For a long time, the Microsoft Company has had huge profit margins through employing the monopoly power it has to hold constant the prices of the company’s software at all times regardless of the business situation. However, in these times of horrible downturn and ever-increasing competition, the CEO of the company is changing to a new approach. The CEO is bringing down the prices on various fronts (Forelle 1).
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According to Burrows (1), the Microsoft Company has come up with an idea of having profit margins that are lower among its businesses but raise the general revenues through effective utilization of the opportunities. This involves making an expansion of the company’s share of its big purchases of software and bringing down the office software prices for the consumers, in the markets that are coming up to be in a position, to pay for the software and not carry out piracy.
In July this year, there was a demonstration in New Orleans of the new office 2010. Whereas Microsoft has expectations of most customers paying for this program just the same way they have been doing, versions that are not as powerful and are ad-supported will be available free on the web. Microsoft is as well charging a fee every month for online applications. The company’s new Windows 7 PC operating system would go on the market for forty dollars less than the two hundred and forty the company charged when it launched the vista program in the year 2007. This is the biggest price reduction on a fresh version of windows within a long period of years.
All these initiatives by the Microsoft Company are an experiment that is risky in price elasticity. By bringing down the prices, Microsoft is hopeful of bringing up the sales of the products that have been there and at the same time penetrating the market with great speed with the new products.
The Microsoft Company is coming up with different marketing strategies for them to win a competitive edge. It is doing this through differentiating its products, carrying out promotions, and identifying the target markets. For instance, according to Anonymous (Microsoft launches new suite products in Botswana, 1), Microsoft has launched new software products which include windows 7, windows server 2008 R2, and Microsoft Exchange server 2010. The Microsoft windows server 2008 R2 is the most current server operating system that is specially made up to assist small and medium enterprises to cut down costs on IT by providing all the requirements to assist the organization to be run most efficiently with the lowest possible investment in technology.
On the other hand, Microsoft Exchange server 2010 provides a large variety of tools to both medium and large business enterprises that enable them to control and secure all their inner and outer communications. The windows server 2008 R2 and Exchange server 2010 has been made up in such a way that they can still work well in conjunction with the current Microsoft products designed earlier. But the functioning of these products is said to be excellent when they are used in conjunction with Windows 7.
According to Burrows (5), Microsoft is carrying out promotion through reducing the price of office and making offers of free versions of Excel, Word among other programs to counter competition from its competitors such as goggle offering the same products at very low costs or offering for free. The company has put up several promotions for office and its effective price is one hundred dollars reduced from one hundred and fifty and even more down in some countries like India and Brazil (Burrows 5).
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The Microsoft Company goes on to look for ways to counterbalance price reductions. It has a hope to make better by encouraging the users of Windows 7 to more often upgrade. Because the program CD will be obtained loaded with several versions, those people who buy the much cheaper starter edition can pay more easily at a later time to obtain premium features.
According to Forelle (1), Microsoft Company would ask the current users in Europe having Microsoft Internet Explorer as a default browser if they would want to install a different type. The available alternatives include Mozilla’s Firefox and Google’s Chrome. Microsoft is reported to have said that it would share technical information with its competitors to allow their products to work better with a gamut of Microsoft software including, windows, the Exchange email system, and Office suite.
The possibilities of the success of Microsoft’s strategies
The strategies Microsoft is trying to employ show the potential for it to succeed despite some people showing pessimism. The changes are being pushed by the consumers who are in for bringing down the expenditure on technology (Worthen & Scheck 10). For instance, Hilztzik (1) expresses that not everyone has to upgrade his hardware to Microsoft’s word 2007 due to specialized needs because there are several alternatives to this Microsoft’s product. But this might not be true since this new product is a great improvement on the former products and might still get much more consumers since Microsoft is targeting all groups including small, medium, and large scale businesses.
According to Vascellaro (4), Goggle has come up with an operating system called Google Chrome OS designed to rival Microsoft’s Windows that already runs most of the computers in the world. The author notes that this might turn out to be a big risk and may interfere with the main business of Google which is, selling ads online. Therefore, this implies that the improvement made on Microsoft’s products will enable it to stand a better chance in the competition.
Anonymous. “Microsoft launches new suit products in Botswana”. Sunday Standard. 2009. Web.
Burrows, Peter. “Microsoft’s Aggressive New Pricing Strategy”. Business Week. New York. 51. 2009. Web.
Forelle, Charles. “Microsoft Yields to EU On Browsers”. Wall Street Journal (Eastern edition). New York, N.Y. B1. 2009. Web.
Hiltzik, Michael. “Microsoft’s grip on users is being lost in the cloud”. Los Angeles Times. Los Angeles, Calif. B1. 2009. Web.
Vascellaro, Jessica & Clark, Don. “Google Targets Microsoft’s Turf”. Wall Street Journal (Eastern edition). New York, N.Y. A1. 2009. Web.
Worthen, Ben & Scheck, Justin. “Tech Giants Ramp Up Their Online Offerings”. Wall Street Journal (Eastern edition). New York, N.Y. B1. (2009). Web.