F09_class_26_and_27_Microsoft_and_Cross_Functional_Systems

F09_class_26_and_27_Microsoft_and_Cross_Functional_Systems...

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Microsoft Case Study Discussion MIS 301 Introduction to IT Management
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Put out name tags for case discussion Thanks!
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Agenda for Today Dan Ranta – ConocoPhillips speaker tonight, 5:15pm in GSB 2.126 MSGP4 will be returned Monday, 11/2 Discuss Microsoft 2005 case Success Challenges Beyond Microsoft 2005 – what have you learned from your research so far? Ch. Ext. 11 – “Functional Business Process”
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Microsoft’s Performance 1990-2001 Sales growth = 32% CAGR* Operating profit = 36% CAGR Net income = 35% CAGR Market Cap = 40% CAGR During the same period, the personal computer (PC) industry grew approximately 15% CAGR compound annual growth rate
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Microsoft's Performance: from Extraordinary Compound annual growth rate
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Microsoft’s Performance 2001-2005 After more than a decade of extraordinary growth, MS comes down to earth Sales growth = 12% CAGR* Operating profit = 5% CAGR Net income = 13% CAGR Market Cap = - 2.6% CAGR
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Microsoft's Performance: from Extraordinary to Ordinary Compound annual growth rate
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Microsoft’s Stock Price: until 2000 60 50 40 30 20 10 $ 1 $578
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Microsoft’s Stock Price: Since 2000 $ 1 $0.45
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Microsoft’s Glorious Era: 1990s With a dominant share throughout the 90s, how could MS grow revenues at twice the level of the industry? What are the 3 or 4 most important drivers of MS’s business model?
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Products $ USER 1 Reporter USER 2 Analyst Revenue $10 $10 $3 Lotus 1-2-3 $10 $2 $10 Bundling: price discount Willingness to pay $10 $10 $12 $12 $12 $24 Another example: Microsoft's inclusion of web browser & media player "free" with its Windows operating system
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What does this mean? “We look for opportunities with network externalities – where there are advantages to the vast majority of consumers to share a common standard…” (Bill Gates )
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Network Effects The value of any product or service grows as other users consume it User base (critical mass) is the key The more people own phones, the more valuable the phone is to each owner http://en.wikipedia.org/wiki/Network_effect
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Network Effect and Microsoft - HW/SW compatibilities with others (sharing documents, etc.) - Learning cost (training) - More supports and choices Network effect leads to customer lock-in! Q. Why so reluctant to switch to Mac?
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Other Network Effect Examples in today’s Virtual World Collaborative knowledge management Social networking services Communication tools Multimedia –UGC sharing P2P File sharing
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How about this one?
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What would you expect the competitive structure of the industry to look like?
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F09_class_26_and_27_Microsoft_and_Cross_Functional_Systems...

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