Microsoft Case Study
1. How has Microsoft responded to competitive threats and opportunities in the past? What patterns do you see?
Microsoft typically entered markets when it realized potential of dominance. The second time IBM asked Gates to build them an OS, Gates saw potential, believing that the OS would become a standard that other manufacturers could use as well. Microsoft bought DOS from another software vendor, modified it and licensed it to IBM. Gates held onto the copyright, and as he predicted he was able to sell MS-DOS to all the other vendors and become the dominant OS developer in the PC market. When Excel and Word failed to compete in the PC market with Lotus and WordPerfect, Microsoft turned its attention to the Apple market where there were fewer competitors. Apple had smaller share in the OS market, so few companies were building software for the Macs. Microsoft could take its time learning how to create a better product. Eventually, Microsoft returned to take on Lotus and WordPerfect, this time in much better shape. They were also able to use their size by under-cutting competitors’ prices, offering customers “competitive upgrades,” making the Microsoft option more cost effective to buyers. Five years later, in 1995, Microsoft had become the dominant player in word processing, spreadsheets and presentations with MS Office. The Internet browser war is another good example of how Microsoft was late to the game, but was able to learn from the competition and leverage its weight later on in the battle. In 1993 and 1994, the Mosaic web browser was gaining great momentum. Marc Andreesen, taking a page from Gates, knew winning in market share meant winning it all. Andreesen had the foresight to see the importance of the web browser and had Netscape licensing Mosaic. By mid-1995, Netscape had the lion’s share of the browser market. At this point, Microsoft woke up and Gates made a big push to create a browser. Roughly a year and a half later,
Microsoft typically entered markets when it realized potential of dominance. The second time IBM asked Gates to build them an OS, Gates saw potential, believing that the OS would become a standard that other manufacturers could use as well. Microsoft bought DOS from another software vendor, modified it and licensed it to IBM. Gates held onto the copyright, and as he predicted he was able to sell MS-DOS to all the other vendors and become the dominant OS developer in the PC market. When Excel and Word failed to compete in the PC market with Lotus and WordPerfect, Microsoft turned its attention to the Apple market where there were fewer competitors. Apple had smaller share in the OS market, so few companies were building software for the Macs. Microsoft could take its time learning how to create a better product. Eventually, Microsoft returned to take on Lotus and WordPerfect, this time in much better shape. They were also able to use their size by under-cutting competitors’ prices, offering customers “competitive upgrades,” making the Microsoft option more cost effective to buyers. Five years later, in 1995, Microsoft had become the dominant player in word processing, spreadsheets and presentations with MS Office. The Internet browser war is another good example of how Microsoft was late to the game, but was able to learn from the competition and leverage its weight later on in the battle. In 1993 and 1994, the Mosaic web browser was gaining great momentum. Marc Andreesen, taking a page from Gates, knew winning in market share meant winning it all. Andreesen had the foresight to see the importance of the web browser and had Netscape licensing Mosaic. By mid-1995, Netscape had the lion’s share of the browser market. At this point, Microsoft woke up and Gates made a big push to create a browser. Roughly a year and a half later,