the belief that software is the tool that empowers people both at work and at
home. Since our company was founded in 1975, our charter has been to deliver on
this vision of the power of personal computing.
As the world’s leading software provider, we strive to continually
produce innovative products that meet the evolving needs of our customers. Our
ectensive commitment to research and development is coupled with dedicated
responsiveness to customer feedback. This allows us to explore future
technological advancements, while assuring that our customers today receive the
highest quality software products.
A good mission statement attempts to answer some key questions about the
company and the industry. These questions are Who are we?, What business are we
in?, and Where are we headed? In Microsoft’s mission statement they tell who
they are, as well as what there business is. They stess their goals and where
they are headed very well. My biggest problem with this mission statement is
the fact that Microsoft is to worried about being on top and will do what ever
is necessary.
INDUSTRY AND COMPETITVE ANALYSIS
Dominant Economic Characteristics
Market Differentiation
The first popular graphical platform came to market in 1984 with Apple’s
Macintosh. It was an instant success as the GUI platform of Macintosh
eliminated the need for obscure character commands. Gates worked closely with
Steve Jobs, who was the leader of the Macintosh team, in order to create
Microsoft’s competing GUI version of the Mac called Windows. The major
difference that Microsoft held over Apple was its willingness to allow other
software developers open access to the Windows format. Apple restricted its GUI
to Macintosh computers only. That difference helped to elevate Microsoft
eventually to the software industry leaderCbar none.
Gates devotes pages of explanations of why such a Agreat company@ as IBM failed
in its attempts to finally create its own software operating system. He
apologetically cites the specific decisions that IBM made with the development
of its OS/2 operating system. His reason for the disappointing results of IBM’s
attempts are chiefly due to the fact that graphical computing could have found
mainstream success if IBM had been more cooperation with Microsoft in developing
a general application of GUI software to be used with existing hardware rather
than insisting on developing a whole new application.
When Microsoft went public in 1986, Gates offered IBM 30% of MSFT stock in
order that IBM could share in the fortune, be it good or bad, of Microsoft. IBM
declined. This was Microsoft’s attempt at keeping IBM close to Microsoft as IBM
was instrumental in the success of Microsoft.
Despite not seeing eye to eye with IBM in the development of Windows, Gates saw
the GUI application as the progressive alternative to DOS and continued to
create improvements on the existing applications. In the weeks prior to the
release of Windows 3.17, May 1990, Gates A. . . tried to reach an agreement with
IBM for it to license Windows to use on its personal computers. We told IBM we
thought that although OS/2 would work out over time, for the moment Windows was
going to be a success and OS/2 would find its niche slowly.@ (62) IBM again
refused to cooperate with Microsoft insisting total dedication to the
development of OS/2 which was eventually doomed to an ignominious future. AIBM
has proven conclusively through the years that it has no idea of how to create
or market software. Examples are Displaywrite word processing; the PC Jr, IBM
Personal Typing System, and the PS-1, all with proprietary software; OS/2as
mentioned above, and feeble attempts at networking. Now, with the purchase of
Lotus, the software giant should request last rites.@] According to Gates, AIf
IBM and Microsoft had found a way to work together, thousands of people-
yearsCthe best years of some of the best employees at both companiesCwould not
have been wasted. If OS/2 and Windows had been compatible, graphical computing
would have become mainstream years sooner.@ (62)
Pace of technological change
In its twentieth fiscal year (July 1BJune 30) since incorporation, Microsoft
leads the software industry with revenues of $5,937,000,000 as of June 30, 1995 .
It is the unequaled standard bearer for software manufactures and with its
release of Windows 957, a total graphical operating system, should remain at the
top for years to come.
Despite its current position, Microsoft is still faced with new challenges as
with the progression of any high-tech industry. The most recent challenges
facing Microsoft are its applications to the Internet and its commitment to the
development of the information super highway.
In 1989 the U.S. Government decided to cease funding its 1960s project ARPANET
and allow the project to be succeeded by the commercial equivalent AInternet.@
In its beginning stages, the Internet picked up where ARPANET left off. Its
primary function was to provide electronic communications, or e-mail, solely
between computer science projects and engineering projects. Its popularity
increased as it became commercially available to PC users. To fully appreciate
the significance of e-mail and the transmission of electronic data consider the
evolution of the printed language.
Advances to the Printed Word
When Johann Gutenberg introduced the printing press to Europe in 1450, the
method of copying the printed word was revolutionized. Before the advent of the
printing press there was an estimated 30,000 books available on the earth, most
were hand written by monks. Although it took two years to complete the movable
type for Gutenberg’s Bible, once completed, multiple copies could be made rather
quickly. Almost 500 years later, Chester Carlson, frustrated by the length of
time involved in preparing patent applications, set out to invent an easier way
to duplicate information in small quantities. What resulted was a process he
called Axerography@ when he patented it in 1940. In 1959, Carlson aligned with
Xerox Corporation as a means of manufacturing and distributing AXerox@ copying
machines. Xerox projected sales of perhaps 3000 units. Much to their surprise,
they placed orders for 200,000 units, and one year later reported nearly 50
million copies a month were being processed. By 1986, that figure increased to
200 billion copies per month and has steadily increased ever since. The advent
of xerography allowed small groups to participate in the capabilities of a
printing press for a fraction of the cost and in a fraction of the time a
conventional printer would take.
The market size for the computer industry is very large, this past year
it totaled $238.7 billion dollars. It is expected to rise considerably in the
next few years.
The competitive scope for the computer industry globally is very strong,
microsoft is worldwide. The Japenese are very big competitors, but Microsoft is
to powerful to compete with.
Ease of entry is very hard, the computer industry is a costly industry
to enter. To compete with large companies you would need millions of dollars to
even consider getting started. One could start a small computer business
focusing on one area without the cost being overly expensive. An example would
be if you wanted to focus one the accounting industry you need not worry about
anything else. The life of the product depends totally on your needs, as well
as the increases in technolgy. Microsoft comes out with new products all the
time, but you don’t necessarly need to buy them. Sometimes a computer program
can lasts companies for years. It is very difficult to enter the computer
industry due to the large capital requirements and the rapid technological
changes, so either backward or forward intergration would be very difficult.
Driving Forces
There are several driving forces in the computer industry.
1) Increased efficiency due to economies of scale
2) Change in the industry growth rate
3) Product innovation due to the rapid increases in technological
advancements
4) The need to be the first to develop the new program
The newest driving force for the computer industry was the internet or
super highway. The following describes both along with the advantages they
brought.
The Internet
The Internet offers even more advantages than Xeroxed copiers where information
can be accessed and/or distributed to all interested parties (with a PC) via the
electronic transmission of data. As defined by Gates, the Internet is Aa group
of computers connected together, using standard >protocols’ (descriptions of
technologies) to exchange information.@ (94) Electronic massages are sent via
phone lines from one computer to another and stored in the electronic Amailbox@
of the another computer until the message is Adown-loaded@ by the user.
Another advantage to the Internet is AWeb browsing@ on the World Wide Web (.www)
or simply AWeb.@ Server companies offer graphical pages of information to be
accessed by subscribers of their service. From the Ahome@ page of a topic, one
can activate subsequent hyperlinks for further information on given topics by
clicking the mouse device of most PCs.
Although Gates admits that Microsoft was surprised at the commercial success of
the Internet, he has begun work on software applications to make the Internet
easier to access for PC owners with limited computer knowledge. Some people may
confuse the subscriptions to companies on the Internet, such as CompuServe,
Prodigy, and America On-line with the creation of the information super highway,
but according to Gates, the Internet is simply a Aprecursor to the information
highway.@ (90) Comparing the information highway with the Internet is like
comparing a country lane with the Eisenhower Highway System. Even that analogy
would not do justice to the information highway as it will look in twenty or
more years. The limitations of the Internet must first be expanded before
anything resembling the actual information highway exists. One challenge that
Micro-soft and other companies have is to convince the phone companies and cable
companies to replace the coaxial lines that serve homes and businesses with
fiber optic cables. Fiber optics will expand the bandwidth necessary for the
immense amount of information sent on the highway.
Two technologies currently in the works toward this transformation of trunk
lines are DSVD and ISDN. Digital simultaneous voice data can be used with
existing phone lines, but does not provide a sufficient bandwidth to handle
video transmissions; hence, new lines must be laid for this application to reach
full capacity. Even with the current integrated services digital network
technologyCwhich incorporates a wider bandwidth but requires the laying of new
linesCthe clarity of full motion picture images still leaves much to be desired.
Add-in cards which upgrade the PC Ato support ISDN costs $500 in 1995, but the
price should drop to less than $200 over the next few years. The line costs
vary by location but are generally about $50 per month in the United States. I
expect this will drop to less than $20, not much more than a regular phone
connection.@ (Gates, 101)
The Information Highway
Once more and more PC owners hook up to the Internet with ISDN lines, the
groundwork for further progress towards the information highway will be laid.
The information highway was coined by then-Senator Al Gore Awhose father
sponsored the 1956 Federal Aid Highway Act@ (Gates, 5) during the Eisenhower
Administration. According to Gates, this terminology is flawed. It connotes
the following of routes with distance between two points. It implies traveling
from one place to another when the actual information highway will be free of
such limitations. Some people also confuse the information highway with a
massive government project which, Gates feels, A. . . would be a massive mistake
for most countries . . . .@ (6) Just as Microsoft’s mission in 1975 was Aa
computer on every desk and in every home,@ (Gates, 14) so it is with Microsoft
progressing towards A. . . >information at your fingertips’ which extols a
benefit rather than the network itself.@ (Gates, 6)
Key sucess factors
1) The high degree of expertise and product innovation
2) Being able to stay on the cutting edge of technology
3) Companies need to have a low degree of glitches in there programs
4) A very strong customer support system (user friendly)
5) Must be able to meet the customer needs
The computer industry is a strong leader in technology. To compete you
must stay one step ahead of the rest. Microsoft has proven how devoted they are
to computer program developing by always being one step ahead of the rest. When
one is dealing with the computer industry it is very important to have
kniowledgable employees working for you.