2. Microsoft Tablet PC SWOT Analysis

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Tablet PC
MARKETING 4960
CASE ANALYSIS
November 16, 2005
Prepared For: Professor Zwick
Prepared By: Milana Dozortsev
Dmitri Echin
Samantha Lim
Mike Z.
Case Analysis
Microsoft: Positioning the Tablet PC
CONTENTS
1.
SYNOPSIS ..........................................................................................................................................................2
2.
MICROSOFT TABLET PC SWOT ANALYSIS ............................................................................................3
STRENGTHS: ..............................................................................................................................................................3
WEAKNESSES: ...........................................................................................................................................................4
OPPORTUNITIES: ........................................................................................................................................................4
THREATS: ..................................................................................................................................................................4
3.
ALTERNATIVES AND EVALUATION .........................................................................................................5
4.
RECOMMENDATIONS AND IMPLEMENTATION ..................................................................................8
IMPLEMENTATION: SHORT TERM ...............................................................................................................................8
IMPLEMENTATION: MEDIUM RUN ..............................................................................................................................9
IMPLEMENTATION: LONG TERM .............................................................................................................................. 10
5.
CONCLUSION................................................................................................................................................. 11
Page 1
Case Analysis
1.
Microsoft: Positioning the Tablet PC
Synopsis
Alan Kay of Xerox PARC envisioned pen-based computers 25 years ago with Dynabook.
Chuck Thacker developed the first prototype, the Alto which needed a mouse and a keyboard
and had a size of a small refrigerator. Two decades later, Apple introduced the Newton, a
handheld device that achieved notoriety for its poor handwriting recognition. Following were
many other pen-based devices which failed. The Microsoft’s Tablet PC Team were undaunted by
these earlier failures. Microsoft’s OEM partners developed the Tablet PC hardware while
Microsoft developed the software, which was called the Windows XP Tablet Edition.
Bill Gates claimed that the reasons for their failures were incompetence in hardware and
software and the absence of a wireless network. Today, all these things are available for the
success of the Tablet PC.
The “architect” of the eBook and Table PC initiative, Bert Keely believes that the idea of
a Tablet PC can spin off if it solves the present problems of using a conventional computer to
read a digital book as well as the difficulty of using to a pen to write lengthy materials on a little
PDA. Windows and Office were to evolve to support handwritten ink and “immersive” reading.
However, having formed the Tablet PC Version 1.0, the Tablet PC teams faces two
critical issues related to the final marketing plan. The first concerned the positioning of the
Tablet PC. One option was to position the device as a radical breakthrough in computing
technology that would dramatically change the role of computers in the workplace and home.
The second option is much more conservative and it involved positioning the Tablet PC as
merely a high-end laptop with several interesting new features. The second issue is concerned
with the choices of the initial target market for the device.
Page 2
Case Analysis
Microsoft: Positioning the Tablet PC
Following our analysis of the case presented above, we will introduce the strengths, weaknesses,
opportunities and threats for the launch of the Tablet PC, an evaluation of each issue, our
recommendations and finally, our suggestion of an effective timeline of implementations.
2.
Microsoft Tablet PC SWOT Analysis
Strengths:
The Microsoft Tablet PC enjoys several strengths. Firstly, Microsoft is an extremely well
recognized and respected brand around the world. This automatically gives this new PC an
advantage and fame as many people constantly follow the new products that Microsoft releases.
Secondly, distribution is a vital strength in this case, as Microsoft can use its already existing
distribution channels and relationships with other parties to quickly and efficiently enter the
market. This, in turn, can make the PC popular through word of mouth and generate exponential
sales growth.
Thirdly, the product quality this time clearly outperforms all the pre-existing small PC’s.
Based on the outline features in the case, the Microsoft Tablet PC is the first of its kind in terms
of its combination of size, functionalities, and most importantly performance. Never before
could a small gadget like this perform all the outlined features and do them well. Thus,
Microsoft stands to benefit from the first mover advantage. For Microsoft, the first move is an
advantage as they can quickly put the product on the market in mass volumes and thus it would
take some time before another company can overtake them in market share.
Fourthly, quality of talent working on this project is definitely not lacking. Microsoft has an
abundance of resources, both human and financial. It can use these resources to keep on
constantly improving the product, tweak marketing strategies, and in essence do anything
necessary to try and make this a profitable venture.
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Case Analysis
Microsoft: Positioning the Tablet PC
Weaknesses:
Even one of the largest organizations must have some weaknesses.
When it comes
specifically to the Tablet PC, Microsoft’s overall reputation has a very large impact on the
success of this product. As already outlined, a strong reputation can mean great success, but a
major glitch somewhere along the way in the organization can mean disaster for the Tablet PC.
Thus, the reputation of the company can both be its strength and weakness, depending on what
the future holds. An unexpected PR disaster can have a major impact on all the company’s
products.
Opportunities:
With a product such as the Tablet PC, it appears that the opportunities are endless. Before the
release of version 1.0, Microsoft had plans in motion for versions 2.0, 3.0 and 4.0. Clearly
constant improvement and evolution are an integral part of sustainable revenue in this type of
business.
Furthermore, combining the Tablet PC with other services like a cell phone and a GPS device
can bring a variety of everyday gadgets into one, making this a central station and organizer of
ones life. With time, this will probably become both a useful and a viable extension to the
current product. Additional Microsoft services would probably include networks similar to AirG
that would offer networked communications, games, and an entire assortment of additional
quarks, all customized to fit every individual.
Threats:
Drawing from historic trends, other similar products have miserably failed in the past.
Though their functionality and features were perhaps inferior to the Microsoft Tablet PC, one
cannot help but wonder if Microsoft will join the rest of the small PC’s in the technological
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Case Analysis
Microsoft: Positioning the Tablet PC
graveyard. Based on the history of this technology, it is possible that consumers will reject this
product altogether.
One of those reasons that may hinder the product from becoming mainstream is its price. A
$2,000 to $3,000 price tag is not quite affordable for all. It is conceivable that there would be an
initial market, but many consumers would probably forego the extra convenience to slash down
the price tag of their PC to around $1,000 in plain lap top form.
Another reason for a potential failure can be the product’s glitches. Even though Microsoft
has invested abundant resources to test and assure the product quality, they cannot always be
prepared for the unexpected.
New products always carry an element of risk, which can
potentially have disastrous consequences. Consumers, who may expect a product with no
glitches, may be staring at a blue error screen on initial start-up. This would not fair well at all
for the word-of-mouth marketing.
Finally, it is imperative for Microsoft not to underestimate the competition. There are many
companies throughout the world that would love to see Microsoft fail, and what better way to
accomplish this than to steal market share? Perhaps Microsoft is the world leader for operating
systems on traditional PC’s, but its effectiveness on the smaller portable units as compared to
other potential systems is still under question.
3.
Alternatives and Evaluation
Microsoft’s primary positioning objective is to decide how to market the Tablet PC.
They must decide which frame to place the product in. It is very important not to over promise
and under deliver. Microsoft has two options. The first option is to market the Tablet PC as a
breakthrough in computing technology. Secondly, Microsoft can decide to promote the Tablet
PC as a high end laptop.
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Case Analysis
Microsoft: Positioning the Tablet PC
If Microsoft decides to position the Tablet PC as a revolutionary product they will have
to live up to the hype that they will create. It is definitely possible for computer users to view
this product as revolutionary because it is the first time that pen based computers are available to
the public. Furthermore the ClearType technology allows for much better reading and even lets
the user snuggle up in bed with their favorite eBook.
Nevertheless, Microsoft does not actually produce the Tablet PC, it only provides the
software to run them. There are 10 manufacturers who decide to produce the Tablet PCs ranging
from Acer to Viewsonic. Since Microsoft does not control the production of the actual products,
it cannot be sure that they will be glitch free. Hence, if they promise the products to be
breakthrough and the product keeps malfunctioning, it will look bad on the company and the
product.
Microsoft’s second option is to position the Tablet PC as a very high end, ultra light
laptop with added functionality. Microsoft already stated that they have developed Version 1.0
with the ability to run all the applications that are used by desktop and laptop PC’s today.
Therefore, since the Tablet PC can run all applications the same way as the PC, it may be
intelligent to market it as a high end ultra light laptop. Customers will be less likely to feel as if
Microsoft under delivered, especially if they extras such as Microsoft Reader, Windows Journal,
handwriting and voice recognition are as good as they are promised to be.
From Exhibit 8, it is evident that large and medium sized businesses combined account
for the largest volume of portable PCs (both in volume and millions of dollars). Additionally
one third of PCs are replaced every year within these companies. For these reasons, it would be
wise to target large and medium sized businesses. If this decision is made, Microsoft should
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Case Analysis
Microsoft: Positioning the Tablet PC
approach the corporate IT departments of these companies because they are the ones who make
the decisions in future PC purchases.
This may not be the optimal decision for Microsoft because even though Tablet PCs are
very ultra compact, they are not on par with leading edge laptops and desktops in terms of
processing power and capacity. This may frustrate business users and discourage them from
repurchasing in the future. Furthermore, the Tablet PC software is not yet perfected and any
glitches or bugs will not be tolerated by busy business individuals who need information to work
all the time.
Microsoft can choose to target individual home users as their initial target market. It is
evident from Exhibit 8 that individuals make up the largest single segment of portable PC
purchases (both in volume and millions of dollars), therefore, Microsoft will be able to reach the
largest potential pool of clients by targeting this segment. Microsoft should particularly target
the early adopters and techies. Early PDA’s and mobile email devices used this strategy and it
resulted in rapid adoption. Individuals will also be more forgiving compared to corporate users
if the technology has a few minor glitches.
Students are another market especially with increasing backpack sizes being an issue in
schools. The Tablet PC can eliminate this problem by giving access to all this information in a
small compact format. Nevertheless, younger students may have trouble writing on a Tablet PC
instead of regular paper and the product may be too expensive for most parents to afford.
The last possible segment that Microsoft could market to is the consumers who had never
owned a PC. The idea behind this segment is that the consumers would have the Tablet PC that
could belong in any room of the house. It could be used to check recipes, do last minute
bookkeeping or just read an eBook. Even though the home segment is the largest single end-user
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Case Analysis
Microsoft: Positioning the Tablet PC
segment for portable PCs, it may be hard to target first time users as potential clients of the
Tablet PC. The technology will definitely be easier to grasp for individuals who already owned
a previous PC. Furthermore, these consumers may not be as forgiving of glitches, since they are
not used to having personal computers crash on them, and be disappointed in the product quicker
than a repeat PC buyer.
4.
Recommendations and Implementation
In order to achieve the most optimal results upon launch, Microsoft Tablet PC should
position itself as a high end laptop with added features and the target market should consist of
the individual consumer market. Based on previous evaluation, positioning the Tablet PC as a
high end laptop with added features will entice the individual consumer market, specifically the
early adopters and it will not over promise the product. Similarly, this market may be more
forgiving to minor glitches. However, in the long run, Microsoft may choose to expand to other
markets such as the student and school market as well as the larger corporate, business user
market. Once the product gains credibility in the marketplace and new product extensions are
introduced, they can be targeted at business professionals as the product will have been tried and
tested. Similarly, in time the price will eventually drop with the introduction of competitors, and
this will make the product more affordable to students and schools. It is of utmost importance
that Microsoft maintains consistency in at all consumer touch points. Therefore it is imperative
for Microsoft to provide high levels of customer service as well as consistent innovations and
product extensions.
Implementation: Short Term
Targeting the consumer market, specifically early adopters and tech savvy individuals
would be the first step in accessing the market. The strategy that would be most affective is a
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Case Analysis
Microsoft: Positioning the Tablet PC
buzz marketing strategy where word of mouth is created about a product and it spreads as a viral
infection. Agencies such as Bzzagent.com have an interesting way in creating buzz. This agency
recruits Bzz agents who are product enthusiasts and gets each agent to use the product. Each
agent then takes upon him/herself the responsibility of getting the word out. This agent would
then speak directly to friends, family or colleagues and in essence push the product. Microsoft
can recruit prominent “techies” that host forums or blogs online related to high-tech products,
and they can offer a trial period where this individual can test the product and then inform the
masses. This buzz can be generated leading up to the launch as it is an inexpensive way to gain a
potentially large market share.
However, once the product does launch, it would be important for Microsoft and major
distribution centers such as Best Buy and Future Shop to work together to promote the product
through online and in store product showcases. Buzz marketing and strong marketing
communications can add value to the initial stages of the product launch. The buzz marketing
should take effect approximately six months prior to the launch in order to generate hype and the
marketing communications should be ongoing from the launch date and indefinitely.
Implementation: Medium Run
Once the product gains some ground in the industry, they will be able to expand into new
segments since they will have achieved greater credibility. Because of the turnaround time of
technological products, the price may have already decreased at this point, specifically with
introductions of newer software and therefore the Tablet PC can be pushed to the student and
school market. Students would invariably benefit from the ability to use the functions of an ink
pad on a laptop device, therefore Tablet PC can offer bulk discounts to schools and students.
Since there would be such a large volume of units sold in schools, it would make sense to lose a
Page 9
Case Analysis
Microsoft: Positioning the Tablet PC
marginal profit but to gain greater awareness and a larger customer base. Microsoft Tablet PC
can offer student discounts through online purchases and equipping schools with these devices
would make it very difficult to change to competing brands.
Also, the medium run would also be the point in which Tablet PC is introduced to the
corporate user group. Assuming the product performs to par, this product can be marketed as a
tool for creating business solutions. The Tablet PC would have gained credibility by this point
and therefore the extension into the corporate market would be a natural progression. This
process should be implemented between the six month to one year mark.
It should also be noted that the Microsoft Office versions will not come equipped with
the windows journal option, therefore in the medium run Microsoft must have tested Office
versions that allow the option. The Microsoft Office software is the most popular and highly
used, therefore if Windows Journal is not offered as an option directly in the software package,
Microsoft should create a downloadable version online. This should be implemented within two
years of initial launch.
Implementation: Long Term
The goal for the long term is complete market penetration. Microsoft Tablet PC should be
a device that is found in all market segments, from individual users, to less technologically
capable individuals. In the long term, the Tablet PC should be in households and used for
common every day tasks such as checking recipes or reading E-books. This process will take
place within 3-4 years of the initial launch. Through word of mouth (buzz marketing) and
consistent integrated marketing communications programs, the Tablet PC will be as common as
a desktop and laptop computer found in the average household.
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Case Analysis
Microsoft: Positioning the Tablet PC
Part of the long term strategy will be to consistently reinvent the hardware and create
software upgrades. As technology becomes more advanced new adopters will be looking to
upgrade their existing Tablet PC’s and corporate users will also be looking to possibly smaller
more compact devices to replace their blackberries and palm treos. With wireless communication,
the Tablet PC may affiliate itself with telecommunications providers to add the wireless internet
and voice communication features.
5.
Conclusion
In order to ensure success at the time of the product launch it is imperative to choose the
right target market while simultaneously choosing the right frame for the product. In the case of
the Tablet PC, the initial target market should be the individual consumer segment which
consists of early adopters and the frame of the product should be an advanced laptop with greater
features. In time, as the product gains credibility, it can be extended into more developed markets
that can increase profitability margins.
Page 11
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