Competitive Advantage †Microsoft Case Essay

When trying to spill the beans of MSs success, the titles of two books from Bill Gates slip into my mind. They be The thoroughfare Ahead and Business the speed of thought, which I would translate into pleader and Speed and could be the reason for MSs success be good at setting strategy and adapting to the changes. However, to reframe them within the context of new Competitive Strategy, the reasons for MSs success are to create and hold back its modern COMPETITIVE ADVANTAGES.With the analysis of it competitive advantages, MSs advantageousness was more rely on its ability to DEFEND its market view rather than to create. To put it an other(a) way, the usage of MSs resources and capabilities freighter be better understood in light of isolating mechanisms.On one hand, MS focus on increasing customer retention. software system is an experience good. It can be tell exactly from the name Windows XP where XP is unmindful for experience. For an experience good, the search costs, training cost and learning cost are high, which in turn help to increase customer retention. Here is a classic example. In 1998, Bill Gates gave his speech at capital of the United States University and talk about piracy in China, and he said near 3 million computers get sold every year in China, but people dont pay for the software.Someday they will, though. As long as they are going to purloin it, we want them to steal ours. Theyll get sort of addicted, and then well somehow figure out how to sop up sometime in the next decade. For the same reason, MS bundled mogul Suite, grow server computer programs, and gave many stuffs/features for free like IE and Media Player. We can anticipate the adding to the list will grow on and on. Its broad scope of products and international presence also helped MS to increase customer retention.On the other hand, MS defend its market position fiercely. A typical maneuver used by MS is the prohibitive development cost. For example, it spent $2 billion alone in 2001 for its .net platform. When MS identifies a potential threat, it oppose with all of it resources and capabilities to compete with. Through advance technology, enticement OEM manufactures, or rase giving for free, it won battles over Office Suite, OS, Internet browser and media player.As a result, MS stands above its competitors and reaps its profit like printing money. For example, succession application software price dropped by an average of 8.9% at 1989, MS could raise its OS price. While WordPerfect was priced at $79, MS charged $249 for upgrades of Office 2000.The challenges MS faced somehow derived from its own marketing activities. The antitrust judicial proceeding is a warning for its aggressive assault on its competitors. In general, Microsoft should withhold focus on defending its market positions, using its resources and capabilities cautiously and smartly. Its closing off mechanisms could be enhanced by strategies like product development and acquisition, platform integration, user and channel enticement, all happen at prohibitive cost.