Strengths:
One of their biggest strengths is that they have full compatibility between their product lines like Sharepoint and Office and their new OS right from the start, giving them a head-start before other companies. Since their software is from the same company and Phone 7 developers have internal knowledge, they can easier implement data exchange interfaces between the Smartphone and the Software than external developers. Also most people are familiar with the typical “look and feel” of a Microsoft product through their dominance in the desktop computer market, giving adopters of the Smartphone a shorter period of time to learn the functionality than with other Smartphones. Another issue is that the connection to the Xbox Live is a proprietary one. It cannot be easily copied by the competition and is thus a major competitive advantage. Since Microsoft has a strong financial basis, a short period of financial losses in the Smartphone market can be endured to push the OS into the market.
Weaknesses:
Although Microsoft is having a $7B budget for research and development, they have been known in the past for their inability to market their innovations successfully. In this regard it is quite possible that developments, that would have further enhanced the Phone 7, have been held back. Also, with the introduction of their new OS, they have tightened control over the applications that can be used on the Phone 7. The most rigid one is that only those applications can be used that have been received through their marketplace.
Opportunities:
A major opportunity is that the Smartphone market itself is still growing rapidly, giving even a niche position a profitable outlook. As long as Microsoft does not completely drop out of the market, the investments in the Phone 7 may be profitable. The biggest opportunity for Microsoft is having a first-mover advantage in tapping into the Mobile Gaming Market. Although the iPhone and Android are supporting online gaming, none of the competitors have a thorough integration of the Mobile Gaming business. Being the first ones in this market could lead to a very high competitive advantage similar to Amazons movement into the online retailing business. Also, like iPod customers moved to the iPhone and then to the recently published iPad, Microsoft can draw from their customer base of Windows Mobile 6.5 and the Zune player. If the sales are similar to Apple’s experiences, the sales would not cannibalize the Zune sales.
Threats:
A threat that Microsoft has to actively engage is their bad reputation and their past bad marketing efforts. Even though they may have the best technology, they constantly fell short in showing their customers how they could improve their lifestyle. On the other hand, Apple has shown numerous times how a great marketing campaign can lead to a tremendous success. Also, Microsoft will not be alone in the race over the domination in the Mobile Gaming Market. Nintendo has announced that they develop themselves a new mobile gaming device. This could be a new, major entrant in this area. The last major threat is that the Smartphone market field is highly competitive and that other vendors will most likely release new phones in a matter of months, putting Microsoft under severe pressure to be innovative.
The following graphic will summarize our findings:
References:
SearchExchange, "What Microsoft gets for its $7B R&D budget", Jun 10, 2004, http://searchexchange.techtarget.com/news/article/0,,sid43_gci969606,00.html
DigitalTrends, "Windows Phone 7 Apps: Only from Microsoft's store", Mar 16, 2010, http://www.digitaltrends.com/mobile/windows-phone-7-apps-only-from-microsofts-store/
Fortune Magazine, "Piper Jaffray survey of iPad buyers: 74% owned Macs; 66% had iPhones", http://tech.fortune.cnn.com/2010/04/05/piper-jaffray-survey-of-ipad-buyers-74-owned-macs-66-had-iphones/
MocoNews.Net, "Microsoft's Windows Mobile has A Marketing Problem", Oct 7, 2009, http://moconews.net/article/419-microsofts-windows-mobile-has-a-marketing-problem/
IT Chuiko, "New mobile gaming device, Nintendo can get 3G functionality", Mar 21, 2010, http://it-chuiko.com/gadgets/2963-new-mobile-gaming-device-nintendo-can-get-3g.html
