MICROSOFT
Judith-Rahel Seitz
Main Case Study
Covering the Following Focus Areas:
Management Models
Order/Development
Processes
Strategy
Marketing
Finances
Human Resources
Joined-Up Thinking
Company Formation
Business Ethics
Facts and Figures
Case Summary
Microsoft is a world leader in standard software,
services, solutions, and hardware. Its headquarters
are located in Redmond, Washington, United States.
Microsoft employs around 221,000 people. In 2022,
sales were USD 198 billion. The company is the
world’s largest software manufacturer.
With its Surface series, Microsoft has succeeded in
positioning its tablet PCs as a serious alternative to
Apple. Over the past few years, Microsoft has been
reinforcing its market position by penetrating
Apple's traditional business areas.
In the fall of 2012, Microsoft introduced Microsoft
Surface, a tablet that comes with pre-installed
software. Surface Studio, a tablet specifically designed
for creative work, was launched in June 2017. It has a
large screen suitable for any type of work and can be
used vertically or horizontally as a drawing board.
Microsoft has big plans for Surface Studio, aiming
for it to become the preferred working tool of
graphic artists. This tablet has a high-resolution 28inch display as well as touch and stylus support,
robust hardware, and a classically elegant design.
This case study sheds light on various strategic
aspects in the context of successful corporate
governance.
Learning Goals
Students will...
T
© Copyright ZHAW School of Management and Law
• perform a SWOT analysis using Microsoft
Surface Studio as an example;
• outline strategic core competences and
differentiate its strengths;
• apply Porter's four competitive strategies;
• critically reflect on the “stuck-in-the-middle”
issue; and
• apply Ansoff's product market strategy.
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1. Background
The Microsoft Corporation is an international software and hardware manufacturer. Even today, the company is
still best known for its Windows operating system and Office software, but hardware components are playing an
increasingly important role. Microsoft is based in Redmond, a suburb of Seattle, Washington, on the West Coast
of the United States.
Currently, Microsoft is heavily involved in cloud platforms, hybrid clouds, artificial intelligence (AI), and
digitalization. However, security and sustainability issues are also discussed in Microsoft's strategy workshops.
In the software sector, Microsoft enjoys a market share of 88%, and most PCs have a Microsoft operating
system. Its only serious competitors are Apple (with macOS) and Linux, who have a market share of 10% (Apple)
and 2% (Linux), respectively.
In the hardware sector, Microsoft offers computer mice, joysticks, keyboards, and other input devices. Since the
beginning of the millennium, Microsoft has also been selling game consoles (Xbox). In the past, Microsoft had
a difficult time challenging Apple's leading position with its hardware projects.
Between 2006 and 2011, Toshiba launched Zune on behalf of Microsoft, an MP3 player to rival Apple's iPod. In
addition, they created the Zune Marketplace (similar to iTunes Store) - a Microsoft music download platform with
Microsoft Points as the means of payment. In 2012, the Xbox Music service replaced Zune Marketplace.
Microsoft Mediaroom (formerly Microsoft IPTV Edition), an IP network-based television platform, was introduced
as the answer to Apple TV. In 2013, Microsoft sold Mediaroom to the Swedish company Ericsson. In September
2013, Microsoft acquired Nokia's mobile phone business for a total of USD 9.5 billion. However, its attempt to
become a serious player in this sector alongside Apple and Samsung failed.
Since 2012, Microsoft has been developing products that consist of only one or more touch-sensitive displays.
Microsoft calls this product range Microsoft Surface.
2. The Surface Family
With the Microsoft Surface brand, Microsoft is developing a growing family of smart tablet PCs that offer
customers the familiar Windows or Office software environment combined with multi-touch displays.
Microsoft Surface tablets are characterized by the fact that the hardware is sold as a package with pre-installed
software. To reinforce its position in this market, Microsoft is increasingly breaking into Apple's traditional
business areas. With the Surface series, Microsoft has succeeded in recent years in positioning itself as a
serious alternative to Apple in the field of tablet PCs.
Figure 1: Various Surface products
© Copyright ZHAW School of Management and Law
Source: https://www.microsoft.com/de-ch/store/b/surface
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3. Microsoft Surface Studio
Another step in this direction is the launch of the Microsoft Surface Studio product line. Surface Studio is a
traditional all-in-one PC with powerful hardware and minimalist design. The centerpiece is a tilting, gigantic 28inch touchscreen with sharp, true-to-life colors, which can be used as a drawing board by graphic artists,
architects, or engineers. In February 2019, the second generation, Surface Studio 2, was released. “Surface
Studio 2 is our digital canvas for creative work. Modern technology gives the computer enough power for
professional use. Innovative design and an outstanding display make it possible to digitally design, sketch, paint,
or draw in an impressive way,” says Andre Hansel, Senior Product Manager for Surface Commercial at Microsoft
Germany (in Microsoft, 2019a). Above all, Surface Studio supports creative work and design processes in a
variety of ways. With a little practice, the highly sensitive touch screen allows users to increase productivity
many times over. However, Microsoft Surface Studio also offers a multitude of applications in other work, design,
and presentation areas. In addition to functionality and flexibility, the devices have an aesthetic design,
previously a hallmark of Apple.
Studio was launched rather pricey, starting at just under CHF 4,000. The new Surface Studio 2+ sells for around
CHF 5000.With its Studio product line, Microsoft is very specifically targeting the creative professions (architecture,
advertising, communication, design, etc.), which has for decades been considered the domain of Apple. Industry
analysts see this as Microsoft declaring war on Apple, which lost its innovative edge following the death of Steve
Jobs in October 2011.
With Surface Studio, Microsoft is attempting to digitize everyday life and blur the boundaries between digital and
physical reality with its digital drawing board function.
Figure 2: Surface Studio 2 with tilting touch screen
© Copyright ZHAW School of Management and Law
Source: https://news.microsoft.com/de-de/surface-studio-2verfuegbarkeit/
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4. Task
The following tasks need to be completed based on the case study text and the teaching materials for the topic
block “Strategy.”
You are a management assistant at Microsoft and receive the following assignment:
4.1. SWOT Analysis
Conduct a classical SWOT analysis to identify the strengths and weaknesses of Microsoft and the Surface
Studio product line. Identify the risks and opportunities of the environment in which Microsoft and Surface Studio
operate.
4.2. From Strengths to Strategic Core Competences (VRIO)
Which strengths of Microsoft and Surface Studio can be described as having strategic core competences?
Which ones do not? Name four strengths, assess the suitability of each as a core competence, and justify your
answer applying the VRIO model.
4.3. The Four Competitive Strategies According to Porter
Where would you rate Microsoft Surface Studio in Porter's four-competitive-strategies model? Justify your
answer.
4.4. The “Stuck-in-the-Middle” Issue
In what situation might Microsoft Surface Studio run the risk of finding itself “stuck in the middle?” Justify your
hypothesis.
4.5. Graphical Illustration of the “Stuck-in-the-Middle” Issue
Illustrate the situation of being “stuck in the middle” using a profitability - market share diagram.
4.6. Product Market Strategy According to Ansoff
How would you classify Microsoft Surface Studio according to Ansoff's product market strategy? Justify your
answer.
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5. References
Cloudmagazin. (2019). Microsoft der super Rechner. Retrieved from
https://www.cloudmagazin.com/2019/01/17/microsoft-der-super-rechner-surface-studio-2/
Devoteam Alegri. (2018). Was erwartet Sie auf der diesjährigen Microsoft Inspire. Retrieved from
https://www.devoteam-alegri.eu/was-erwartet-sie-auf-der-diesjaehrigen-microsoft-inspire-eine-vorschau/
Diggelmann, L. (2017). Test Microsoft Surface Studio. PCtipp.ch. Retrieved from
https://www.pctipp.ch/tests/hardware/desktops/artikel/test-microsoft-surface-studio-87939/
Microsoft. (2019a). Store, Surface. Retrieved from https://www.microsoft.com/de-ch/store/b/surface
Microsoft. (2019b). News Center. Retrieved from https://news.microsoft.com/de-de/surface-studio-2verfuegbarkeit/
Microsoft (2023). Surface for Business. Retrieved from https://www.microsoft.com/dech/surface/business/surface-studio-2-plus
Netmarketshare. (2019). Operating System Market Share. Retrieved from
https://netmarketshare.com/report.aspx?qprid=8
Rössler. M (2016). Microsoft erfindet den iMac neu. Chip.de. Retrieved from
https://www.chip.de/news/Surface-AiO-PC-Microsoft-erfindet-den-iMac-neu_102360373.html
Waibel, R. & Käppeli, M. (2015). Betriebswirtschaft für Führungskräfte. 5th edition. Zurich: Versus.
Wietlisbach, O. & Graf, A. (2017). 13 Dinge, die jeder Mac- und Window Nutzer über Microsofts neuen iMac
Killer wissen muss. Watson. Retrieved from https://www.watson.ch/digital/microsoft/613513488-13dinge-die-jeder-mac-und-windows-nutzer-ueber-microsofts-neuen-imac-killer-wissen-muss
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