EXECUTIVE SUMMARY MICROSOFT
EXECUTIVE SUMMARY MICROSOFT
Microsoft is unique in history. By virtue of its dedication to providing
complete PC user desktop solutions, Microsoft has revolutionized computing by
making it available on every desktop. PC solutions are positioned to promote
ease of use. The company has developed a group of products that provide
incredible functionality, are intuitive to use, and are at the same time widely
available to users because of the low cost of products.
Rules-based configuration enables implementation of large numbers of
products by a great variety of consumer and business customers in many
different countries. Limiting end user software operations to very simple,
understandable, well defined tasks make computer use achievable. This is the
genius of Microsoft.
MICROSOFT REVENUE
Microsoft product segment revenue is analyzed by the calendar year
following. Platforms accounted for $8.09 billion dollars in 1998. (See Figure ES1 and Table ES-2.) Applications and tools accounted for $7.47 billion in 1998.
(See Figure ES-3 and Table ES-4.) Interactive media and other grew to be a
measurable market segment with $1.1 billion in 1998. The company did not start
reporting this revenue separately until September of 1998.
COPYRIGHT 1999, WINTERGREEN RESEARCH, INC.
ES-1
www.wintergreenresearch.com
tel 781-863-5078
email: info@wintergreenresearch.com
EXECUTIVE SUMMARY MICROSOFT
ES-1
MICROSOFT PC APPLICATION PRODUCT MARKETS, PERCENT, 1998
Word
4%
Excel
2%
Office
82%
PC Input Devices
8%
AD Tools
4%
Source: WinterGreen Research, Inc.
TABLE ES-2
MICROSOFT PC APPLICATION PRODUCTS
AND DEVELOPMENT TOOLS, 1998
In Billions of Dollars
Billion $
%
Office
W ord
Excel
PC Input Devices
Application Development
AD Tools
6.13
0.28
0.15
0.60
82
4
2
8
0.31
4
Tota l
7.47
100
Source: W inte rGre en Re se arch, Inc.
COPYRIGHT 1999, WINTERGREEN RESEARCH, INC.
ES-2
www.wintergreenresearch.com
tel 781-863-5078
email: info@wintergreenresearch.com
EXECUTIVE SUMMARY MICROSOFT
ES-3
MICROSOFT PLATFORM AND BUSINESS APPLICATION PRODUCT MARKETS
PERCENT, 1998
Workstation NT
13%
Server NT
7%
Backoffice
15%
Exchange
4%
Windows 98
58%
SQL
2%
Source: WinterGreen Research, Inc.
WinCE and Other
1%
TABLE ES--4
MICROSOFT PLATFORM
AND BUSINESS APPLICATION PRODUCTS, 1998
In Billions of Dollars
Billion $
W in d o w s 98
W o rkstatio n N T
Serv er N T
B acko f fice
Exch an g e
SQ L
W in CE an d O th er
4.63
1.07
0.54
1.24
0.32
0.16
0.10
Tota l
8.09
%
57
13
7
15
4
2
1
99.65
Source: W inte rGre en Re se arch, Inc.
COPYRIGHT 1999, WINTERGREEN RESEARCH, INC.
ES-3
www.wintergreenresearch.com
tel 781-863-5078
email: info@wintergreenresearch.com
EXECUTIVE SUMMARY MICROSOFT
MICROSOFT OPERATING SYSTEM AND
APPLICATION STRATEGY
Since its inception in 1975, Microsoft’s mission has been to create
software for the personal computer that empowers and enriches people in the
workplace, at school and at home. Microsoft’s early vision of a computer on
every desk and in every home is coupled with a strong commitment to Internetrelated technologies that expand the power and reach of the PC and its users.
Microsoft strives to produce innovative products that meet customer evolving
needs.
Large corporations used multiple versions of Office during the deployment
phase. Upgrades depend on the time it took to install large numbers of desktops
and end users. The Office 97 service upgrade included Word 97 binary file
converter that simplified the sharing of documents across multiple versions of
Word. Shell Oil deployed Office 97 on 10,000 desktops in the same day.
Microsoft has built in market protection because of the diversity of its
Windows operating systems. The products go beyond full functionality to a level
of product complexity that delivers enormous simplicity to users. No competitor
can hope to deliver comparable functionality even if the operating system code is
available. Microsoft dominates by virtue of its comprehensiveness.
Microsoft has positioned to provide a robust, scalable, and global directory
service. Active directory is being positioned to be integrated with new and
existing applications. NT is positioned to minimize costs, improve functionality,
and increase the ability to respond to moves and changes. Consolidating
directories and implementing a global directory service represents a feature of
NT.
COPYRIGHT 1999, WINTERGREEN RESEARCH, INC.
ES-4
www.wintergreenresearch.com
tel 781-863-5078
email: info@wintergreenresearch.com
EXECUTIVE SUMMARY MICROSOFT
Therein lies the vulnerability of Microsoft as well. Some competitors may
implement network computing more efficiently than does Microsoft. Microsoft is
tied to a large, immutable operating system that is not yet stable. Success has
pushed out competition in many client segments but that situation could change.
Now, competitors can only hope to provide products that supplement
Microsoft functionality rather than compete directly with it. The 3Com Palm
operating system is more efficient than the Microsoft CE operating system. Linux
is emerging as a market force. Real time operating systems are gaining a
market presence. Companies now seek to ally with Microsoft to achieve a
market presence. Microsoft seeks to harness critical forces in the personal
computing and digital technology revolutions by creating a plethora of
partnerships represent the primary strength of Microsoft. Microsoft has been
able to ally with the developers who define PC technologies, and the customers
who use PC technologies.
IBM AND MICROSOFT CORPORATE
POSITIONING
Microsoft has a focus and an expertise in providing client side, across
industry platform and framework products and applications. IBM has a large
enterprise focus on providing mission critical, industry specific solutions. Each
company participates in the others markets, but in large part they do not collide in
the market.
As the Internet takes hold, all the rules change. The Internet represents a
quantum change in all the rules on doing business and of managing computing
systems and IT departments. As these changes occur, Microsoft and IBM have
COPYRIGHT 1999, WINTERGREEN RESEARCH, INC.
ES-5
www.wintergreenresearch.com
tel 781-863-5078
email: info@wintergreenresearch.com
EXECUTIVE SUMMARY MICROSOFT
significant market opportunity to redefine their participation in computing systems
markets.
Microsoft has a people focus. Microsoft is attuned to how people shape
the face of computing. Microsoft seeks to develop products that are intuitive to
use. This is in contrast to IBM which has a mission critical solutions focus. IBM
is focused first and foremost on how to preserve and protect data and information
which is located inside the computer. Each company typifies a particular market
focus. Each company addresses the complete needs of an industry segment but
with a particular slant on the business of computing. There is a significant place
for both types of company in the computing industry.
Middleware represents the most comprehensive threat to Microsoft
operating systems. As computing enters the network age, the network is the
computer. Middleware is the operating system of the network.
But, within PC operating system functionality, Microsoft is everything to all
people. Windows has achieved a monumental dominance of enabling PC
functionality by virtue of its comprehensiveness. The intricacy of the features
and the large number of features are admirable and have no parallel in any
product ever offered to the market.
Windows 98 and its successors represent fully featured operating
systems. They are unmatched for functionality and utility. The cost of
development has been spread over many years. The cost has been spread over
a large number of users, resulting in a very large installed base. The huge
installed base assures a market for upgrades for years to come.
Microsoft operating systems drive sales of PC equipment, because users
desire to have ever increasingly powerful functionality. As PC hardware
COPYRIGHT 1999, WINTERGREEN RESEARCH, INC.
ES-6
www.wintergreenresearch.com
tel 781-863-5078
email: info@wintergreenresearch.com
EXECUTIVE SUMMARY MICROSOFT
component and system vendors have been able to provide increasing speed and
continuously improving performance, demand for more functions persists.
Performance improvements for PC hardware are expected to increase by
quantum leaps for the nest 15 years, driving demand for operating system
multimedia capabilities.
MIDDLEWARE
As Microsoft moves to put middleware into the operating systems,
significant hurdles have been encountered. Middleware is by definition across
platform, open systems software network enabling technology. Operating
systems are by definition proprietary. So the Microsoft operating system does
not logically embrace middleware and the operating system has tried to reach
outside its logical definition. Microsoft seeks to avoid middleware by embracing
the Internet.
Microsoft puts functionality in operating systems that other vendors are
putting in middleware. The issue is how to manage cross platform cross
application strategy. Microsoft has implemented HTML in Word making these
documents available on the Internet in a universal format.
The issue relating to middleware revolves around how to manage
transactions in a similar universal manner. Microsoft has targeted proprietary
operating system solutions balanced by the Internet.
Concurrently middleware vendors are developing EAI application
integration strategies with message broker and switching algorithms. Microsoft
server related strategy targets small and mid size businesses with the Windows
and NT operating system platform.
COPYRIGHT 1999, WINTERGREEN RESEARCH, INC.
ES-7
www.wintergreenresearch.com
tel 781-863-5078
email: info@wintergreenresearch.com
EXECUTIVE SUMMARY MICROSOFT
WELL DEFINED TASKS
Limiting end user software operations to very simple, understandable, well
defined tasks makes computer use achievable. This is the genius of Microsoft.
Microsoft has been able to implement this capability for both consumer and
enterprise operating system and applications software. Ultimately, Microsoft is
expected to separate its Internet servers from the PC operating systems and
institute separate pricing schedules.
TRAINING TOOLS
Just-in-time training tools are positioned to be available when needed by
knowledge workers. Instead of learning a lot and retaining a little, a new method
of training is evolving. Information can be learned in an incremental way.
Learning occurs as needed. Learning is achieved through help systems. Help
systems in the Windows shell comprise investments of thousands of hours of
usability testing, making it easier for users to instantly locate and read relevant
information on a topic. Information pertaining to any Microsoft and third-party
products is displayed in help systems. Help systems go a long way to deliver
just-in-time training to users. Help systems reduce peer support and formal
training expenses.
REDUCING COST OF OWNERSHIP
Lowering the total cost of administering applications is a key concern to IS
managers. Microsoft users and system managers embrace reduction of total
COPYRIGHT 1999, WINTERGREEN RESEARCH, INC.
ES-8
www.wintergreenresearch.com
tel 781-863-5078
email: info@wintergreenresearch.com
EXECUTIVE SUMMARY MICROSOFT
cost of ownership as a key priority. Microsoft has a goal of reducing total cost of
ownership (TCO) by another 50 percent in future versions.
Lower cost of ownership represents a significant competitive issue in
software markets. Microsoft has positioned to provide lower cost of ownership
across its entire product line.
MIGRATION STRATEGY
Migration strategy is an integral part of Microsoft operating system
positioning. Microsoft pays attention to how it adds new functionality, being sure
that it extends the life cycle of existing products even while developing new
functions and features for next generation operating systems.
The migration process from down-level servers to new servers can take
place one domain controller at a time. When all of the domain controllers in one
domain have been upgraded, it can be switched to a newer domain. In this
manner, Microsoft has positioned to keep customers purchasing existing
products while developing new ones.
SUCCESS FACTORS
Microsoft’s commitment to making innovative software products, combined
with soliciting for customer feedback, is the key to customer satisfaction and
long-term success.
Microsoft’s long-term vision of the personal computer as a tool to
empower people and organizations is the basis of its success. To the extent the
Internet drives PC markets, Microsoft is tied to the Internet. Development efforts
are centered on personal productivity enhancement. As we enter a new era of
COPYRIGHT 1999, WINTERGREEN RESEARCH, INC.
ES-9
www.wintergreenresearch.com
tel 781-863-5078
email: info@wintergreenresearch.com
EXECUTIVE SUMMARY MICROSOFT
personal computing that embraces communications technology, the vision is
shifting.
WELL DEFINED TASKS
Limiting end user software operations to very simple, understandable, well
defined tasks makes computer use achievable for most people. This is the
genius of Microsoft. Microsoft has been able to implement this ease of use
capability for both consumer and enterprise operating system and applications
software.
COPYRIGHT 1999, WINTERGREEN RESEARCH, INC.
ES-10
www.wintergreenresearch.com
tel 781-863-5078
email: info@wintergreenresearch.com