Microsoft is a popular American multinational technology company that was set up during the year 1975 and is headquartered in Washington, United States. The company was founded by Bill Gates and Paul Allen.
The company produces, licenses, manufactures, sells, and supports computer software, personal computers, consumer electronics, and related services. Its popular software products are the Microsoft Windows range of operating system, the Microsoft Office Suite, the Internet Explorer and Edge web browsers. Its leading hardware products are the Microsoft Surface and Xbox video game consoles.
During the year 2016, Microsoft was the largest software producer in the world regarding its revenue. During the year 2018, Microsoft was ranked No. 30 in the Fortune 50 rankings.
Apart from owning as the maker of the Windows OS, Microsoft is also a popular and leading cloud player. There is a lot of competition in recent years and aside from Apple and Google, there are many cloud players that include IBM, Amazon, and Oracle. Their products and services compete against Microsoft’s products and services. During the year 2017, Microsoft’s revenue grown to 90 billion dollars as against 85.3 billion dollars during the year 2016.
The growth in the company is due to the increased revenue from its cloud products and its growing range of products and services. Apart from its various Azure services, the brand has also focused on AI products.
The popular Microsoft products include Microsoft Office and OS that is meant to increase its productivity and efficiency.
The SWOT analysis of Microsoft differentiates all the main strengths, weaknesses, opportunities, and threats that support the company to grow more. Read out this article, to get an understanding of where Microsoft stands.
The SWOT analysis of Microsoft indicates the strengths of the brand in which the brand is good and the way it stands away from its competitors, its weakness that halts the brand to perform well and should focus on to improve.
It lists its opportunities that the brand can use to increase its market share and brand value. It also throws light on the threat that has the potential to harm the brand.
To make sure that Microsoft meets the long-term competitive advantage it must address the various concerns highlighted in the SWOT analysis of Microsoft.
Let us discuss on the SWOT analysis of Microsoft.
Strengths in the SWOT Analysis of Microsoft
- International Presence – Being a global brand, Microsoft’s presence is seen in almost 190 countries and this is, in fact, the main strength of the company. Global presence replicates huge sales and takes a vast reach of the brand. The world’s technological growth is enormous and has led to more usage of digital technology and computers all over the world. Most of the computers in the world make use of the Microsoft operating system. Almost 500 million devices across the globe make use of the Windows operating system. Microsoft Office software is being used on many devices across the globe. The Microsoft Office is being used by a hundred million people worldwide.
- Huge Portfolio – As related to its nearest competitor Apple, Microsoft has a huge product portfolio. This is, in fact, a major strength that helps to achieve a higher sale. The huge product portfolio includes the following:
- Operating system
- Server applications
- Cross-device productivity applications
- Business solution applications
- Software development tools
- Video games
- Desktop and server management tools
- Video games
- Training and certification for developers and computer system integrators
The brand also produces and sells various devices like the following:
- Gaming and entertainment consoles
- Intelligent devices and connected accessories that integrate with cloud services
Also, Microsoft is famous in the online advertising world.
- Rising Cloud Business – The cloud industry is on its boom for the past few years. Along with Microsoft’s entry into the cloud business, investing a huge amount into this coupled with innovation has been a big hit for the brand. Cloud-based services have been in great demand and it has also led to higher growth for the brand. Microsoft sees huge growth in cloud-based services. Its cloud segment includes private, public, and hybrid server products and various cloud services that can empower the current businesses and contains mainly of the following:
- Server products and cloud services that include Windows Server, Microsoft SQL Server, System Center, Visual Studio, and Azure.
- Enterprise Services that includes Microsoft Consulting Services, Premier Support Service.
The revenue from the cloud has reached about 27.4 billion dollars for Microsoft. This is a huge revenue for the company thereby seeing it as big strength for it.
- Innovation – Having a strong focus on innovation, Microsoft has seen enormous growth in the cloud and computing domain. To maintain its growth, it must be innovative that is very much evident from the company. It continues to invest in research and development and has come out with innovative products. Microsoft is ahead of its competitors in many areas that include Mixed Reality and AI. In these areas of Research and Development, Microsoft invests a huge amount. Mixed reality is an innovative technology that is full of potential as it can change the gaming world and knowledge work to provide great experiences. Cloud technology is indeed a fast-growing area and Microsoft invests a lot of innovation in many cloud services. During the year 2017, Microsoft’s Research and Development has invested almost 13 billion dollars for cloud services.
- Brand Image – For any brand to be well-recognized, it must rule the global market and create a strong brand image. Having a strong brand image must become big support in the long-term to achieve the brand’s goal. In the technology industry, having a brand image is the main support that would drive faster growth. It is also linked with the brand’s market position together with its profits and sales. Microsoft is indeed a leading brand in the market with regards to its technology and over the years it has managed to develop a high trust level among its customers who are in the form of large and small businesses, individual customers, government institutions, and other players. Microsoft has its large product range that has aimed to maximize the user’s productivity at the international market. It has a good name in the computing world. The Microsoft Office and Windows OS are being used across numerous laptops and computers worldwide. Microsoft software has helped users to reach a high degree of productivity and efficiency that has led to gain trust among the brand’s users.
Weaknesses in the SWOT Analysis of Microsoft
- A Decline in the PC Market – Usage of PC has seen a huge decline over recent years where there has seen a huge rise in sales in tablets and smartphones. Many computing brands have seen a dip in the market share and their sales as well. As Microsoft is one of the major providers of various software and devices, it has also seen its sales dipping where the computer sale has reduced. While many PCs make use of Microsoft OS and software, it would hurt the profit of the company. This way, the decline in the PC market is a great weakness for the brand thereby damaging its profit.
- Slower with regards to its Innovation – During recent years, Microsoft has increased its investment in the Research and Development area. But when you compare its innovation frequency with its near competitors like Apple and Amazon, Microsoft innovation’s speed has been slower. Its search engine and browsers are not as commanding as the one created by Google. Also, this is one more reason for its market share from online advertising, and search is less compared to Google.
- Low Market Share from Advertising – Microsoft’s advertising revenue has grown over the past years, but it is less as compared to the other major players who are prominent in the advertising industry like Facebook and Google.
- Vulnerable to Cyber Crime – Microsoft’s products are susceptible to cybercrime. For example, the Windows operating system has remained a target for many cybercrime attacks across the world. This factor is a great weakness for its products and would limit the sale of Microsoft’s products. Here, cybersecurity is a product feature of competition among the firms in the computer software and hardware industry.
Opportunities in the SWOT Analysis of Microsoft
- AI and Innovation – The IT industry sees huge growth and there are several booming areas that includes AI and many other technologies. The gaming industry as well see a huge lot of opportunities. Microsoft can invest in innovation in these areas that would help to achieve huge growth.
- Acquisitions – Microsoft has entered many acquisitions over the past years, out of which few were not that effective for the company. Recently, it has acquired LinkedIn that has proved an effective acquisition and allows it to connect to a large customer base and to also link it to a new opportunity. Having such partnerships and acquisitions would bring a lot of opportunity for the brand where it would allow to expand in the market and to grow faster. Being a financially strong company, it can get into more acquisitions selectively. The company should be careful while acquiring, it should acquire only those businesses that would increase its core business value. Acquisitions would indeed bring a lot of advantages for the brand.
- Affordable Services – One main factor that would affect the market penetration level is its price. Microsoft sees a huge opportunity by creating products and services that are affordable. By decreasing the prices for its products, it would help to get higher sales and thereby increasing its market share.
Threats in the SWOT Analysis of Microsoft
- Competition – The IT industry sees strong competition from all angles. This has led to a rising pressure for all big giants in the industry. Microsoft sees a huge competition from Apple, Google, Oracle, IBM, etc. Even though having a large product range, it does see a strong competition which is a threat to the brand.
- Technology Market – The technology market keeps changing fast and undergoes a paradigm shift. The fast-changing situation makes it challenging for big companies like Microsoft. Brands would have to focus more on innovation and marketing to get a huge customer base and for their customer retention.
The SWOT analysis of Microsoft mentioned in this article has highlighted the main strengths of the brand that comes up from its global presence, having a huge portfolio, having a huge domain in the cloud, showing its innovation in various products, and its brand image.
The company has its weaknesses from the decline in the PC market, slower frequency in its innovation, having low market share from advertising, and being vulnerable to cybercrime.
The company has its opportunities to venturing into more innovation and AI technologies, entering into feasible and effective acquisitions and partnerships, and selling products at affordable prices. It sees a huge threat from its competitors and from the ever-rising technology market.