Microsoft's Strategy for Small Businesses (A): The Innovative PR Campaign for MS Office Accounting 2007

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Case Details:

Case Code : MKTG167
Case Length : 20 Pages
Period : 2005-2007
Pub Date : 2007
Teaching Note :Not Available
Organization : Microsoft Corporation
Industry : Computers and Information Technology
Countries : Europe, USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

Background Note

Microsoft was founded by Bill Gates (Gates) and his friend Paul Allen in April, 1975 at Albuquerque, New Mexico. Over the years, the company has grown to become a global computer technology corporation. It is based in Redmond, Washington, USA and develops, manufactures, licenses, and supports a wide range of software application products.

As of 2006, it had a strong dominance in the desktop computer operating system (OS) and work group server OS market. The company also markets gaming consoles, mobile devices, and computer hardware...

Microsoft - Making a Fundamental Shift

Though Microsoft was very profitable, its share price had remained fairly stagnant since 2002 (Refer to Exhibit III for five-year chart of Microsoft's stock price movement). Investors and analysts were more excited about Internet-based firms like Google and Yahoo!. With its Internet presence, Google, in particular, was making rapid in-roads into the software market. While in 2005, the revenues of Microsoft grew by 8 percent to US$39.8 billion, Google's revenues grew by an impressive 92 percent in 2005, to US$6.1 billion...

The Big Battle for the Small Business Account

According to Joe Wilcox, senior analyst at Jupiter Research, even though almost half of Microsoft's revenue came from SMBs, the company's penetration in this market was still very limited. Some analysts suggested that Microsoft could achieve a huge revenue growth in this segment if it could get the SMBs to replace their pirated software with authorised versions. Another challenge was that many SMBs tended to use technology at a minimal level because they could not afford to employ people with a strong technical background to take care of their information technology (IT) requirements...

MS Office Accounting 2007

On October 29, 2006, Microsoft unveiled two new accounting software packages targeted at SMBs - OAE 2007 and OAP 2007 (Refer to Exhibit IV for the Logo of Office Accounting 2007). OAE 2007 was targeted at the large number of SMBs that did not use any accounting software to run their operations. To entice such users, Microsoft offered OAE 2007 free of charge to SMBs, while OAP 2007 would be available (in early 2007) at a price of US$149.95 (£80). Existing SBA 2006 users could upgrade to OAP 2007 at a price of US$99. OAP 2007 would cater to SMBs with more complex requirements...

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