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Competitive Strategies Case Study

Case Title:

Vertical product integration at Microsoft: Will it succeed?

Publication Year : 2006

Authors: Pinal Shah, Joel Sarosh Thadamalla

Industry: Information Technology and IT Enabled Services


Case Code: COM0172A

Teaching Note: Not Available

Structured Assignment: Not Available


The Microsoft Corporation (Microsoft) with its global annual revenues of US $44.28 billion had 71,553 employees in 102 countries as on July 2006 and stood as world’s second largest software company after IBM. Microsoft’s best selling products were the Windows Operating System for servers and single computers and the Office suite of productivity software. The company had gained more than 90% of market share in its segments of operating system and web browser.

With its first product Xenix, the operating system, the company developed successful software like Dos, windows, MS- Office. The company expanded its business to Web based software in the mid 90s, mobile ended devices in early 2000 and in 2001 it diversified in to home and entertainment segment with the launch of video game console ‘Xbox’. After successfully building roots with Xbox and its later version of Xbox 360, the company stepped into the music player industry with its new project ‘Zune’. Microsoft was gearing its resources towards services, and integrating various devices to stop the dominance of Apple’s iPod.

Microsoft began to concentrate on hardware, and was planning to play a bigger role in product design. As the software was becoming increasingly commoditised, it needed to find new revenue streams to keep growing. Would Microsoft succeed to get more control over the new vertical markets to dominate, before monopoly of its Windows erodes?

Pedagogical Objectives:

  • To understand the Microsoft’s monopolized business in Operating systems segment
  • To understand the importance of related diversification
  • To discuss the competitive strategies
  • To analyse the relevance of vertical integration strategy.

Keywords : Microsoft; Integration strategy; expansion strategy; competitive strategy; market leader; new product development; Innovation; core competencies; vertical markets; product integration; software; computers; Xbox; Zune; Windows; DOS; Microsoft Office; application software; system software; Competitive Strategies Case Study; Web browser; operating system

Contents : 
Global Software Industry
Microsoft Corporation
Windows: The flagship product
Changing Face of Microsoft
Top Ten Software companies in the world
Financial statement for Microsoft Incorporation

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