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Microsoft Case Solution
Microsoft is undoubtedly the biggest computer service provider in the entire world with its services ranged from operating system to internet browsers and a huge variety of applications and softwares for computer systems (Allan, 2001). Its success has been associated with a number of factors including its tactics of targeting the market, segmenting, advancement, innovation, and monopoly power. While these factors play a vibrant role in sustaining the company’s monopoly in the market, some also argue that numerous activities of the giant service provider lead to the ‘setting up’ of its monopoly across the world (Smart Computing, 2002).
It should be noted that there is also evidence to prove the later argument. This work is a case study of Microsoft to analyze how Microsoft generated conditions to set up its monopoly in the industry. The discussion will start with the case study analysis of Microsoft and its monopolies. The next section will explore the ways in which these monopolies are set and how they affect the market while the last section will summarize the analysis and provide concluding remarks.
Following questions are answered in this case study solution:
Case Study Questions Answers
Microsoft Corporation is a multinational technology company that is spread across the world and has millions of customers in a majority of countries. Headquartered in Washington, this tech giant has dominated the technological world for about four decades. There are a variety of services provided by the corporation to its customers including operating systems, applications, personal computers, software’s for computers, internet browsers and much more. Mostly, the company is involved in the production, development, licensing, distribution, sales and further support of these services (Smart Computing, 2002). Although a majority of services provided by Microsoft are the software's-related, it also deals in hardware devices that include tablets and Xbox consoles, etc. sold across the world. With the net income of $16.79 billion made in 2016, the extent of services provided by the company is hugely wide and portrays a classic view of monopoly (Rudd, 2009). It is true that the products offered by Microsoft are exceptionally advanced and high-quality giving it an edge in the market, many companies have been skeptical about its market intentions (Allan, 2001).
Some claim that Microsoft has been using tactics to crush other market entrants who might be a threat to its monopolistic status in the industry. Companies in the US also brought up a legal action to grab some market share in the industry as they don’t stand a chance against the competitiveness of Microsoft (Brinkley, 2000). Furthermore, some activities of the company infer that it sets up a monopoly for itself and affects the business of other companies. One factor that supports the claim of the companies competing against it is the copyright activities of Microsoft. Its gets everything all of its products strictly copyrighted so that no one else can produce something similar and provide it as a substitute in the market confining free market entry (Rudd, 2009).
Firstly, it should be noted that Windows operating system is one of the strongest, and widely accepted products of Microsoft. These Windows are used in a majority (80%) of the Intel-based personal computers (PC). Furthermore, it is also an increasing trend in the market that most of the computers bought come with the Windows pre-installed in their systems and all the customers have to do is start the computer and land on the Windows. In this way, most customers don’t even know what the other substitute systems look like because their PC was already launched in the Windows (Rudd, 2009).
This reduces the chances of the customers to be able to explore other options available and suitable for their computers. The customers get so accustomed to the Windows system because of its wide applicability that they don’t consider to take a risk and see how other systems are operated. This automatically excludes other companies from the market and helps Microsoft to impose its monopoly by reducing the chances of other competitors to easily enter into the market and approach the customer community (Smart Computing, 2002).
There is another extension to the barrier of entry for other companies that are put by Microsoft. Even if a user is using some other operating system on his computer, most of the software’s and application relevant to the computer are only compatible with the Windows system. Therefore, customers who prefer other operating systems due to their simplicity are forced to switch to Windows because they can’t use the applications on other operating systems (Brinkley, 2000). In this way, Windows and its software’s become compliments for each that cannot be used without each other and prospects of survival for other companies reduces. The company should introduce softwares that are compatible with other operating systems as well so that the customers of other systems can also install and use them (Jenkins & Bing, 2013).
There has been an emerging point of view in the business community across the world that Microsoft has been involved in anti-competitive activities that make it almost impossible for other companies to compete with it. One major form of that behavior is associating its software’s and applications to the Windows operating system while another similar method is the exclusionary agreements that Microsoft has with other companies. These exclusionary agreements put a constraint on companies that confines their buying, selling, and distribution of software’s and operating systems (This Nation, 2016). Microsoft should notice that due to this activity, other companies that want to offer substitutes for Microsoft’s product are left with just a handful of companies that will sell and distribute their products and services. Henceforth, Microsoft’s potential competitors automatically get kicked out of the market or have to put down their desire to offer a substitute in the market. A solution to this problem might be for Microsoft to remove these exclusionary agreements and if that is not possible, it should at least reduce the intensity of these policies and agreements to make it possible for other companies to be able to provide their services in the field (McKenzie & Shugart, 2016).
It is not entirely true that Microsoft only uses anti-competitive strategies to stay a monopolist in the market as several products of the company are exceptionally high-tech and consumer-friendly. Furthermore, there is a high level of satisfaction in the customer community of Microsoft that plays a vital role in sustaining its monopoly. To make its business look more ethical and remove the blames of being involved in anti-trust activities, Microsoft should also consider providing its computers in the market that don’t come with the Windows pre-installed. This will give the customers an options to decide on their own about whether they want to go with the Windows or other operating systems (McKenzie & Shugart, 2016).
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