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Microsoft’s Annual Report

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Microsoft was founded in 1975. Currently, the multinational computer company is headquartered in Redmond, Washington. From a meager start, the company has gradually but steadily grown to become a leading player in the computer and software industry. Through its parent company and a host of other subsidiary companies, the firm has diversified its services to software development, innovation, cloud protection and mobile technology design. However, the company’s leading products are Microsoft Office Suit and Microsoft Windows. The company’s reputation is universally acclaimed, with a huge customer base all over the world. Under the capable leadership of Steven A. Ballmer, the company’s Chief Executive Officer, the firm has posted impressive financial results for the last few years.

Despite the economic depression that affected most companies, leading to receiverships and foreclosures, the company has posted successive impressive results. The company’s 2011 financial year ending June 30, for instance, posted a 12 percent growth. These are credible results, according to their independent auditors Deloitte & Touche. The company’s audited results for the year 2011 show that the firm has excellent prospects for future success. Despite the economic meltdown that crippled many companies in 2008, the firm has continued to post impressive results. Frankly, it can hardly get worse than that. Just when other firms were still shaking off the effects of the depression, the company posted “staggering” revenue of $69.9 billion in 2011. The company’s latest share price as at 11/1/2012, is 28.54, having moved up by 1.17% (Google trader).

Industry Situation

Microsoft has highly diversified its operations. It, therefore, operates in many industries providing different services. Even though the company is widely known for its active and leading role in software development and supply, their other subsidiary businesses are equally doing well. Currently, the company has diversified its operations to encompass application software industry, entertainment industry, IT and computer technology industry and advertising industry.

The company is actively involved in the application software industry. The software industry, where Microsoft holds the lead, has several business lines. Such lines include infrastructure software, enterprise software and security software. The software industry is highly dynamic and characterized by acquisitions, mergers and vendor strategic alliances (Khosrowpour 121). Microsoft has been able to control and dominate the software industry by “developing, licensing and supporting a wide range of software products and services” (Microsoft Annual Report 3).

The company’s leading software products include the widely used Windows Operating System, which has been produced in many versions, such as MS DOS, Windows XP and now Windows 7; web and server services and Windows Live Suite.

Despite continued success in the application software industry, the company’s profits have continued to drop in this sector due to stiff competition. Well-established and emerging companies, such as Google and Apple, have continued to cut the company’s earnings by providing highly competitive products at affordable prices. It is not only these two giants that pause threat to Microsoft, but also emerging platforms that have reduced significantly the demand for PCs. The emerging platforms include Smart phones and tablets, which are mobile and have increasingly gained preference over PCs. However, Microsoft has been able to control, albeit, this competition through provision of software that is secure, compatible with many appliances and with easy to use interfaces.

Another industry where the company is involved is the advertising industry. Today many people get information in barely all subjects of interest online. Microsoft has tapped into this growing market to deliver customized online advertising for small, growing and established companies. Through its premier services such as adCenter, Bing and MSN, the company has helped to connect billions of customers to sellers globally.

Microsoft has been actively involved in the IT and computer technology industry for several years. Over the years the company has invented and produced many leading products.  Through partnerships, acquisitions and mergers, the company has been able to provide computer hardware to customers around the globe. One of the leading hardware produced and distributed by Microsoft is “The Wireless Comfort Desktop 5000”. The keyboard has modern design and is easy to use. The company’s latest invention is the “Explorer Touch Mouse,” which is hyped to speed up the computer use.

This industry’s outlook sends mixed signals to both Microsoft and other industry players. Its competition is fierce and market is slowly diminishing. Apple and Google have strong financial base that can upset Microsoft.

In line is also the entertainment industry. Despite the economic depression that hit many countries in 2008 and continued to persist, the entertainment industryhas beenbooming… The selection of TV programs, computer games and movies is seemingly infinite, providing plenty of cheap thrills…” (Nybo 78). Microsoft has invested in this industry in order to have a share of this growing industry. The company has thus developed several products aimed at satisfying the unquenchable demand for entertainment. The popular platform, Xbox 360, is one of the Microsoft’s leading entertainment products. It is aimed at satisfying the demand for entertainment by families and individuals globally. Another widely used product in this category is Mediaroom, which provides television programming, recorded, live and on-demand. The competition in this industry is equally fierce with Nintendo and Sony investing heavily in research to provide better gaming console to beat Microsoft’s Xbox 360.

The Company’s Future Plans

The fierce competition, new technological innovations and changes in consumer preference have forced Microsoft to make a significant shift in its business approach. This is necessary if the company is to keep its market share in its sectors of operation. According to the company’s Chief Executive Officer Steven A. Ballmer, the company’s focus in the future is the consumer (Microsoft 2011, Letter to Stakeholders 1).

The first approach will be to work closely with companies specializing in the tablet, phone, and PC production to assist in the distribution and opening new market frontiers, as many people continue to use these products globally. Microsoft will seek to bundle its software with these products to increase the market base.

The company also expects to release Windows 8, a new operating system that promises features which are more advanced and have friendlier user interface. Considering successfulness of Windows 7, the company expects to earn a lot of money from the upcoming release. Microsoft “is selling roughly 30 million Windows 7 licenses per month” (Fleming par. 2). Therefore, if the upcoming Windows 8 can be more reliable, secure and easy to use, the company will earn more money.

The company is also looking forward to expanding its cloud business. Therefore, it will enhance and promote its cloud platforms, such as Windows Azure, Skype, Office 365 and Bing. Finally yet importantly, the company is looking forward to finding better ways of improving people-technology interaction. For instance, the company is looking forward to bringing “the advances of Kinect beyond entertainment to business, science, education and medicine by connecting it to the Windows PC and the Windows Phone” (Microsoft 2011, Letter to Stakeholders 3). 

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