Friday, March 11, 2005

Microsoft's Competitive Strategy as I see it

Ten years ago, when Internet was booming, Netscape came up with the Netscape Navigator, Microsoft (MSFT) did too. Subsequently, MSFT killed Netscape by bundling its Internet explorer with its Windows O/S Licenses. History speaks, "The Anti-Trust Lawsuit that lasted for 10 years", which obviously hasn't harmed MSFT a bit, except for the fall in share prices for that period, a penalty to pay and a small change in the way it sold licenses. The major losers were the MSFT employees under the stock option plan, which MSFT managed to somehow mitigate, but the ultimate losers were the customers who did not have another choice for the net explorer as MSFT had succeeded in killing its rival Netscape. MSFT has been involved in a lot of such antitrust lawsuits and has a special cell to take care of such things, under its corporate governance structure. Today, 2005, when google is the search king, MSFT has now its own search engine MSN. And fortunately for MSFT, it is supposed to launch the newer version of its Windows named "LongHorn", scheduled for release in 2006, which would probably be bundled with the MSN Search Engine. The Interesting fact is that the MSN Search is tagged with "Encarta Encyclopedia Software", which gives answers to direct questions like, "Who won the 1994 Stanley Cup?". Encarta, tagged with MSN search bundled with the Longhorn, could take MSN's position in the search market way ahead. The present scenario of search market is: Google - 35%, Yahoo - 27.1% and MSN - 15.4% market share. MSFT's long-standing strategy has been the announcement of the release of newer versions/upgrades of its softwares even before the beta version is ready. This strategy actually helps MSFT retain its customers in between the version enhancement periods, in a way that the customers expect and wait for an enhanced version rather than switching to another branded promising software. The way MSFT has been strategizing its product releases and competitive practices, the seemingly interesting questions as a researcher are "What would be the repercussion of such bundling (Encarta+MSN Search bundled with Longhorn) again?", "What could ultimately happen to google in the coming years?", "Would there be another such lawsuit filed against MSFT in the near future?", "Would MSFT be again able to walk away with style without major scars?", like it did with most of its antitrust judgments, and ultimately killing its rival (google/yahoo). And at what cost, just the penalty for anti competitive practices... WILL MSFT GO BACK TO ITS OLD STRATEGIES IN THIS NEW ECONOMY? wait and watch...

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