The landscape of the IT industry has changed dramatically in recent years. Gone are the days of Goliaths of the industry like Microsoft dominating the industry with little scope for other companies to challenge its position? Microsoft enjoyed the number one position virtually unchallenged for a long time. The stranglehold it had on all aspects of the IT software market, be it for desktop applications or internet browsers, was so strong that a string of lawsuits were slapped on it for alleged anti-trust practices. It was contemplated that Microsoft would be broken up into smaller units a la Bell and Baby Bells.
(Egan, 2008, p. 14) It is in this context that the rise of Google as a serious competitor to Microsoft with potential to challenge the latter’s supremacy has to be viewed. Google started off on the web search front and slowly started foraying into desktop applications that could be integrated with the web applications unlike Microsoft that insisted on proprietary and standalone desktop software. Google went farther and started giving away its desktop application software for free as compared to Microsoft that charged a price for its Office suite of applications.
The fact that Google has found a ready audience for its applications are as much a reflection on Google’s savvy business strategy as they are about changing customer preferences and tastes. The point about changing customer preferences and consequent shift in the demand patterns is something that would be discussed throughout this case study. (Bodell, 2008, p. 145)The key point about the case is that Microsoft that has long enjoyed unprecedented and virtually unchallenged success as the top software maker of choice is now faced with an existential dilemma that threatens to not only to dethrone it from its position but also lead to a much worrisome (for Microsoft Management that is) decline in profits and revenues.
There are many reasons for this seemingly precipitous fall from its position. Primary among them is the fact that Microsoft may not have paid heed to the market conditions and changing customer preferences in the same way it did for over a decade. This is surprising for a company that has always prided itself to be “ahead of the curve” when it comes to anticipating customer preferences and doing business at the “speed of thought” that means that it is always on top of the market.
(Hassan, 2003, p. 138) The other reason could be that Microsoft has become lethargic to change and adaptation given the fact that it has grown into a huge monolith where the inertia of organizational bureaucracy is dragging it down and making it slow to respond to changing market conditions. (Cusumano, 2009, p. 27)When contrasted with Google that is nimble and fleet footed when it comes to anticipating the fluid market conditions, Microsoft appears to be a lumbering elephant that is slow to move fast and respond to Google’s moves in the market.
(Malcolm, 2010, p. 180)This situation is compounded by the fact that Google has a distinctive edge in the market for internet compatible products and it is with this in mind that Google has exploited the market with its offerings of software that integrates into its browser and is fully compatible with the internet. (Kalyanam, 2002, p. 485) There have been volumes written about how Microsoft sleepwalked its way in the midst of the Internet revolution and how it missed key opportunities along the way.
The succeeding paragraphs would analyze the reasons in detail for the lack of strategy by Microsoft when it concerns the market for software that is compatible with the internet. (Losekoot, 2008, p. 260)