Over the years, technology has dramatically revolutionized the way people operate in modern day society. There has been an overwhelming response with many different groups of people using technology to make their lives simpler and more efficient. Many different companies have entered the forefront of technology including Sony, Apple, Samsung, and Toshiba. One of the biggest companies to sculpt the technology landscape is Microsoft.
Microsoft has contributed to the technology revolution in a variety of ways and has participated in multiple markets to contribute to a large-scale change. Microsoft was founded by two of the greatest minds of their time. Two young men by the name of Bill Gates and Paul Allen came up with the idea to create their company on January 5th, 1975 when they saw the creation of a new computer, the Altair 8800. They manipulated the design to fit their program, BASIC, for the computer.
They were able to impress the creators of the Altair 8800 at MITTS (also known as Micro Instrumentation and Telemetry Systems) and moved to Albuquerque where they co-founded Micro-soft. A year later it was renamed without the hyphen. The foundation for Microsoft was that they put an emphasis on the software that went into the computers and not the hardware of the computers itself. After Microsoft was able to get its feet wet in the industry, the company moved from Albuquerque to Bellevue, Washington on January 1st, 1979.
The duo of Gates and Allen had Steve Babbler Join the team on June 1 lath, 1980 who would later succeed Gates as the CEO of Microsoft. Once the company settled in Washington, they decided to restructure the company from the top to the bottom. They formally came an incorporated business in its home state of Washington. They also pronounced Bill Gates as the president and chairman of the board and Paul Allen was named Executive Vice President. Bill Gates was already wealthy due to his family fortune. However, when he started the basis for his company, he never tapped into those resources.
By 1978, Microsoft was already bringing in revenue that was found to be close to 1 million dollars. Due to the emphasis of Microsoft’s technology on software, they were going to need another company to back them so they could establish the development of their hardware. They were able to strike a deal with International Business Machine Corporation (also known as MM) once Vim’s first choice for software development fell through. Microsoft had been creating a middle- ground between operating systems and software development so in order to benefit Vim’s first personal computer (or PC), they needed to build a full operating system.
Once Microsoft was able to make its operating system called Microsoft Disc Operating System (also known as MS-DOS), they were able to mass produce the SO and sell it to Vim’s competitors that were also trying to recreate the PC. By 1982, they had licensed the SO to 50 other companies and sold them by the millions. After working for over a year on multiple products in their industry, Microsoft was declared one to the largest steward producers in the none computer industry. The years to 1985 and 1986 were one of Microsoft’s most productive times to date.
They opened up an international manufacturing facility in late 1985. At the culmination of this year, they also went on to produce their first edition of Windows (Version 1. 0). In the first year of the company going public with an international public offering, they were blew to raise their shares and gain a great deal of momentum within their market. Just within the first day of their stock sales, the price per share soared from twenty- one US dollars to twenty-eight dollars. During the time period from 1986 to 1990, Microsoft was hard at work developing new software for computers and enhancing their systems.
Microsoft was able to create its first office program, which combined office related tools with a word processor and other databases, called Microsoft Works. It became very successful for the first several years it was released. It was not until the release of Microsoft Office where it became practically obsolete. Microsoft Office was produced in 1989 and carried multiple features that Microsoft Works was not capable of operating. It was able to combine many different facets of the programs it was developing into one program. This package tended to include Microsoft Word, Excel, and other features depending on the package purchased.
Microsoft exclusively developed both of these products internally within the company. Microsoft Office was a crucial software program developed my Microsoft and is still used even today as one of the biggest programs ever made. In 1990, Microsoft continued to build upon the foundation of the Windows operating system by creating Version 3. 0. This version of Windows gave Microsoft an advantage in the streamlined graphic interface and the protective properties it gave to the products that it was compatible with. The production of Windows 3 however led to much controversy within the Microsoft Company.
They already had an agreement in place for the production of SO/2, another operating system they had been producing. However in mid-1991, Gates announced that the agreement in place had been dissolved and Microsoft was going to turn its complete attention to the Windows interface instead. The developers who participated in the production of SO/2 felt deceived and were unaware of the sudden movements. However, despite Microsoft losing the production of the SO/2, they were able to focus completely on the Windows operating system and became the most used operating system within the United States for PC’s.
During the time of the sass’s, Microsoft was able to dominate the landscape of the computer industry. The software they were able to develop was highly used within the market and became more advanced with each new version that was released. Microsoft Office created a gigantic gap between itself and the competition, making it the dominant business/office program bundle. In 1993, Microsoft was named the “Most Innovative Company Operating in the United States,” further cementing its status among the software industry. Apple had filed a legal case against Microsoft for copyright infringement on the design of their operating system.
The case spanned a five-year window between the two companies. In the end however, Microsoft remained victorious and had all charges dropped against them for the supposed copying of the Apple system. Microsoft realized how well they were performing and wanted to do as much as possible to engage their consumers. Microsoft had produced a large variety of products that could be customized to the utilization to the user. They tottered compatibility steward to Windows users that would ease new users into using the computers without being discouraged from the use of their new products.
The product they had marketed, Microsoft Bob, proved to be a failure and did not live up to expectations that they had set. Microsoft proceeded to release another new version of Windows, Windows 95, which had a impolitely new user interface and was the first time that Microsoft had incorporated a web browser into its system. Today the web browser is known as Internet Explorer. Microsoft has used these software programs to propel themselves ahead of their competitors and become a tremendous force in their market.
Even though Microsoft was already on top of its market with its products, they still striver to improve and become more involved in new technology that was being created. During the early sass’s, the Internet was beginning to form and become a major staple for years to come. Bill Gates recognized the extraordinary potential for the Internet and began to create projects that would put Microsoft on the map in these new areas. He sent in a memorandum to the other chief officers at Microsoft recognizing the importance of the Internet that was called the “Internet Tidal Wave. Gates took it upon himself to manage his company in the proper direction and realized the importance of not Just the present but the future of the company and the endeavors they were going to undertake. He outlined how Microsoft had not truly understood the potential of the Internet up until that point in time. He made “the Internet the highest level of importance” and ensured that all of their efforts were put in the right direction. Gates ensured that their direction was placed into the online component of the computer industry and the future potential of the World Wide Web.
After beginning to pour all of their resources into the basis for competition in the Internet in early 1995, they began to radicalized the way people used the computers they had for years. At the end of the summer of 1995, Microsoft had finally released MANS, also known as the Microsoft Network. Microsoft launched this as a direct competitor to AOL for domination over the major online servicing through the Internet. Microsoft was able to utilize MANS as an umbrella service, where they were able to put many of the new programs they had running through the Internet into one place to be properly organized and allow for easier access.
They did not limit themselves though to the potential of what the Internet could mean through various media outlets. Microsoft reached an agreement with NBC in 1996 to launch a new network called MASC. to further branch the company out and compete with several news outlets. Different new ventures in various markets allowed Microsoft to push the envelope against its competitors and become involved in multiple markets at the same time that would potentially overlap at certain times. These strategic moves gave Microsoft an upper hand in the Internet market that they were not able to have in the early sass’s.
Even though Microsoft was not able to take advantage of the Internet landscape as soon as it was released, it was able to take past projects and utilize them in the formation of its Internet-based products. Certain products such as Active and other Microsoft reverse allowed for the customization of how people browsed the Internet. There were a large variety of computing languages that enhanced computer usage. New support was also built-in to parts of Microsoft’s new initiative through the Internet. In 1997, Microsoft released a new version of Internet Explorer, Internet Explorer 4. . The new version to Internet Explorer dissipated its competition (Netscape at the time) and allowed Microsoft to lead the forefront of Internet browsers on almost every type of computer. Microsoft had seemingly cemented its place even further among the large genealogy moguls competing to revolutionize how things were operated. The year 1998 represented several large moments within the Microsoft Company itself and for the management structure of the company. Bill Gates named Steve Babbler as the President of Microsoft. However, Gates still kept his title as CEO/Chair of the Board.
The series of events shaped how Microsoft would be operated on a high-level basis and determine how the stake of the company was divided at the very top. In this year, Windows 98 was also released to the public, which was a supremely advanced operating system in comparison to others on the market. Not only was Microsoft able to further develop its software, it was able to further develop its power worldwide. Microsoft was able to open its own headquarters in India. The new headquarters would prove to become the second largest Microsoft headquarters in the entire world.
Microsoft did not settle at any point to take in its success. They kept pushing their limits and trying to expand to every part of the globe. Gates and his team created a recipe for success that not many other companies were able to recreate due to the vast resources he had acquired and the innovative ideas they were continuously making. Even with the dominance of the sass’s, Microsoft continued to succeed in multiple facets of its business in the sass’s. One of the factors it had struggled with however was a legal case of United States v.
Microsoft, where the United States claimed that Microsoft had established itself as a monopoly within the computer industry and other ventures. The legal case forced Microsoft to divide the different parts of its company into two separate parts. The management aspect of the business were mostly kept in check for the very prestigious positions but were split differently on the lower chain of command. During the beginning of this time period, Microsoft chose to release a new Windows operating system called Windows 2000.
This operating system combined many of the newest technologies that Microsoft had developed and incorporated them in more creative ways. It also gave access to various programs that had been used in the past but had not been available for the current versions until that point. In 2002, Microsoft decided to Join even more markets to compete in. The revenue they had produced over the years gave them an advantage to Join any markets they deemed fit without worry if at first it did not succeed. They decided the new market they wanted to enter would be the video game industry.
The industry had been a relatively small battle, with practically only Sony and Nintendo battling it out. Other smaller companies had tried to compete in this market to no avail, such as Saga and Atari. Microsoft first released the X-Box to be a direct competitor to the present game consoles at that time, which were the Plantation 2 and the Gamecock. The first Microsoft venture into the video game market was met with satisfactory results. The console did not overachieve but it also did not fail in comparison to others.
The company started off with the first product in decent fashion where it could continue to grow in its position. In 2005, Microsoft released the X-Box 360 as a follow-up to the first X-Box. The system performed extremely well for the present console generation. It was able to take the content it had released on its previous console and make significant improvements. The graphics became high-dentition and it was able to supplement its gamely with finer controls. Another attraction of the console was the way it was able to go beyond just the games. It was able to play DVD’s and engage its audience in a wide variety of says.
The system was able to stream movies from online through Nettling and Youth and also had access to the Internet to browse and also download online content. In the period from 2005-2010 has been a busy time for Microsoft. The company attempted to add a wide variety of software updates and critical acquisitions to the company. The company updated its Windows software once again with Windows Vista, which had a heavy focus on simplifying office work and making PC’s more efficient. Gates announced in 2006 that he would prepare a two-year transitional period where all of the work would not be on his shoulders.
Instead he would be able to work through the company as chairman and head of the board of directors without having to worry about the day-to-day operations. These moves allowed the company to progress moving forward without Gates losing his passion for his Job. Microsoft took note of many different types of software in other industries that they could acquire to keep the company moving forward. Microsoft signed a partnership with Victim Studios in 2007 that gave them access to the high amount of content that Victim carried. It also allowed them to advertise in ways that they were unable to before.
In 2011, Keep had already established itself as the major video chat software that people used to talk to one another over the Internet. Microsoft took note of the trend that the company was going in and decided it was in its own best interest to purchase the rights to the company. Microsoft making these proper moves allowed the company to keep moving forward while also acquiring subsidiaries that will give them an advantage over the rest of their competition. Microsoft is one of the leading providers of software and hardware products and services.
The company focuses on developing, manufacturing, licensing, and purporting software products worldwide. Its major software products include operating systems, server applications, high-performance computing applications and software development tools, business solution applications, desktop and server management tools, software development tools, video games, and online advertising. Microsoft as a company enjoys a competitive position in the industry through its comprehensive product portfolio. Microsoft’s substantial debt and declining brand equity are major causes for concern.
The company, with focus on research and development, and inorganic growth, could cash in on the growing demand for video Ames and enhance business. The technological changes, intense competition across the segments, and the extensive use of pirated versions of its products pose a huge threat to the company’s future growth. Microsoft has strength in increasing its liquidity. Microsoft reported increasing liquidity for the fiscal year ended 2011. The company’s cash and cash equivalents amounted to $9,mm in 2011, reflecting an increase of 74. 6% over $5,mm in 2010.
The increasing current ratio indicates that the company is in a strong financial position and is more capable of meeting its short term obligations than in the revises year. Similarly, the company’s quick ratio increased to 2. 55 times in 2011, as compared to 2. 10 times in 2010, and its cash ratio increased to 1. 83 times in 2011 as compared to 1 40 times in 2010 The company also reported increase in working capital over the previous year. The working capital of the company increased to $46,mm in 2011 from $29,mm in 2010, showing an increase of 56. 3% over that in 2010.
The increasing liquidity, cash and working capital provide the company adequate capital to expand its operations. Another strength that Microsoft has is its operational efficiency. The company ported strong operational efficiency with decreased cost and increased margins in 2011. For the fiscal year ended 2011, the company reported total revenue of $69,mm, as compared to $62,mm in 2010, representing an increase of 1 1. 94%. The increase in revenue was driven by strong sales of the Oxbow 360 entertainment platform, Microsoft Office 2010 system, and Server and Tools products, partially offset by decreased Windows revenue.
For the fiscal year ended 2011, the company reported operating income of $27,161 m, as compared to $24,mm in 2010, representing an increase of 12. 39%. Its operating income increased at a CARR of 8. 6% for five years from 2007 to 2011. The company’s cash from operating activities amounted for $26,mm in 2011, representing an increase of 12. 1% over $24,mm in 2010. The company reported sales growth of 1 1. 9% in 2011, compared to 6. 9% in 2010. Microsoft’s operating margin increased from 36. 32% in 2009 to 38. 68% in 2010 to 38. 83% in 2011.
On the other hand, the company reduced its operating cost as percentage of sales to 61 . 1% in 2011 from 61. 3% in 2010, and its administrative cost decreased to 25. 9% in 2011 from 27. 5% in 2010. Such strong operational performance would help the company expand its business operations and trenches its market position. Focused research and development activities are another strength that Microsoft has. Proportioning innovation and optimization through strong research and development activity, the company develops a strong competitive advantage and builds brand equity.
Key research areas of the company include algorithms and theory, hardware development, human-computer interaction, machine learning, adaptation, and intelligence, multimedia and graphics, systems, architecture, mobility, networking, security, cryptography, smart connected devices and cloud computing among others. The company’s innovation investments focus on the merging technology trends and breakthroughs across a wide spectrum of technologies, tools, and platforms spanning communication and collaboration; information access and organization; entertainment; business and e-commerce; advertising; and devices.
The company started Microsoft Research Group in 1991 to explore the possibilities of developing new technologies. Microsoft has research facilities in Beijing (China), Cambridge (ASK), Bangor (India), Canada, Denmark, Ireland, Israel and in New England, Redmond, and Silicon Valley in the US. The company also operates Microsoft Research, one of the world’s largest computer science research organizations, and works in close collaboration with top universities around the world to advance the state-of-the-art in computer science sector.
It is one of the leading technology companies with a portfolio of over 26,000 U. S. And international patents issued and over 36,000 pending. Microsoft’s research and development expense were $9. 0 billion, $8. 7 billion, and $9. 0 billion during fiscal years 2011, 2010, and 2009, respectively. These expenses accounted for approximately 13%, 14%, and 1 respectively, to revenue in each to those years. The company had about 35,000 employees in research and development activities as f June 30, 2011. The R;D division of the company offers new services and technologies, along with improving the existing offerings.
Such focus on research and development allows the company to introduce new products/services and optimize its existing portfolio, which enables it to generate greater benefits. A comprehensive product portfolio is something that Microsoft does very well. Microsoft offers a comprehensive range of software, services, and hardware solutions across different customer classes, which enables it to enjoy a leading market position. Microsoft generates revenue by developing, manufacturing, licensing, and purporting software and services across a wide variety of computing devices.
The company does business worldwide and has offices in more than 100 countries. Microsoft carries out the developmental of systems (servers, personal computers, and intelligent devices), server applications (distributed computing environments), information worker productivity applications, business solutions applications, high performance computing applications, software development tools, video games and online advertising. Microsoft also provides consulting and product and solution support services, as well as trains and certifies computer system integrators and pullovers.
Recently, it focused on the development of various cloud-based solutions that provide customers software, services and content over the Internet by way of shared computing resources located in centralized data centers. The comprehensive product portfolio of Microsoft enables it to cater to a wide variety of customer requirements across industries and geographies. On the contrary to the strengths that Microsoft has a weakness that the company faces are legal proceedings. The company is defendant in various unresolved cases against it.
The company is engaged in various legal proceedings relating to product sign, manufacture and performance liability and other litigation’s relating to contracts, employment issues or intellectual property rights. Legal proceedings incur additional costs to the company, and if prove guilty will result in huge penalties that will adversely affects its profitability. As of June 30, 2011, the company had accrued aggregate liabilities of $mm in other current liabilities and $mm in other long- term liabilities regarding the various litigation’s.
In May 2012, the company was ruled against in a patent infringement litigation filed by Locate-Lucent and the company had to pay $mm to settle the case. The company is currently defending approximately 55 patent infringement cases filed against it. These kinds of litigation’s against the company would dent its reputation and could also affect future business. In addition to the weakness of legal proceedings, Microsoft also has issues with their declining brand equity and valuations. The company reported a decline in brand equity growth, which affects its brand valuation and brand image in the industry.
The company’s overall world ranking in Global Top 100 from Milliard Brown Optimum decreased from the top to fourth place in 2010 and to fifth in 2011. The company reported brand value of $78,mm in 2011, as compared to $76,mm in 2010, representing a marginal increase of 2%. Prior to this, the company has recorded brand values of $76,mm in 2009 and $70,mm in 2008. In 2011, Apple Inc. Recorded an increase to 84% in its brand value. Microsoft’s compounded annual growth rate (CARR) for revenue was 8. 15% during 2007-2011; whereas Apple, Google, Oracle and SAP recorded CARR for revenues of 44. 87%, 28. 5% and 18. 61%, respectively, for similar periods. Microsoft reported EVE/EBITDA of 7. 62 times as of fiscal year ended 2011, as compared to 9. As of fiscal year ended 2010. Moreover, the multiple was much lesser than its peer companies. Apple, Google, Oracle and SAP recorded EVE/EBITDA ratios of 9. 97, 17. 43, 1 1. 38 and 22. 57, respectively, as of respective fiscal year ends. The declining brand equity and valuation could affect the overall brand image of the company. Another weakness Microsoft slowly acquired is increased debt. The company reported an increase in its debt in its balance sheet.
As of fiscal year ended 2011, the company reported total debt of $1 1 ,921 m, as compared to $mm as of fiscal year ended 2010, representing an increase of 100. 72%. Microsoft registered debt to equity ratio of 20. 88% as of fiscal year ended 2011; reflecting significant increases from 12. 86%, 14. 53% and 0. 00% as of fiscal year ended 2010, 2009, 2008 respectively. The net debt to equity ratio of the company increased from -0. 83%in 2009 to 0. 94% in 2010 to 4. 05% in 2011. Apple, Google, and Oracle recorded net debt to equity ratios of -12. 81%, -1. 86%, and -0. 61%, respectively, for respective fiscal year ends.
A highly leverage balance sheet could result in a substantial portion of cash flow from operations being used for the payment of principal and interest; could restrain the Meany’s ability to secure additional financing at favorable costs; and limits its ability to make adjustments to its capital structure in case of significant changes in the market and economy. A huge market that Microsoft has opportunities in is the video gaming industry. The video games market is expanding in terms of revenue and the number of subscribers. The video games market is likely to outgrow and overtake the sales of music, box office, and video markets.
The video games software market size is expected to reach $55 billion in 2013 from approximately $45 billion in 2010. The customer base for video games providers could grow with an increase in the number of game subscribers. The number of game players could reach 1,260 million in 2012 from 910 million in 2009, with the number of online game players increasing to 1,180 million, and mobile players to 370 million in 2012. The significant increase in video game subscribers will lead to the expansion of the customer base of different operating companies.
The increase in market share and customer base could result in the growth of the company’s profitability. The market outlook of global IT services is another opportunity that Microsoft has. The company could benefit from the positive long-term outlook for IT services market. According to industry estimates, expenditure on IT services is expected to rebound by 2012, at an expected growth rate of 6%. Demand for IT services is likely to be driven by growth in financial services, healthcare, communications and media. The worldwide IT spending is reported $3. 7 trillion in 2011, reflecting an increase of 6. 9% over that in 2010.
Similarly, the worldwide IT spending is expected to reach $3. 8 trillion in 2012, representing an increase of 3. 7% over 2011. According to in-house search, in 2012 the Worldwide IT market segments namely, Computing Hardware, Enterprise Software, IT services, Telecoms Equipment, and Telecoms Services expected to increase 5. 1%, 6. 4 %, 3. 1%, 6. 9% and 2. 3% respectively over that in 2011. Moreover, global IT market is expected to expand nearly 30% over the next tee years. The demand for green IT services, driven by companies trying to improve their cost efficiencies, is projected to be about $4. 8 billion by 2013.
Thus, the company could capitalize on the growing global IT services market, which could enhance its revenue and strengthen its market position. Inorganic Growth would be another area that Microsoft has an opportunity to develop in. The company expands its boundaries of operations and increases its customer base with its alliances and agreements with industry players. In April 2012, the company entered into a definitive agreement with AOL Inc. To acquire over 800 of its patents and their related patent applications and to grant Microsoft a non- exclusive license to its retained patent portfolio for aggregate consideration of $1 ,056 billion.
In November 2011, Microsoft announced the acquisition of Video Surf Inc. , a California-based video discovery technology company. After the acquisition, Microsoft plans to integrate Video Surfs back-end computer vision technology across its entertainment platform to augment the Oxbow 360 ecosystem and evolve search and discovery of entertainment content on Oxbow LIVE. In June 2011 , the company acquired Provenance, a leading provider of Enterprise Risk Management (ERM) software. The acquisition of Provenance enables deeper integration of compliance-related solutions into future versions of Office and Sharpening.
In May 2011, the company acquired Keep, the leading Internet communications company. The acquisition extends Kepi’s world-class brand and the reach of its networked platform, while enhancing Microsoft’s existing Portfolio of real-time communications products and services. In November 2010, Microsoft announced the roll out of its new Microsoft Partner Network (MAN) to align its seven year old Microsoft Partner Program (MSP) closely with the changing requirements of businesses.
In October 2010, the company collaborated with Wisped and launched the beta version of Washbasin, a multilingual content creation tool for Wisped. The strategic expansion initiatives would help the company to expand its business presence to new geographical egging and gain better market coverage, which would help in future growth initiatives. Microsoft could benefit from the various strategic partnerships that it enters. In April 2012, the company entered into strategic partnership with Barnes and Noble, Inc. To accelerate the transition to e-reading.
In February 2012, the company entered into a strategic applications partnership with Good Technology to enable the use of the Good for Enterprise solution on the Windows Phone devise. In January 2012, Microsoft and Technocrats enhanced their relationship through the new Bizarre Plus program for accelerators and incubators. In December 2011, the company signed a strategic relationship agreement with Ninjas Motor Co. Ltd. To collaborate and create a next-generation dealer management system based on Microsoft Dynamics CRM. Microsoft and General Electric Co.