘successful acquisitions’. However, there are some that can be considered ‘not so successful’.
Hotmail (Outlook)
Hotmail was a great opportunity for Microsoft. It could become the one and only email service, passing Yahoo! Mail and Gmail. Yahoo! Mail was only an alternative to Hotmail and Gmail was merely a division of Google designed as a startup company. But Hotmail failed… and it failed hard. Gradually, Gmail displayed a cleaner and a more modern user interface; while Hotmail did not update, upgrade or innovate anything. And deciding to rebrand the service as Outlook only showed the world that Hotmail is dead.
aQuantive
What would you say if you learn that Microsoft purchased a company for 6.2 billion USD and you did not even hear of it? aQuantive was a digital marketing company acquired by Microsoft in 2007. It could fill the empty ad space Microsoft was lacking and other new companies such as Twitter and Facebook were leading. It could lead to additional services and products that are marketed and advertised all over the world. Instead, Microsoft chose to focus on web search advertisements for its search engine Bing.
Skype
Skype could be one of the (if not the) most popular messaging, voice chat and video chat programs. And for a limited amount of time, it was. Then later, Microsoft merged Hotmail and Skype into Microsoft Accounts. Smartphones became more popular and the apps such as WhatsApp, Facebook and Snapchat became the apps that were used for voice chat, video chat and messaging. And in March 2020, the majority of the countries announced a shutdown and a quarantine period. Skype could have been the program everyone used to communicate, work with, play games with, chat with and etc. However, other programs such as Zoom and Google Meet became more popular due to the fact that they were easier to use and operated in a cleaner, smoother way.
Lacking Innovation
Perhaps, the biggest reason that most of the acquisitions of Microsoft, mentioned above in the previous chapter, did not work is the lacking force of an innovation. Daily life became much faster and everyday brought an incredible number of innovations, services and products to be used and consumed. Everyone’s attention span decreased hugely. These situations should be considered, if you are operating a tech company; let alone, if you are investing in more than 200 companies and keep the majority of the market share with your operating system.
Due to the fact that Microsoft operates on the motto of ‘if it is not broken, do not fix it’, its ventures became gradually useless, flawed, old and unusable. Even though 2020 was a good year for the Windows operating system in terms of sales, the newest version of its console Xbox Series X struggled to keep up with the PlayStation 5. As PlayStation reinvents its product radically, it gains interest from the curious users. As for Xbox, it has seen that only minor changes and small upgrades will not be enough to compete against your competitor.
Not Being Number One
Other than the Windows operating system, which programs does Microsoft have in the number one spot? Hard to answer.
At the beginning, Internet Explorer was Windows’ internet browser, so it became the most popular one. If you were using Windows, then you were using Internet Explorer. After a few years, tough competitors such as Safari (Apple’s internet browser) and Mozilla Firefox came up on the scene. And then, Google Chrome was released in 2008. In a couple of years, again due to the fact that Internet Explorer failed to reinvent itself, Google Chrome the biggest browser in the market. Even though Microsoft rebranded the Internet Explorer recently, because it had (literally) became a joke among users, the updated Microsoft Edge still cannot garner more than 3% of the browser market share worldwide.
On the topic of being number two, let’s talk about Bing. Google is such a big and an immense company (and a search engine) that it became a verb to search something up on the internet. Everyone says ‘Let’s google it’, not ‘Let’s bing it’. More than 92% of internet users use Google as their main search engine, Bing cannot and will not compete against in this category.
This ‘securing the number two spot’ situation can be seen in almost all of Microsoft’s endeavors. And often the time, they are not even number two! Microsoft Edge, Bing, Skype, Windows Phones, Outlook, Windows Defender…
Dependence on Hardware Producers
Windows became the most successful operating system because it was featured in the computers that major producers such as IBM, Lenovo and Dell put it in their devices. Therefore, the biggest earning division of Microsoft is completely dependent on the sales of computer manufacturers. If less computers are sold, then less Windows systems will be sold as well.
Opportunities
Hardware Potential
Windows is an incredibly useful and hugely popular software, that is great; however, Microsoft can also use the potential of its popularity and the company’s enormous revenue in order to create hardware as well. They started this process with Microsoft Surface (and its subsequent versions), Microsoft’s own laptop, computer and notebook. You can also purchase Microsoft’s own keyboard, mouse, webcam and headphone as well.
Xbox console, with its main hardware and controllers, is a professionally designed and high quality hardware. Microsoft can use this potential further, perhaps with a new smart television, a smart speaker such as Alexa, Google Assistant or Siri HomePod or of course, a brand new, updated and competitive Windows Phone.
Big Enough to Buy Its Competitors
As it was mentioned, today’s world can make brands and individuals go viral and make them famous in an instant. So, it is hard to figure out and pinpoint which company can become a huge conglomerate or ‘the next big thing’. However, being Microsoft has its benefits as well. If there are companies or startups that can jeopardize your success or you think that they can become your tough competitor, you (as Microsoft) can just buy them out. Of course, it is not always that easy to just ‘buy your rivals’, but it still does not eliminate the possibility of it. Because you have enough cash flow; your brand value is big enough and Microsoft’s revenue is trustworthy enough to invest into other companies’ stocks.
Out of the Common Controversies
Facebook has been criticized for selling their users’ data, allowing hate speech on their platform and the leadership of the company by founder and CEO Mark Zuckerberg.
Twitter has been criticized for enabling ‘trolls’ to be effective on real life issues, the spread of conspiracy theories such as QAnon and the aloof personality of its CEO Jack Dorsey.
Amazon has been criticized for the harsh work conditions, the tax cut it got and the increasingly wealthier CEO, the richest man on Earth Jeff Bezos. Can you think of one controversy that Microsoft or one of its CEO’s got themselves into?
Of course, there are some; and they are obvious threats to the brand as well. But there are not many that were so publicized in the media such as the ones for the other big tech companies.
Artificial Intelligence
Microsoft acquired several companies specialized in AI and added them into their research and development processes. The company seeks to create intelligent machines that can be combined with human reasoning and thus, enrich the human experience. Microsoft also has an AI Business School which gives insights and provides guidance for companies in regards to artificial intelligence.
COVID-19 Sales
This pandemic that everyone dealt with in 2020 is horrible and forced everyone to stay at home. While small businesses had to shut down and even big companies had to reduce their employee numbers, Microsoft is not one of them. As it was mentioned, it actually is the company that got the biggest boost in revenue. Employees of Microsoft can work from home and people who remain in their homes continue to buy Microsoft products in order to keep in touch with their loved ones and operate their business online.
Threats
Few, Yet Important Controversies
Microsoft has so much less controversies than its competitors as other tech companies. However, a few of these controversies are crucial for the company’s public image. The most known of them is the gender bias of employees in the company.
- Complaints by Women
Between 2010 and 2016, female employees of the company filed 118 complaints to its human resources department in regards to gender discrimination, harassment and issues about equal pay. And only one of these complaints was followed by the department. After criticism and countless other complaints, the HR department actually investigated these complaints in 2016. It found that women who have the same job position and title earn 99.8 cents for every $1 earned by men. This alone shows the failed commitment of the company to equal pay among genders. On top of that, the study was found ‘lacking’, as the women whose complaints were investigated stated that they ignored the likeliness of raises and promotions.
Women also complained about the behavior of their male colleagues and described their work environment as ‘toxic’.
- Banned ‘Gays’ and ‘Lesbians’
A gamer named Richard Gaywood found out that his account was banned from Xbox Live because his gamertag included the word ‘gay’ in it. His account was suspended even if he filed a complaint stating his gamertag was his last name. Additionally, a woman named Teresa also found her profile suspended from Xbox Live because she wrote on her profile that she was a lesbian. Microsoft, in fact, has banned the words ‘gay’ or ‘lesbian’ to appear in profiles or gamertags because it has found that around 95% of them were used pejoratively. And Microsoft, who takes pride at being an LGBTQ+ supportive company, chose this option in order to fight homophobia taking place on their Xbox consoles.
Unbeatable Competitions
As it was mentioned, Microsoft has not been on the number spot for various products and services for some time. And unfortunately, these turned into unbeatable competitions with their competitors. It is quite hard for Skype to come back from behind and beat every video chat software to come on top. The year 2020 was an opportunity for the software to showcase its expertise, but it failed.
Similarly, Microsoft’s other software such as Bing cannot win over users and beat Google. Their competitors and these competitions are constant threats for the company. Of course, there might always be a small chance and a tiny possibility that Google can fail; Zoom, Google Meet and Discord can all bankrupt and Microsoft’s services can get on top as number ones… However, that is an incredibly small possibility.
Shifting Preferences of Users
People who are not working from home, students who are not using their computers to do their assignments and people who do not need devices such as desktop or laptop computers, do not use computers. They all use their phones to do everything. In fact, you can achieve nearly everything through your smartphone. Our smartphones become more like tablets; and our tablets become more like computers. That is why PC sales decrease because of the transforming preferences of users. Therefore, the main revenue channel of Microsoft, Windows operating system, can become a product that people do not need.
Pirated Services
In India alone, more than 90% of the computers sold have a pirated version of the Windows operating system. Due to the fact that Windows is a basic operating system, it is also fairly hackable. That is why more and more people are using the pirated service and installing the new versions of the system into their computers instead of purchasing it.
FINAL WORDS
As you can see, Microsoft accomplished so much that it became the world’s third biggest company and after nearly 45 years, still is a household name. But it cannot be on top of the list for every product and service it creates. It still has its weaknesses and threats as well as its opportunities to look for and threats to consider. So, no matter if you are managing one of the biggest companies in the world such as Microsoft; you are a small sized firm or a fresh start-up, you are going to do SWOT analysis for your business.
You can use Someka’s SWOT Analysis Template that can be easily used with Microsoft Excel. It is completely free and incredibly useful for you to see the past weaknesses, present strengths and future opportunities as well as threats for your business.
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