Microsoft is the world’s leading American tech company specialized in operating system, office software suits, cloud computing, devices, applications, and hardware products. Paul Allen and Bill Gates laid the foundation of the software company in 1975. The headquarter of the software company is in Washington, USA.
Microsoft’s main products and services are MS Office Online, MS Money, MS Office 365, Office, MS Windows, MS Dynamics, Apps for iOS, MS Azure, Apps for Android, LinkedIn, Docs.com, Surface Pro, Cortana, MS Teams, Bing Video, and Bing.
According to an estimate, Microsoft’s annual revenue in 2021 was 168.09 billion dollars and it has increased by 17% compared to 2020, Out of which the net income of the software company was 61.3 billion dollars, and it has increased by 47%.
Microsoft’s main competitors are Oracle Netsuite, Apple, SAP, Google, Sony, Oracle, HP, Salesforce, and SAS.
Today, our topic for discussion is the SWOT analysis of Microsoft. It’s going to focus on internal strengths/weaknesses, and external opportunities/threats that are available to the software company.
Here’s Microsoft swot analysis;
Table of Contents
Strengths of Microsoft
Dominant Software Company
Microsoft is the world’s leading cloud computing and software tech company. It’s also the developer of the world’s largest operating system company. However, the software brand provides cloud services via dynamic 365, Office 365, and Azure.
The daily active users of Microsoft Teams were 145 million in FYQ3. In the first quarter, this number was 115 million. (source)
Microsoft Teams monthly active users hit 250 million that including 80 million Teams phones users.
Market Share
Microsoft is the world’s second-largest tech company in terms of market share and market value. The company falls under the category of the world’s top five cloud service providing companies like Google, Oracle, IBM, and AWS.
Market Capitalization
The market capital of Microsoft is over 2.5 trillion and second after Apple Inc., and it’s the world’s leading hi-tech company. According to Investopedia, its cloud revenue stream could be the major factor that will increase the valuation. Furthermore, financial analysts are predicting $3 trillion market capitalization for MSFT.
Market Reach
Microsoft is operating its business in over 190 countries across the globe. At the time, Windows 10 is running on more than 1.3 billion devices. Last year Microsoft donated more than $1.4 billion in software and services for supporting nonprofit organizations around the globe.
Growth Rate
If we look at the statistical figures of the company in terms of annual revenue, net income, market value, and market growth, then the growth rate of Microsoft is stable and consistent. According to an estimate, the market worth of the software company is roundabout 2.5 trillion dollars in 2022.
Stock Keeping Unit
Microsoft has recently included a stock keep unit in its brand as a new item by combining Windows 10 and MS 365. Ever since the launch of M365, it has become a billion-dollar business.
Loyal Database of Customers
Microsoft has the largest database of loyal customers, approximately 1.2 billion people are using the office and the users of Office 365 are 60 million. The reason billion people use MS Office every day is that they trust the brand and it’s reliable.
Advertising & Marketing
Microsoft has inspired and influenced billions of people across the world through its strong marketing and advertising strategies. Its advertisement campaign like “Be the One” created by McCann in 2020 watched by millions of people worldwide.
Brand Reputation
According to an estimate by Interbrand, MSFT falls at the 4th position of the world’s most valuable brand in terms of brand equity. According to Forbs “Global 2000” MSFT was at the 15th position in 2021 of the world’s top brands.
User-Friendly Software
Microsoft has earned a reputation in the market in terms of quality products and tech Software Companies. Its Office suites and operating system are user-friendly and easy to use.
Weaknesses of Microsoft
Unfair Business Practices
Slack Technologies filed a lawsuit against Microsoft for involving in anti-competitive and unfair practices in Europe. The federal court is hearing the complaint of the case in the US, if it goes against the company, then it would further cost a lot of money.
Below Average Performance in Search Engine Market
Searching browsers like Firefox, Safari, and Google Chrome have dominated the internet browsing market and achieved the maximum market share. It seems like Microsoft is losing its market share to internet searching browsers.
Limited Innovation
MS is falling in the race of innovation of its hardware products like smartphones and PCs. Especially if we compare the company’s position with the products of others tech companies like Amazon, Google, and Apple.
PC Market Overexposure
MS hardware products like PC and hardware are at the mercy of vendors and currency exchange rates. Its shipment gets delayed and puts the company’s reputation in a vulnerable position.
Cybercrime Theft
MSFT is in a vulnerable position due to cyber-attacks. Hackers have reportedly attacked the firewall of Microsoft many times. In fact, it’s easier to break the security of MS if the user isn’t using the external 3rd party anti-virus software.
Unsuccessful Acquisitions
Some of the acquisitions that Microsoft has made like Hotmail, AQuantive, Danger, Massive, LinkExchange, and Nokia turned out to be failed products. It resulted in the forms of loss of millions of dollars to the company.
Opportunities for Microsoft
Cloud Services
Cloud computing services are a growing trend in today’s market. MS has already made a significant contribution in the cloud technology. In fact, the company plans to launch the latest cloud software for the healthcare industry.
Artificial Intelligence
Gaming and AI are the other growing field of technology and they’ve got a lot of growth potential. If Microsoft makes timely investments and develops something innovative, then it would give the company a unique competitive edge.
Acquisitions & Partnerships
Microsoft should consider acquiring and developing partnerships with other growing firms and tech businesses. It would help the company to diversify its product/service portfolio, amplify profitability, and market share. For instance, Microsoft made an alliance with Coca-Cola to offer them business software for 5 years.
Smartphone Market
Smartphones and the internet are the highest growing area with a lot of market growth potential. The software tech company should exploit this market opportunity and launch some relevant products.
Cost-Effective Strategy
If Microsoft lowers the price range of its products and services, then it would amplify the company’s sales significantly, and ultimately increase revenue and profitability to the company. Lower prices would allow users to use MS products legally, instead of using the pirated.
Remote Work Solution
The lockdown and pandemic have amplified the trend of work from home that you can do the office work from anywhere. This trend has increased the usage of Microsoft Team, and it brought roundabout 75 million users in April 2020. Resultantly, the revenue of the company went over the roof in the 2nd quarter of 2020.
Portfolio Diversification
A diversified portfolio lowers the risk rate, increases the stability, the profitability of any company. MS is planning to acquire gaming and entertainment units from AT&T and Warner Brothers, it would further increase the profitability and stabilize the company’s market position.
Threats to Microsoft
Some of the main threats that Microsoft has to face are as follows;
Politicized contracts
Microsoft has won many government contracts due to favoritism and politicization. For instance, President handed the Pentagon contract to Microsoft rather than giving it to Amazon. Critics said that the reason the President decided in favor of Microsoft is because of his personal feud with the CEO of Amazon, and they thought that Amazon was more qualified than MS.
Anti-Encryption Drive
Government institutions are putting pressure on the tech companies like Microsoft to remove the user encryption technology that would make it easier for them to catch the exploiters and culprit. But it would weaken the company’s OS, that’s why they have pledged to disclose the identity of the culprit when they find one.
Workforce Criticism
According to the workforce diversity statistic in 2018, MS had a significant imbalance of workforce diversity. The total number of minorities and women working in the company was very low. It raised a question on the company’s HR practices and HR policies.
Gay Controversy
The gaming service of Xbox Live brought a lot of criticism to the company. It’s because there were references that didn’t allow gays and homosexuals either to create the user profile or use the gaming tags. The software brand said that it was offensive and unsuitable to the users.
High Competition
The tech industry has become fiercely competitive in recent years due to the growth of other tech giant companies like Google and Apple. They’re launching new features and tools to attract users from Microsoft. For instance, Google has introduced the feature of editing and video calling in Gmail to make the Google Workplace more attractive to remote work users.
Changing Preferences
Notepads, laptops, smartphones, and tablets have changed the preferences of ordinary users away from PCs. This change in customers’ preferences has changed the interest of the customer market.
Open-Source Projects
Open sources projects like Office and Linux OS are providing the same type of services for free just for the sake of public service. Their popularity has increased among people.
Cybercrime & Piracy Issues
Piracy and cyber-attacks are the main threats that Microsoft is facing, and they have greatly jeopardized the company’s system and its network.
