Strategy case study - does Microsoft have a long-term strategy?

I’m half hoping that technology will be the focus for AQA A2 business students in 2012 and, if it is, then this article would make a terrific starting point for discussion and student research.

The Board at Microsoft must often take an envious glance at Apple and Google’s share prices and wish that Microsoft could achieve the same growth in shareholder value. The value of Microsoft’s shares have effectively being treading water in the last decade whilst Apple and Google have delivered stunning share price growth for their investors. Might the essential reason for this be that Microsoft lacks a compelling long-term growth strategy?

The article has some useful pointers to the strategic challenges facing Microsoft, many of which students ought to be familiar with. One approach would be to ask students to start by considering the potential threats faced by Microsoft. They might identify factors such as:

- Intense competition from Apple in the tablet/mobile market & Sony / Nintendo in the console market

- The maturity stage of the desktop / laptop computer market in developed economies

- The rise of open-source and cloud-based solutions which make Microsoft Office less popular (e.g. Google Docs)

- The problems faced (not just by Microsoft) of software piracy in developing economies

- A reputation for product upgrades rather than genuine product innovation (compare with Apple)

Microsoft Windows and Office are the big profit earners for the firm, but they have been around a long time. How many more functions do we really want from the next version? Are we prepared to pay for it - again

I like this quote in the article from one of the investment analysts, who says of Microsoft:

“Coming up with the next version of an existing product is not a strategy”.

The implication is that innovation is the key to Microsoft’s success in the long-term. But what global problem are they going to attempt to solve?