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Microsoft Corporation: Lack of Innovation


Innovation is paramount in the contemporary technology industry. Competition in the smartphone industry calls for production of sophisticated devices. Lack of change at Microsoft contributes to the poor performance of the company’s smartphone. Microsoft’s Windows Phone operates on a system that does not support many applications. Moreover, the company is slow in the production and distribution of applications.

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Thus, the smartphone is not popular amid the youths and technology-savvy customers. Digital prototyping is an innovation management tool that enables businesses to expedite design, testing, and production of quality products. Microsoft requires using digital prototyping to improve the production of smartphones. The instrument will allow the company to reduce the time taken to release applications into the market. Moreover, it will aid the company to manufacture smartphones that meet the needs of the target market.

Background Information

Competition in the technology industry calls for organizations to be innovative. However, many companies invest time and money but fail to realize industrial innovation. The majority of the innovative initiatives do not materialize. Many companies are unable to sustain novelty as evidenced by Yahoo, Nokia, Hewlett-Packard, and Sun Microsystems among other businesses. The lack of strategy is one of the primary factors that inhibit innovation.

Horn and Brem define strategy as “a commitment to a set of coherent, mutually reinforcing policies or behaviors aimed at achieving specific competitive goals” (950). A good strategy facilitates cooperation amid different units in business, recognizes goals and precedence, and helps to focus energy on them. Microsoft is one of the companies that lag in innovation. The inability to innovate has made it hard for the company to capitalize on its partnership with Nokia. This report will use a case study by Pal Singh. The author brings out the issue of the lack of innovation at Microsoft.

Microsoft is a global technology firm that was established in 1975 by Bill Gates and Paul Allen. The company has its headquarters in Bellevue, Washington. Microsoft is renowned for the manufacture of Windows operating system. It also manufactures Microsoft Office that comprises a range of software. Other products include Xbox, and Bing (Pattak 781). In 2015, the company’s yearly returns stood at $86.83 billion, and it hired over 128,076 workers across the globe (Pattak 782). The company develops, licenses, supports and manufactures an assortment of software for different computing gadgets.

Since its inception, Microsoft has acquired and merged with multiple technology firms as a way to diversify its products. In 2014, the company purchased Nokia Devices and Services to enable it to venture into the mobile phone industry (Pattak 783). Unfortunately, the lack of innovation made it hard for Microsoft to manufacture devices that could compete with Apple’s iPhone and Google’s smartphone. In 2016, the company served 2.7% of America’s smartphone market (Pattak 784).

SWOT Analysis


Microsoft enjoys a superior brand image. The company is among the leaders in the software and hardware business. The Strong brand image helps the company to attract and retain clients. As per Kang, “Microsoft benefits from positive externalities with existing products” (117). The company’s Windows operating system gains popularity as software developers continue to manufacture applications for International Business Machine (IBM) personal computer-compatible operating systems. Microsoft partners with other companies, therefore manipulating the market to its advantage.

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One of the significant flaws of Microsoft is slow innovation (Kang 119). Most customers complain that the company does not introduce innovative hardware or software. Instead, it prefers upgrading the existing products. Companies like Apple dominate Microsoft in the production of state-of-the-art operating systems. Microsoft’s operating system is vulnerable to cybercrime. Thus, many customers do not prefer it for security reasons. The company relies mainly on software products. Therefore, it cannot compete with businesses that sell both software and hardware.


Microsoft is famous for the manufacture of the operating system. The company has a chance to diversify its product portfolio by investing in other industries and markets (Kang 123). The company can also invest in the production of new computer hardware to boost revenue. Strategic alliances with other businesses can give Microsoft an opportunity to manufacture novel products, thus raising its competitive edge.


Microsoft faces stiff competition from Apple, Yahoo, and Google. The companies manufacture superior operating systems, browsers, and search engines (Kang 128). Rapid changes in technology make it hard for Microsoft to compete effectively. The company is unable to keep pace with the changing demands of the technology industry. Piracy is a significant threat to the survival of Microsoft. The company loses a lot of money due to the distribution of counterfeit software that bears its brand.

Problem Description

Microsoft’s chief executive officer saw the increase in demand for smartphone as an opportunity to expand the company’s product portfolio. The CEO assumed that the escalation in the sales of smartphone would contribute to the increase in the sales volume of other devices such as tablets and personal computers (Pal Singh 602). Microsoft purchased Nokia’s mobile business because of its innovations.

The leadership of Microsoft thought that it would leverage Nokia’s experience in the manufacture of mobile phones to make devices that can compete with Google and Apple. However, the company did not enhance its operating system to meet market demands. The lack of innovation in the Windows ecosystem made it difficult for Microsoft to manufacture superior smartphones (Pal Singh 607). The Windows ecosystem has limited applications compared to Android and iPhone Operating System (iOS). The absence of innovation makes it difficult for Microsoft to produce top applications that are in high demand. Today, the Windows phone has limited number of applications.

According to Pal Singh, Microsoft fears that introduction of novel products might cannibalize existing hardware and software that are the significant sources of revenue (613). Such a stance discourages innovation. It is the high time that the company gets rid of failed legacy products and embarks on an innovation drive. The main problem that Microsoft faces is the lack of innovation in the smartphone business and addressing this issue will enable it to grow its market share not only in the United States but also globally.

Management Tools

Innovation management does not entail the use of superior technology. Instead, it involves coming up with creative ways of addressing problems. Horn and Brem aver that innovation management tools can be viewed as an assortment of instruments, methodologies, and techniques that assist an organization to cope with market challenges and acclimatize to circumstances (941). The success of innovation management depends on the ability of a company to utilize its knowledge to boost internal operations and enhance the correlation with external actors. Innovation management tools include “brainstorming, product lifecycle management, portfolio management, digital prototyping, idea management, and product line planning among others” (Horn and Brem 941).

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According to Arastehfar et al., digital prototyping enables organizational leaders to evaluate an entire product before it is manufactured (287). Engineers, producers, and designers use the tool to plan, iterate, enhance, authenticate, and envisage products digitally. Digital prototyping improves interaction amid product development stakeholders and enables an organization to expedite processes, thus ensuring that goods reach the market on time (Arastehfar et al. 294).

Additionally, it helps the manufacturers to evaluate the success of the product before it is manufactured. Smartphones are expensive to produce. Thus, it is imperative to assess their viability before they are made. Digital prototyping is an invaluable tool that can help Microsoft to enhance the level of innovation in the smartphone business. It would enable the company to design, assess, and test smartphones before manufacturing them. Eventually, the company would cut down on production costs and avoid possible failures.

Brainstorming entails different people coming together to share ideas on how to handle a current problem. Four rules govern brainstorming sessions to facilitate idea generation, invoke creativity, and eliminate social inhibitions. According to Horn and Brem, brainstorming pays attention to quantity and not quality (943). It is premised on a belief that quantity yields quality. Thus, members are encouraged to share as many ideas as possible.

Participants are discouraged from criticizing others. Criticism discourages creative thinking. Brainstorming accommodates wild ideas. Members are invited to analyze existing problem from different angles and to share new perspectives (Horn and Brem 948). Plans are put together, and the members look for ways to improve them. Brainstorming can help to address the innovation challenge at Microsoft. Technology experts would share ideas, thus developing a versatile operating system that supports multiple applications. Additionally, brainstorming would enable Microsoft to identify and equip its smartphones with applications that are in demand.

Portfolio management refers to centralized control of technologies, methods, and procedures used to manufacture products or run projects. It enables an organization to maximize the utilization of the available resources and minimize costs. Portfolio management is a critical tool for innovation because it facilitates risk mitigation and helps in the identification of cost-effective and efficient methods of developing products.

Portfolio management is famous for change control. It helps to “identify and prioritize change requests that include new features, requirements, functions, regulatory demands, and technical enhancements” (Horn and Brem 951). The tool would go a long way towards enabling Microsoft to enhance its Windows ecosystem, thus producing sophisticated smartphones.

Applicable Management Tool

Digital prototyping would help Microsoft to boost the level of innovation in smartphone production. It would help the company to enhance production speed. Currently, Microsoft manufactures physical prototypes that are expensive. The development of physical prototype takes at least three years to complete. On the other hand, the development of a digital prototype takes at most one year, hence cost-effective regarding time.

The use of digital prototyping would enable the company to involve customers in the production cycles of both smartphone and Windows operating system, therefore ensuring that it manufactures superior products. Development of a digital prototype would cost Microsoft at least $50,000. On the other hand, the company spends about $10,000 to build a physical prototype (Pattak 982). One may not see the need for the use of digital prototyping due to its cost.

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However, it is imperative to consider the expenses attributed to physical model. The use of physical prototype has resulted in the company incurring enormous losses. In 2016, Microsoft spent $950 million on restructuring mobile phone business (Pattak 982). In the previous year, the company had lost at least $7.5 billion (Pattak 982). The use of digital prototyping would help to mitigate production of substandard devices, thus minimizing operations costs. Currently, Microsoft spends at least $400 to produce a single unit of Windows phone (Pattak 983). Digital prototyping would enable the company to reduce the production cost to about $200 per device.

Expected Results

Digital prototyping will enable Microsoft to improve lead time for both smartphone and Windows operating system. One challenge that the company faces is a delay in the production and release of mobile phone applications into the market. With this innovation tool, the company will discern and address possible technical weaknesses of the phones before manufacturing them. Digital prototyping will boost the company’s production.

Currently, Microsoft has multiple departments that make different components of smartphone (Pattak 982). Digital prototyping will help to bring together all the units, thus expediting the product lifecycle from design to production and release into the market. One of the advantages of digital prototyping is that it will help Microsoft to reduce production costs associated with development of faulty products. Moreover, it will enable the company to identify ways to enhance user experience, thus boosting the quality of smartphone. A significant disadvantage of digital prototyping is that it is expensive to institute. Moreover, it takes time to develop.


The lack of innovation contributes to poor performance of Microsoft’s Windows Phone. The phone runs on Windows operating system, which supports limited applications. Most customers prefer Apple and Google smartphones because they run on versatile operating systems. Microsoft requires using digital prototyping to upgrade windows operating system and develop superior smartphones. The company has a pool of skilled employees. The concerns that introduction of novel products will affect the performance of existing software and hardware that serves as sources of revenue discourage innovation. Microsoft should invest in innovative smartphones to benefit from their high demand worldwide.

Works Cited

Arastehfar, Soheil, et al. “A Framework for Concept Validation in Product Design Using Digital Prototyping.” Journal of Industrial and Production Engineering, vol. 31, no. 5, 2014, pp. 286-302.

Horn, Christian, and Alexander Brem. “Strategic Directions on Innovation Management – A Conceptual Framework.” Management Research Review, vol. 36, no. 10, 2013, pp. 939-954.

Kang, Hyungu. “To be a True Industry Leader: Apple Inc. and Microsoft Corporation in Consumer Electronics Industry.” Leadership & Organizational Management Journal, vol. 2013, no. 3, 2013, pp. 114-130.

Pal Singh, Netra. “Microsoft Acquired Nokia in Unpopular Operating System Market.” Independent Journal of Management and Production (IJM&P), vol. 5, no. 3, 2014, pp. 598-620.

Pattak, Dulal Chandra. “An Investigation into Nokia- Microsoft Strategic Alliance: Joining Forces in the Global Smartphone Industry.” International Journal of Scientific & Engineering Research, vol. 7, no. 8, 2016, pp. 780-785.

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