Microsoft’s business strategy focuses on a diversified product portfolio, including software, hardware, and cloud services. They emphasize innovation and artificial intelligence integration, along with strategic partnerships such as the collaboration with OpenAI. Accessibility, inclusivity, and digital skills education are also important aspects of their approach to empower individuals and organizations.
Strategy
Description
Example
Software Products and Services
Microsoft focuses on developing and selling a wide range of software products and cloud-based services for consumers and businesses.
Windows operating system, Microsoft Office Suite, Azure cloud platform, and Microsoft 365.
Cloud Computing
Microsoft is a leader in cloud computing, providing infrastructure, platform, and software-as-a-service (IaaS, PaaS, and SaaS) solutions through Azure.
Azure Cloud Services, Azure AI, and Azure IoT for businesses’ cloud needs.
Enterprise Solutions
Microsoft offers comprehensive enterprise solutions, including productivity and collaboration tools, business applications, and cloud services.
Microsoft Teams for communication, Dynamics 365 for customer relationship management (CRM), and SharePoint for document management.
Gaming and Entertainment
Microsoft invests in gaming and entertainment through Xbox and related services, targeting gamers and expanding its ecosystem.
Xbox consoles, Xbox Game Pass subscription service, and game development studios like Bethesda.
Hardware Products
Microsoft manufactures hardware devices, including Surface laptops, tablets, and accessories, to complement its software and services.
Surface Pro laptops, Surface Studio desktops, and Surface Book 3 2-in-1 devices.
Artificial Intelligence
Microsoft integrates artificial intelligence (AI) across its products and services, aiming to enhance user experiences and business capabilities.
Cortana virtual assistant, AI-powered Azure services, and AI-driven features in Microsoft 365.
Developer Tools and Platforms
Microsoft provides tools and platforms for software developers, fostering innovation and application development.
Visual Studio IDE, GitHub for code collaboration, and Azure DevOps for software delivery.
Open Source Engagement
Microsoft actively engages with the open-source community, contributing to and supporting open-source projects and technologies.
Acquisition of GitHub, contributions to Linux development, and open-source software initiatives.
Education and Accessibility
Microsoft invests in education and accessibility solutions, empowering students, educators, and people with disabilities.
Microsoft Education platform, accessibility features in Windows, and partnerships with educational institutions.
Sustainability and Environmental Commitment
Microsoft is committed to sustainability, aiming for carbon neutrality and responsible resource management.
Carbon negative by 2030, water replenishment initiatives, and circular economy practices.
Global Expansion and Partnerships
Microsoft expands its global presence and forms partnerships with other companies, governments, and organizations.
Data centers worldwide, partnerships with government agencies for cloud services, and collaborations with industry leaders.
Major shareholders comprise co-founder Bill Gates, who stepped down from the company’s board in 2020, which is why these shares are no longer publicly reported. In 2019, Gates still owned a stake of 103 million stocks, which accounted for 1.34% of the company’s ownership (worth over $23 billion in January 2023). Other individual shareholders comprise Satya Nadella, the company’s CEO, Brad Smith (former president), Jean-Philippe Courtois (EVP), and Amy Hood (former CFO).
In 2022, on over $198 billion in revenue, Microsoft generated over $72.7 billion. The company had over $104 billion in liquid assets (which can be easily converted into cash).
Microsoft is among the largest companies on earth, with a diversified portfolio. Owned by billionaire Bill Gates, Microsoft acquired other companies like LinkedIn, GitHub, Skype, and more over the years. Today, Microsoft is a tech empire that spans software, social media, gaming, and more.
Microsoft’s first acquisition in 1987, Forethought, was the developer of a presentation program that would later become PowerPoint. Since then, the company has made an average of six purchases every year, with fourteen of those exceeding the $1 billion mark. Today’s Microsoftbusiness model spans various segments thanks to an acquisition strategy, which saw Microsoft involved in multiple acquisitions.
Microsoft’s mission is to empower every person and every organization on the planet to achieve more. With over $110 billion in revenues in 2018, Office Products and Windows are still the main products. Yet the company also operates in Gaming (Xbox), Search Advertising (Bing), Hardware, LinkedIn, Cloud, and more.
Microsoft has a diversified businessmodel, spanning from Office to gaming (with Xbox), LinkedIn, search (with Bing), and enterprise services (with GitHub). In 2021, Microsoft made over $168 billion in revenues, of which over $52 billion came from Server products and cloud services, and $39.8 billion came from Office products and cloud services. Windows generated over $23 billion, Gaming generated over $15 billion, LinkedIn over $10 billion, and search advertising (through Bing) over $8.5 billion.
Founded in 1975 by Bill Gates and Paul Allen, Microsoft is a revolutionary company in the world of personal computing. The company designs and manufactures software, hardware, operating systems, apps, and devices. Indeed, Windows and Microsoft Office are staples in billions of homes worldwide.
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time, it also became more hierarchical while maintaining its hybrid approach between functions, engineering groups, and management.
OpenAI is an artificial intelligence research laboratory that transitioned into a for-profit organization in 2019. The corporate structure is organized around two entities: OpenAI, Inc., which is a single-member Delaware LLC controlled by OpenAI non-profit, And OpenAI LP, which is a capped, for-profit organization. The OpenAI LP is governed by the board of OpenAI, Inc (the foundation), which acts as a General Partner. At the same time, Limited Partners comprise employees of the LP, some of the board members, and other investors like Reid Hoffman’s charitable foundation, Khosla Ventures, and Microsoft, the leading investor in the LP.
OpenAI has built the foundational layer of the AI industry. With large generative models like GPT-3 and DALL-E, OpenAI offers API access to businesses that want to develop applications on top of its foundational models while being able to plug these models into their products and customize these models with proprietary data and additional AI features. On the other hand, OpenAI also released ChatGPT, developing around a freemium model. Microsoft also commercializes opener products through its commercial partnership.
OpenAI and Microsoft partnered up from a commercial standpoint. The history of the partnership started in 2016 and consolidated in 2019, with Microsoft investing a billion dollars into the partnership. It’s now taking a leap forward, with Microsoft in talks to put $10 billion into this partnership. Microsoft, through OpenAI, is developing its Azure AI Supercomputer while enhancing its Azure Enterprise Platform and integrating OpenAI’s models into its business and consumer products (GitHub, Office, Bing).
Stability AI is the entity behind Stable Diffusion. Stability makes money from our AI products and from providing AI consulting services to businesses. Stability AI monetizes Stable Diffusion via DreamStudio’s APIs. While it also releases it open-source for anyone to download and use. Stability AI also makes money via enterprise services, where its core development team offers the chance to enterprise customers to service, scale, and customize Stable Diffusion or other large generative models to their needs.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
