MICROSOFT
BUSINESS MODEL
CANVAS
Bilge Narzymski, Roman Salii, Nastassia
Miashkevich
Group: WAW_2022_L_S_II_INF_ENG_C1
AGENDA
About Company
Customer segments
Value proposition
Key activities
Revenue streams
Summary
Microsoft
INTRODUCTION
Microsoft is an American multinational computer
technology corporation whose history started 4th April
1975. Formed by Harvard College dropout, Bill Gates and
his childhood friend Paul Allen, Microsoft has now
become the biggest software company. It is also one of
the most valuable companies in the world.
Microsoft
CUSTOMER SEGMENTS
•
Microsoft serves a diverse range of customer segments, including individual consumers, small
and medium-sized businesses, large enterprises, government organizations, and educational
institutions. They offer a wide range of products and services to the specific needs of each segment.
•
Microsoft focuses on building and maintaining long-term relationships with its customers. They provide
customer support, online forums, and resources to help customers troubleshoot and make the most of
their products. For enterprise customers, Microsoft offers dedicated account managers and consulting
services to ensure their specific needs are met.
Microsoft
CUSTOMER SEGMENTS
For whom they are creating the value?
Microsoft creates value for a wide range of customers, including:
1. Consumers: Individuals who use Microsoft products and services for personal use, such
as Windows, Office, Xbox, and Surface devices.
2. Small and medium-sized businesses (SMBs): Microsoft provides various software and
cloud solutions tailored to the needs of SMBs, including productivity tools, collaboration
platforms, and cloud services.
3. Enterprises and large organizations: Microsoft offers a wide range of solutions for
enterprises, including productivity software, cloud infrastructure, data analytics tools,
cybersecurity solutions, and enterprise resource planning (ERP) systems.
4. Educational Institutions: Microsoft provides educational tools, software, and cloud
services to schools, colleges, and universities, enabling digital learning, collaboration, and
administration.
5. Government and Non-profit Organizations: Microsoft offers specialized solutions and
services specified to the unique needs of government agencies, public sector
organizations, and healthcare institutions.
Microsoft
5
Microsoft
6
CUSTOMER SEGMENTS
Who are their most important paying customers?
•
Large enterprises, government organizations, and educational institutions are typically significant
customers for Microsoft due to their scale and the value they derive from Microsoft's products and
services. These customers often make substantial investments in Microsoft's technology to support
their operations, productivity, and digital transformation initiatives.
How big a market share could you capture in what time frame?
•
According to the 2022 Annual Report of Microsoft, the company aims to grow its share of the PC
market. The report also states that Microsoft’s future growth depends on its ability to transcend
current product category definitions, business models, and sales motions. Additionally, Microsoft has
been expanding its product offerings and investing in new technologies such as cloud computing and
artificial intelligence to stay competitive in the market.
Microsoft
COMPANIES
BIGGER THAN
COUNTRIES MICROSOFT
• With a market cap of more than $1.9
trillion, Microsoft’s value is larger than the
GDP of global powerhouses Brazil,
Canada, Russia, and South Korea.
• Microsoft, which would be the 10th
richest country in the world if market cap
was equivalent to GDP.
Microsoft
8
CUSTOMER SEGMENTS
1. Mass Market: This segment includes customers who are looking for affordable and easy-to-use products.
For example, Microsoft’s Windows operating system is designed for the mass market.
2. Niche Market: This segment includes customers who have specific needs or requirements that are not met
by mass-market products. For example, Microsoft’s Dynamics 365 Client Engagement Plan is designed for
businesses that need to develop and sustain consumer connections.
3. Segmented: This segment includes customers who have similar needs or characteristics. For example,
Microsoft’s Dynamics 365 Customer Insights provides AI-powered suggestions based on measures or
attributes to find similar customers.
4. Diversified: This segment includes customers who have different needs or requirements across different
product categories. For example, Microsoft offers a range of products and services across different
categories such as operating systems, productivity software, cloud computing, and gaming consoles.
5. Multi-sided Platform: This segment includes customers who use a platform that connects two or more
customer groups. For example, Microsoft’s Azure cloud computing platform connects developers and IT
professionals with businesses that need cloud-based solutions.
Microsoft
Microsoft
MICROSOFT PRESENCE IN USA, CHINA,
RUSSIA AND NORTH KOREA
1. United States (US): Microsoft has a strong presence in the US across all customer
segments. Windows and Office products are widely used by consumers, businesses, and
educational institutions. Azure is a leading cloud computing platform, and Xbox has a
significant share of the gaming market.
2. Russia: Microsoft has stopped selling its products and services in Russia following the
country’s invasion of Ukraine. The company has also paused other aspects of its business
in the country to comply with government sanctions.
3. China: Microsoft faces challenges in the Chinese market due to government regulations
and the presence of domestic competitors (e.g., Tencent). Some Microsoft products, such
as the Bing search engine, have faced restrictions or bans. In 2022, Microsoft’s Bing search
engine was required by a “relevant government agency” to suspend its auto-suggest
feature. However, Microsoft has a presence in China through its Azure cloud services.
4. North Korea: Microsoft doesn't have business operations in North Korea. North Korea has
built its own operating system called Red Star which includes a word processing
application, calendar, and music composition service. The Internet exists in North Korea,
but access is severely limited and only permitted to foreigners and the elite. Most people
access North Korea’s intranet called Kwangmyong which is a closed network that allows
access to government-sanctioned websites and content.
Microsoft
12
VALUE PROPOSITIONS
•
What value do they deliver to the customer?
Microsoft delivers value to customers through reliable and user-friendly software solutions. They offer operating
systems, productivity software, cloud services, and developer tools that enhance productivity, collaboration, and
innovation. These solutions enable individuals, businesses, and developers to perform tasks efficiently, manage
documents, utilize cloud resources, and build applications across different platforms.
•
Which one of their customer problems are they helping to solve?
1. Operating Systems: They provide a stable and user-friendly computing environment that is compatible with
many hardware and software applications.
2. Productivity Software: Users can efficiently create, edit, and collaborate on documents, spreadsheets,
presentations, and emails.
3. Cloud Services: Businesses can overcome infrastructure limitations, streamline operations, and accelerate
digital transformation using Azure's scalable and secure cloud platform.
4. Developer Tools: Developers can access comprehensive tools and platforms that simplify the application
development process, enabling them to build high-quality software efficiently.
Microsoft
DEVELOPER TOOLS
• A few options available in Visual Studio Enterprise are:
1.
2.
3.
4.
Live unit tests: unit tests run on after every change made.
Microsoft fake: a tool for isolating unit tests.
Code Duplication detection: a diagnostic tool searching for repeated code
Better diagnostic tools: one of the examples of such tools is .NET memory dump analysis
Microsoft
Microsoft
VALUE PROPOSITIONS
•
What business products and services are they offering to each Customer Segment?
1. Consumers: Windows operating systems, Office 365 productivity software, and Xbox gaming products.
2. Small and Medium-Sized Businesses (SMBs): Productivity tools, Azure cloud services, Microsoft 365 business
software, and development tools.
3. Enterprises: Azure for cloud infrastructure, Microsoft 365 for productivity and collaboration, Dynamics 365 for
business operations, and Power Platform for application development and workflow automation.
•
Which customer needs are they satisfying?
1. User-Friendly Computing
2. Productivity and Collaboration
3. Scalable and Secure Infrastructure
4. Application Development
Microsoft
•
Who are their competitors and why are they different?
Competitor
Description
Apple
Competes in operating systems (macOS) and hardware (Mac, iPhone, iPad).
Google
Competes in cloud services (Google Cloud Platform) and productivity tools (Google
Workspace).
Amazon
Competes in cloud services (Amazon Web Services) and e-commerce/retail.
Oracle
Competes in enterprise software, databases, and cloud services.
IBM
Competes in cloud services (IBM Cloud) and offers AI and enterprise solutions.
Adobe
Competes in design and creative software (Photoshop, Illustrator) and creative cloud
services.
Salesforce
Competes in cloud-based CRM solutions for businesses.
Microsoft stands out from its
competitors by offering a wide
range of products and services
that meet different customer
needs. While other companies
specialize in specific areas,
Microsoft provides operating
systems, productivity tools, cloud
services, developer tools, and
gaming products, among others.
What makes Microsoft special is its
ability to integrate these offerings
smoothly, giving customers a
unified experience. Microsoft also
excels in serving large
organizations with its enterprise
solutions like Azure and Dynamics
365.
•
VALUE
PROPOSITIONS
Price?
Microsoft adopts various pricing models based on its products and services. These
include one-time license fees for operating systems and perpetual licenses for Office
suites, as well as subscription-based pricing for cloud services like Azure and
Microsoft 365. Additionally, Microsoft offers different pricing tiers and packages to
cater to the needs and budgets of different customer segments. Pricing varies
depending on factors such as product features, usage levels, and support options.
Microsoft
Characteristic
Description
Newness
Microsoft offers innovative software solutions and regularly releases updates to enhance its
products.
Performance
Microsoft focuses on delivering high-performance products and services.
Customization
Microsoft provides various levels of customization to meet customer needs.
"Getting the job done"
Microsoft's solutions help customers effectively accomplish their tasks and objectives.
Design
Microsoft emphasizes user-friendly and visually appealing design.
Microsoft
KEY ACTIVITIES
Production:
•
Microsoft produces various software products, including operating systems, productivity software, and
developer tools. This involves the development, testing, and distribution of software solutions.
Examples:
1. Developing new versions of the Windows operating system with improved features and security.
2. Creating updates and patches to address software weaknesses and enhance performance.
3. Designing and releasing new versions of productivity software like Microsoft Office, including Word, Excel, and
PowerPoint.
4. Progressing developer tools and frameworks such as Visual Studio to support application development.
Problem solving/services:
• Microsoft provides problem-solving services to its customers through customer support, troubleshooting, and
resolving technical issues. It ensures that customers receive the assistance they need to effectively use their
products and overcome any challenges they may encounter.
Microsoft
KEY ACTIVITIES
Problem solving/services:
Examples:
1. Providing technical support to customers through various channels, including phone, email, and online chat.
2. Offering troubleshooting guides and knowledge base articles to help customers resolve common software
issues.
3. Conducting training sessions and workshops to educate users on how to maximize the use of Microsoft
products.
4. Providing consulting services to businesses for implementing Microsoft solutions and optimizing their IT
infrastructure.
Platform/Network:
• Microsoft operates and maintains its platform and network infrastructure, which includes cloud services like
Azure. This involves managing data centers, ensuring the platform’s high availability, security, and scalability to
support customer needs.
Examples:
1. Building and maintaining the Microsoft 365 platform, which integrates cloud-based productivity tools like Office
apps, email, and collaboration features.
2. Supporting and growing the Microsoft developer community through initiatives like developer conferences,
Microsoft
forums, and online resources.
KEY ACTIVITIES
The number of daily active users of
Microsoft Teams have almost doubled
the past year, increasing from 145
million users in 2021 to 270 million in
2022.
Microsoft's market scope is truly global, as its products and
services are available and utilized worldwide.
The company serves customers in international markets,
including North America, Europe, Asia Pacific, and beyond. With
a strong presence in both consumer and business markets,
Microsoft caters to individuals, small and medium-sized
businesses, as well as large enterprises across various
industries. Its global reach allows it to address the needs of a
diverse customer base and adapt its offerings to local market
preferences and requirements.
Market Scope
Global
Operating Systems
Over 1.3 billion devices worldwide
Office 365
Over 300 million active users
globally
Azure Cloud Services
Available in 60+ data center
regions worldwide
Partnerships & Clients
Thousands of partnerships and
diverse customer base globally
Microsoft
REVENUE STREAMS
For what value are our customers willing to pay?
1. Quality and Reliability: Microsoft's reputation for delivering high-quality and reliable products is crucial. Customers
rely on Microsoft's software to perform critical tasks, and the assurance of stable and dependable solutions is
highly valued.
2. Productivity and Efficiency: Microsoft's products, such as the Windows operating system and Office productivity
suite, are designed to enhance productivity and efficiency. Customers are willing to pay for software that helps
them streamline their workflows, collaborate effectively, and accomplish tasks more efficiently.
3. Security and Privacy: Microsoft prioritizes security measures and provides customers with tools and technologies
to safeguard their data and systems. Customers are willing to pay for secure and privacy-focused solutions that
protect their sensitive information.
4. Innovation and Technological Advancements: Microsoft invests heavily in research and development, leading to
continuous innovation and technological advancements. Customers are willing to pay for cutting-edge solutions
and access to the latest technologies that can drive their businesses forward and keep them at the forefront of
their industries.
5. Support and Customer Service: Microsoft provides comprehensive customer support, including technical
assistance, documentation, training resources, and community forums. Customers value prompt and reliable
support, as it helps them resolve issues quickly and maximize the value they derive from Microsoft's products and
services.
Microsoft
23
REVENUE STREAMS
How much?
The pricing for Microsoft's products and services varies depending on the specific offering, license type, usage
model, and customer segment. Microsoft employs various pricing strategies, including subscription-based
models, licensing fees, and tiered pricing based on usage or features. The pricing structure is typically
determined by market demand, competition, and the value proposition of the product or service.
For what do they currently pay?
1. Licenses: Customers pay for software licenses, such as Windows operating system licenses or Office
suite licenses. These licenses may be purchased as one-time purchases or through subscriptionbased models like Microsoft 365.​
2. Cloud Services: Customers pay for Azure cloud services based on usage, such as virtual machines,
storage, databases, AI services, and other infrastructure or platform offerings.​
3. Enterprise Solutions: Customers pay for enterprise solutions like Dynamics 365, which provide
comprehensive business management and customer relationship management capabilities.
4. Advertising: Microsoft offers advertising services through its search engine, Bing, and other platforms.
Customers pay for advertising placements and clicks on their ads displayed in search results or other
Microsoft advertising channels.
Microsoft
REVENUE STREAMS
How are they currently paying?
Microsoft customers typically pay for their purchases through various methods, including:
1. Credit or Debit Card
2. Subscription Billing
3. In-App Purchases
4. Enterprise Agreements
5. Microsoft Account Balance
6. Partner Resellers
7. Wire Transfer
Microsoft
REVENUE STREAMS
According to the Microsoft 2022 Annual Report, Microsoft has several revenue streams. The
revenue streams are divided into three segments: Productivity and Business Processes,
Intelligent Cloud, and More Personal Computing.
1. The Productivity and Business Processes segment includes Office Commercial
products and cloud services, Office Consumer products and cloud services, LinkedIn,
and Dynamics.
2. The Intelligent Cloud segment includes server products and cloud services, GitHub,
and Enterprise Services.
3. The More Personal Computing segment includes Windows Original Equipment
Manufacturer, Windows Commercial products and cloud services, Surface, Gaming,
Search advertising, and Xbox content and services.
Microsoft
26
Microsoft
REVENUE STREAMS
•
Asset Sale:
1. Microsoft generates significant revenue through the sale of physical assets, primarily hardware
devices.
2. The sale of Xbox consoles, including Xbox Series X and Xbox Series S, contributes to this revenue
stream.
3. Microsoft sells Surface devices such as laptops, tablets (e.g., Surface Pro, Surface Laptop), and
accessories like keyboards and mice.
4. Other hardware offerings, including peripherals like Xbox controllers and headsets, also contribute to
the asset sale revenue.
•
Subscription Fees:
Subscription-based revenue has become increasingly important for Microsoft.
1. Microsoft 365 (formerly Office 365) is a significant subscription-based service. It includes access to the
Microsoft Office suite, cloud storage through OneDrive, and collaboration tools like Microsoft Teams.
Customers pay monthly or annual subscription fees for these services.
2. Xbox Game Pass is another subscription service where users pay a monthly fee to access a library of
games for Xbox consoles and PC.
3. Microsoft also offers subscription plans for its Azure cloud computing platform, providing customers
Microsoft
with various services, such as virtual machines,
storage, and databases.
REVENUE STREAMS
•
Licensing/Franchising:
1. Licensing is a core revenue stream for Microsoft. The company licenses its software products to
customers for use.
2. Microsoft licenses operating systems like Windows to original equipment manufacturers (OEMs) who
pre-install Windows on devices they sell.
3. Licensing also applies to productivity software like Microsoft Office, server products like Windows
Server, and developer tools(e.g., GitHub, VS Code, Azure DevOps).
•
Advertising:
1. Advertising is a smaller but notable revenue stream for Microsoft.
2. Bing, Microsoft's search engine, generates advertising revenue through search ads displayed alongside
search results.
3. Microsoft also displays display ads across its online properties, including MSN.com, Outlook.com (adsupported free email service), and other platforms.
4. LinkedIn, the professional networking platform owned by Microsoft, offers advertising options for
businesses to reach targeted professional audiences.
Microsoft
Microsoft
SUMMARY
Business Idea: Microsoft
Product / Service Idea: Software development
Key Partners
Key Activities
Developing operating systems,
productivity software,
cloud services,
and developer tools.
Strategic partnerships with
hardware manufacturers,
software developers,
and cloud service providers.
Key Resources
Intellectual property,
research and development
capabilities,
data centers,
and a global workforce.
Cost Structure
Research and development,
marketing and sales,
operations,
and maintaining global infrastructure.
Value Propositions
Reliable and userfriendly software
solutions
enhancing
productivity,
collaboration, and
innovation.
Customer Relationships
Customer Segments
Technical support,
consulting services,
and online communities
for engagement and
feedback.
Consumers,
small and mediumsized businesses
(SMBs),
and enterprises.
Channels
Direct sales,
online platforms,
retail stores,
and partnerships with hardware manufacturers.
Revenue Streams
Software licensing,
subscription-based services,
cloud computing,
and hardware sales.
“MICROSOFT ENABLES DIGITAL TRANSFORMATION FOR
THE ERA OF AN INTELLIGENT CLOUD AND AN INTELLIGENT
EDGE. ITS MISSION IS TO EMPOW ER EVERY PERSON AND
EVERY ORGANIZATION ON THE PLANET TO ACHIEVE
MORE. ”
The quote from the official website of Microsoft company
THANK YOU
Bilge Narzymski
Roman Salii
Nastassia Miashkevich
Group: WAW_2022_L_S_II_INF_ENG_C1
Microsoft