Microsoft Surface Tablet Project
- 1. Group 4 Brent Herbstreit, Mathew Miller, Bruno Garcia, Luis Quinteros, Joel Suarez Dynamic Brief #2 Microsoft Versus Apple The bubble chart above represents Microsoft's attraction to product segments against Apple's reactiveness and relative clout in the Software market, tablet market, cellphone market, the app market, and the competition between the voice calling systems Skype (own by Microsoft) and Apple's FaceTime. We will be discussing the reason why we think this product segments are important to Microsoft's attraction and how this products compare against Apple's reactiveness. The Software Market Microsoft has a strong advantage in the software market. It controls “95% market share in the productivity software market, 75% share in the operating system market and approximately 75% share in the server software market” (‘Overview’). Microsoft’s software brought in approximately $65.7 billion in 2013. Apple, on the other hand, isn’t even among the -0.5 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 -1 0 1 2 3 4 0.1 1.6 2.3 3 0.5AppsMarketplace (2.3) MicrosoftAttractiveness Apple Reactiveness Tablet Market The Software Market The Phone Market Skype vs. Face Time
- 2. top ten software producers (‘Gartner’). In 2013, Apple brought in $16.051 billion from their software, which is less than 10% of their total revenue (‘Apple’). Microsoft, which earns about 75.8% of their revenue from software, clearly has a much larger interest in the software market (‘Microsoft’). We would give a relative clout of 0.1 because Microsoft has the highest market share. Furthermore, they have greater revenue then Apple's software. While Apple does have the resources to gain a bigger market share, Microsoft has a smaller clout, making it hard for Apple to grow in the software market. Tablet Market The tablet industry internationally is of low to medium attractiveness to Microsoft, while the reactiveness of Apple is medium to high. Apples clout is high in the tablet industry because they have a high market share and large revenues in the tablet industry. According to Gartner, Apples global market share for tablets is 36%, which gives them a huge amount of leverage in the industry (Rivera). Microsoft has only 2.1% market share in the tablet market (Rivera). We would give a relative clout of a 1.6 because Apple has the resources and market share to fight back against Microsoft, while Microsoft has the capital to invest if they choose. Microsoft makes about 2.73 billion in revenue from their tablet line, which compared to their total revenue of 85.28 billion is a somewhat low to medium attractiveness for them as a whole. (“Microsoft”). Microsoft v. Apple: Cellphone market Microsoft entered this particular market because of a company that is well known by many, Nokia. On most cases, this company, which offered simple, reliable, and popular phones made our very first cellphone. It is not a surprise that in the year 2007, Nokia had a 49.4% of market share in the mobile market, but as the one of the articles in the financial express explains, “In January 2007, Steve Jobs walked on to a stage and pulled an iPhone out of his pocket and changed the world forever”. By the year 2013, Nokia had 3% of market share. In 2010, trying to gain back its supremacy, the company hired a Microsoft’s veteran to change the course of the company, and he just basically adopted Microsoft operating systemfor the company’s phones. Recently, as we know, Microsoft closed a deal to acquired Nokia. (Financial Express, 2014) The position of Microsoft in this mobile market is not easy, and numbers back up that statement. According to the most recent data posted in the IDC website, the cellphone global market share in the second quarter of 2014 is distributed as follow: Android 84.7%, IOS 11.7%, Windows phone 2.5%, Blackberry 0.5%, others 0.7% (2014). On the other hand, Microsoft may find a niche in some other parts of the world such as emerging markets or in markets where Nokia left its footprint. For example in Brazil, Microsoft market share grew from 4.2% to 5.5% and in China, it reached 3%. This is due to “an enormous effort from Nokia, which has 20 years of history in Brazil and China along with distribution networks, universal brand recognition and consumer goodwill” (Kuittinen, 2014). We would
- 3. give a relative clout of 3.0 because Apple has grown into the cell-phone market since they release the IPhone and while they do not have the highest market share in the cell-phone market, they do have a larger market share and revenue compared to Microsoft. The App Marketplace The App Marketplace is of low attractiveness to Microsoft, while Apple's reactiveness is relatively high. Furthermore, Apple's clout in the app marketplace is high. Based on Statista.com, IOS app store has a 12.9% market share and $6.4 billion revenue from purchased apps by 2013 (“Statistics and facts,” 2013). Even though the Android app marketplace has the highest market share, Apple's revenue surpasses all other App marketplaces. In perspective, Microsoft has increased its market share and revenues as well. However, Microsoft has only a 4% market share and a total of $950 million revenue in the Windows App store (“By the Numbers,” 2014). Here are a couple other differences that have low attractiveness to Microsoft's app store and a medium to high reactiveness to Apple. IOS App Store: * 1.2 Million number of IOS apps * 75 billion number of IOS apps downloaded * 46 million apps downloaded daily (“Statistics and facts,” 2013) Windows App Store: * 170,000 number of Windows phone apps * 3 billion number of Windows apps downloads * 10 million number of apps downloaded daily (“By The Numbers,” 2014) Based on the statistics provided, we would rate the relative clout a 2.3 due to the fact that Apple's revenue give Apple the resources to fight back. Furthermore, Microsoft does not have the amount of space and revenue to compete with the IOS apple store. Microsoft Skype vs. Apple Face Time Microsoft and Apple both have VOIP, Microsoft uses Skype and Apple has Face Time. Both companies have revenues at about 1 billion. (Trefis) When looking at the reactiveness and attractiveness to Microsoft, we would have to put them both low, while Skype does bring in revenue the market share is really split with not much upside for now. So both companies while profitable in this department don’t see much opportunity. We would give a relative clout of 0.05 because both Microsoft and Apple do not have an advantage in this segment.
- 4. Furthermore, they do not have enough market share and revenues to consider the attractiveness of the arena. Sources Rivera, Janessa. "Gartner Says Worldwide Tablet Sales Grew 68 Percent in 2013, With Android Capturing 62 Percent of the Market." Newsroom. Gartner, 3 Mar. 2014. Web. 10 Oct. 2014. "Microsoft (NASDAQ:MSFT) Stock Analysis and Investing." Microsoft. Trefis Model, 1 Oct. 2014. Web. 11 Oct. 2014. Smith, G. (August 2, 2014). By The Numbers: 42 Amazing Microsoft Statistics. In Microsoft Statistics. Retrieved Oct 11, 22014, from http://expandedramblings.com/index.php/microsoft- statistics/#.VDdGT2x0yP8. “Statistics and Facts about App Stores.” (2013). Retrieved October 11, 2014, from http://www.statista.com/topics/1729/app-stores/ "Apple." Factiva. N.p., n.d. Web. 06 Oct. 2014. <https://global-factiva- com.mutex.gmu.edu/du/cosnapshot.aspx?from=cqs&fcode=APPLC&accountid=9VIV000400&n amespace=16>. "Gartner Says Worldwide Software Market Grew 4.8 Percent in 2013." Gartner. N.p., 31 Mar. 2013. Web. 12 Oct. 2014. "Microsoft." Factiva. N.p., 06 Oct. 2014. Web. <https://global-factiva- com.mutex.gmu.edu/pcs/default.aspx?napc=K&f=MCROST&fcpil=en>. "An Overview Why Microsoft's Worth $42." Forbes. Forbes Magazine, 9 Jan. 2013. Web. 6 Oct. 2014. Financial Express. (2014). Dominance to downfall. Retrieved from https://global-factiva- com.mutex.gmu.edu/ha/default.aspx#./!?&_suid=141308740954106392120248638093 IDC: Analyze the future. (October 2014). Smartphone OS market share, Q2 2014. Retrieved from http://www.idc.com/prodserv/smartphone-os-market-share.jsp Kuittinen, T. (July 1, 2014). Why windows phone cannot rebound. Retrieve from http://bgr.com/2014/07/01/windows-phone-market-share-3/ Tagliani, H. (September, 2014). IPhone 6: Apples’ chance to grow Hispanic market share. Retrieved from https://global-factiva- com.mutex.gmu.edu/ha/default.aspx#./!?&_suid=141317062763103336010533384979
- 5. Trefis, Analysis T. "Microsoft." Trefis. Trefis, 25 Apr. 2014. Web. 12 Oct. 2014.