Organizational Behavior of Microsoft Corporation - Essay Example

of your Essay Sub Paper Due Contents Company Introduction 2 Background of the Issue 3 Problem Context 4 Critics Opinion 5 What is Microsoft doing? 6 Analysis of the situation 6 Works Cited 8 Company Introduction Microsoft Corporation is a Redmond based American Multinational Corporation. It develops and manufactures computer software, electronics, personal computers and other such services. It is known for its software products such as the Microsoft Windows OS and its famous game consoles include the Xbox series. It is the world’s largest maker of software in terms of revenue (Microsoft, 2013). It was founded by Paul Allen and Bill Gates and is currently dominating the personal computer operating system market. Recently, Microsoft has acquired Skype Technologies and expanded into digital services market (MSN) and mobile phones (Windows Phone OS). The following statistics show the extent of Microsoft’s penetration into the market and the width of their operations (Microsoft, 2013): More than 200 million Windows 8 licenses sold to date The Windows phone Store features more than 245,000 apps Xbox live has more than 48 million members in 41 companies Office 265 has 3.5 million subscribers Over 1 billion people use Microsoft Office (Microsoft, 2013) This goes to show that Microsoft is a successful multinational with a diverse portfolio. Background of the Issue Microsoft and Nokia Corporation announced that both companies decided to enter into an agreement whereby Microsoft will purchase almost all of Nokia’s Devices and Service businesses. It will also license Nokia’s patents and mapping services (Microsoft, 2013). In this agreement, Microsoft paid EUR 5.44 billion in cash to purchase almost all of Nokia’s devices and service businesses. Building upon their previous partnership and the success of the Nokia’s Lumia smartphones, Microsoft wishes to expand into the mobile devices market through faster innovation and unified branding. Microsoft Chief executive, Steve Ballmer, has been quoted as saying, “Weve done a lot of great work in the two-and-a-half years that weve been in partnership with Nokia, going literally from no phones to 7.4 million smart Windows phones in the last quarter that was reported” (BBC, 2013). Microsoft is a big name in the technology sector; however critics say that the company has been too slow to respond to the booming market for mobile devices. The mobile phone sector is one of huge potential but is widely considered to be a weak spot for Microsoft. Stiff competition from Apple and Google with rival phone platforms has made the competitive context very cut throat. Nokia used to be the leader in mobile phones but their sales fell by 24% and sold only 53.7 million mobile phones during the quarter (BBC, 2013). However sale of its new Lumia phones rose during that period and it was hoped that the merger of Microsoft software and Nokia hardware would help achieve tighter and efficient integration. The Windows phone is the worlds’ third most popular phone OS and it outsells BlackBerry in 34 markets but looking at the biggest picture, it’s been noted that the Windows Phone has only a small 3.3 percent market share. Android OS by google has 79% of the market share and is outselling Windows Phone by 25 times. (Hachmann, 2013) Problem Context Critics say that the Window Phone is failing because of a vicious circle. Consumers will not buy the phone because it has very few apps and the developers will not make apps because there are very few consumers. There are 20-30 million Windows Phone in use but compared to the 250 million iPhones and 900 million Android phones (Hartung, 2013), developers prefer to invest in Android and iPhones rather than Windows. There are essentially three key reasons why consumers are not buying the Windows Phone: The platforms lack of apps No competitive mapping app Poor integration of services This performance has led to Microsoft’s acquisition of Nokia being labelled as, ‘Microsoft’s $7.2 billion mistake’ (Hartung, 2013). Critics Opinion It makes sense for Microsoft to expand into the mobile phones market since the future of the market lies in tablets and smartphones. An increasing number of people have stopped relying on personal computers as much and hence to integrate Microsoft’s software with Nokia’s hardware made sense at the time (Hartung, 2013). Some critics believe that Microsoft did right by entering into this market because innovation and movement towards mobile phones and tablets is the need of the hour. Microsoft is catching up with the competitors in the technology sector by adding clever features and has definitely gained momentum (Molen, 2012). Some of the smarter features in Windows phone includes: Much improved startup and user interface Smooth performance and battery life Support for hardware components Syncs with iTunes (Molen, 2012) But at the end of the day, the numbers show that the Windows Phone is failing. North American sales actually fell to 500,000 units and the average selling prices fell by almost 20% from the previous quarter. Some consider Nokia to now be a low end smart phone maker as compared to Samsung or LG (Hartung, 2013). What is Microsoft doing? In the short run, Microsoft needs to get more consumers on board its product. To get more consumers, they will need official applications and the key solutions that Windows Phone currently does not have. Although the apps have now hit the 160,000 mark, there is still no decent third party alternative available for Windows Phone users. Microsoft is trying to address the problem using WebApps. In this concept, they are taking popular websites and packaging them as apps (Edmonds, 2013). A members of the WebApps team described the concept as, "We are helping people access great mobile experiences on Windows Phone by creating pinnable Web Apps that show up in the app list. These are not a replacement for native apps." This goes to show that Microsoft is not set out to replace official apps but wants to encourage developers to get on board and start providing content (Edmonds, 2013). Analysis of the situation In my opinion, one of the biggest mistakes Microsoft made with the Windows Phone was try to copy the model Apple is using for its iPhones. Apple currently charges its developers a yearly fee and takes a cut of the developers profit as well. But then again, Apple owns a huge chunk of the market after Android. The Windows Phone cannot use the same model because they simply do not own such a market share. They are currently in 4th place in terms of market share; so it does not make sense to copy the business model of a company that is currently in 2nd place. Since then they have dropped the yearly fee and ensured that there is ample support and development tools available, but it was done too late and ended up losing a lot of customers due to the lack of apps (Marshall, 2014). There is currently a lot of news going around that Windows Phones should open up to Android apps but in my opinion, that is a horrible idea and would essentially turn the Windows Phone into an Android skin. It would further kill any chance there might be to get developers on board and ultimately the Windows 8 development platform would lose all its uniqueness. What Microsoft can do is reward developers for taking a risk on their platform and encourage the quality of apps. They can offer a monthly paid bonus to the top ranking free apps in each category. A the end of the month, the daily rankings can be averaged to calculate the monthly ranking and the top 20 apps will receive a bonus based on that rank. This would drive developers to take a chance on the Windows 8 platform and give them a better shot at earning money than they would have had at any other development platform. I think the essential problem with the Windows Phone is that on the innovation continuum, it is only an incremental innovation. It has made cosmetic changes and added only a few features that distinguish it from Android and Apple phones. In a market as competitive as the mobile phone market, such an innovation will not get you a large market share. Looking at the current offering by Microsoft in its Windows Phone, I think the product should simply not exist. It is not fulfilling any need and is not occupying any potential gap in the market. The product itself it not any faster or smoother than its competition, in fact it actually lacks the apps that other products currently offer. So in my opinion, Microsoft should both completely revamp the product and add features that are not there in any of the Apple or Android phones or scrap its billion dollar mistake. Works Cited BBC. (2013, September 3). Microsoft to buy Nokias mobile phone unit. Retrieved from BBC: http://www.bbc.com/news/business-23940171 Edmonds, R. (2013, Oct 23). Microsoft attempts to solve the Windows Phone app problem with web apps. Retrieved from Android Central: http://www.wpcentral.com/microsoft-attempts-solve-windows-phone-app-problem-web-apps Hachmann, M. (2013, September 3). The Microsoft-Nokia deal: Fail plus fail equals more fail. Retrieved from PC World: http://www.pcworld.com/article/2048063/the-microsoft-nokia-deal-fail-plus-fail-equals-more-fail.html Hartung, A. (2013, September 4). Microsofts $7.2B Nokia Mistake. Retrieved from Forbes: http://www.forbes.com/sites/adamhartung/2013/09/04/microsofts-7-2b-nokia-mistake/ Marshall, J. (2014, Feb 13). John marshal. Retrieved from How Microsoft could solve its Windows Phone app problem without giving up the farm: http://johnmarshall4.postach.io/how-microsoft-could-solve-its-windows-phone-app-problem-without-giving-up-the-farm Microsoft. (2013, March 3). Microsoft By the Number. Retrieved from Microft: http://www.microsoft.com/en-us/news/bythenumbers/index.html?utm_source=bufferhttp://www.microsoft.com/en-us/news/bythenumbers/index.html?utm_source=buffer Microsoft. (2013, September 3). Microsoft to acquire Nokia’s devices & services business, license Nokia’s patents and mapping services. Retrieved from Microsoft: http://www.microsoft.com/en-us/news/press/2013/sep13/09-02announcementpr.aspx Molen, B. (2012, Oct 29). Windows Phone 8 Review. Retrieved from Engadget: http://www.engadget.com/2012/10/29/windows-phone-8-review/ Rogowsky, M. (2012, July 18). If You Havent Seen A Windows Phone Lately, Its Because Theyre Practically Disappearing. Retrieved from Forbes: http://www.forbes.com/sites/markrogowsky/2013/07/18/if-you-havent-seen-a-windows-phone-lately-its-because-theyre-practically-disappearing/ Read More