Microsoft Business Strategy Analysis

This assignment requires a deep analysis of Microsoft's business strategy. It focuses on their product and service portfolio, including Windows, cloud services, Surface devices, Xbox, and search advertising. Students must evaluate Microsoft's competitive advantages, such as its focus on innovation, integration of hardware and software, and global reach. The analysis also considers the challenges Microsoft faces, including competition from rivals like Google and Apple.

Running head: MICROSOFT’S 10-K REPORT
MICROSOFT’S 10-K REPORT
Name of the Student
Name of the University
Authors Note

1
MICROSOFT’S 10-K REPORT
Table of Contents
Company Overview:........................................................................................................................2
Segment Data:..................................................................................................................................3
Descriptions of Segments/Product Lines:........................................................................................4
Competitive Advantage:..................................................................................................................6
References:......................................................................................................................................7

2
MICROSOFT’S 10-K REPORT
Name of the Company: Microsoft Corporation
Ticker symbol: NASDDAQ: MSFT
10-K: https://www.microsoft.com/en-us/Investor/sec-filings.aspx
Annual Report: https://www.microsoft.com/en-us/Investor/annual-reports.aspx
Company Website: https://www.microsoft.com/en-in/
Company Overview:
Microsoft Corp. is a high tech oriented corporation with an only aim to empower each
individual as well as entity throughout the world. The main strategy of the organization is to
build high quality and best in-class productivity services and platforms (Microsoft.com.). The
services will include intelligent cloud as well as intelligent edge related to artificial intelligence
(AI).
Microsoft is set to transform their business to lead the organization for digital
transformation. To achieve the vision of the organization, the research and development team
focuses on reinventing the business processes and productivity. Moreover, creating more
personal computing system and building effective intelligent cloud services. The company
design devices and further manufacture and sells the products in the global market. the products
and services includes PCs, tablets, entertainment and gaming consoles, intelligent devices and
cloud based offerings (Microsoft.com.). The foundation of the effort rests on the advent of
leading collaborations, productivity, business process and communication tools that include
Microsoft Dynamics, Microsoft Office and LinkedIn.

3
MICROSOFT’S 10-K REPORT
Segment Data:
The financial performance of Microsoft corp. is related to the following segments:
Productivity and Business processes
In the year 2017, Revenue has increased by 15% due to the acquisition of LinkedIn,
which was worth $2.3 billion. The revenue increment comprises mostly due to the subscribers
for Talent Solutions. Higher revenue is obtained from the Office commercial revenues, which
includes Office 365 commercial. As the subscribers are increasing at a rapid rate after shifting
their interest to the Office 365 commercial. Moreover, revenue earned from Dynamics has also
increased (Janssen et al.). On the other hand, operating expenses also increased due to the cloud
engineering and LinkedIn expenses. The total cost of revenue included $918 million due to the
acquisition of LinkedIn. This further included the cost of amortization for the acquired intangible
assets.
Intelligent cloud
The higher growth of cloud services and server products lead to the growth of the
revenues in 2017. The cloud services and server products revenue grew by 42.5 billion
(Microsoft.com.). Azure itself contributed in the revenue growth besides the on-premises
licensed server products. The revenue obtained from enterprise services decreased due to the
decline in profit obtained from customer support agreements (Stohl, Cynthia, et al.). The
operating income obtained through intelligent cloud services also consisted unfavorable foreign
currency that amounted to 3% of the revenue. By the improvement in Azure there was a higher
mix of lower enterprise services and cloud offerings.
More Personal Computing:

4
MICROSOFT’S 10-K REPORT
The increase in revenue from Windows OEM and Commercial has led to the increase in
total revenue. Windows OEM Pro has attracted more of the target customers and outperformed
the commercial PC market. Windows commercial revenue has increased by multi-year increment
of agreement revenue. Search advertizing revenue has further excluded traffic acquisition costs.
Due to growth in the increased subscribers for Bing and higher revenue gained per search. Xbox
services and software revenue also increase in 2017 as the Xbox Live transactions hyped. On the
other hand gaming and surface revenue decreased by 2% due to the reduction in sale volumes
and premium devices (Microsoft.com.).
Segments Productivity and
Business processes
Intelligent cloud More Personal
Computing
Total %
Contribution (in
Percentage )
31% 29 % 40% 100
Descriptions of Segments/Product Lines:
Productivity and business process:
The productivity and segments for business processes includes the products and services
in their portfolio for communication, productivity as well as information services. This also
includes various specialized ranges of platforms and devices. This segment has primarily
included:

5
MICROSOFT’S 10-K REPORT
 Office Commercial that comprises of licensed on-premises and Office 365 subscriptions.
This also includes SharePoint, Microsoft Teams, and Skype for businesses and Client
Access Licenses (CAL).
 LinkedIn, which includes Talents Solutions, Premium Subscriptions and Marketing
Solution.
 Dynamics business solutions that includes Dynamics 365, which is a set of applications
that are cloud-based across CRM and ERP.
Intelligent cloud platforms:
The intelligent cloud segment also consists of private, public and hybrid cloud services
and server products, which power the modern business. This segment mostly includes:
 Cloud services and server products that included Microsoft SQL Server, Visual Studio,
Windows Server, Azure, and System Centre as well as related CALs.
 The Enterprise Services that included Microsoft Consulting services and premier support
services.
Personal computing:
Microsoft’s more personal computing sector consisted of products and services that led to
harmonizing the interest of developers, end users and IT professionals. This segment included:
 Windows includes Windows Commercial that comprises of the volume licensing for the
operating system. Windows cloud services, patent licensing, window commercial
offerings and MSN display advertizing.
 This device included Microsoft Surface that other intelligent devices and PC accessories.

6
MICROSOFT’S 10-K REPORT
 Xbox hardware for gaming that included services and software for Gaming. Xbox Live
subscriptions, advertizing and transactions (Microsoft.com.). Moreover video games and
third party games royalties.
 Search advertizing.
Competitive Advantage:
In the ever-increasing competitive business environment diversified through global
companies with its important research and development resources. The corporation ensures to
remain competitive in the global market by generating innovative services, products and devices
to attract the consumers and make its business more successful (Baumann-Pauly, Dorothée, et
al.). Competitors also lead to growth in revenue from integrated services with software and
hardware platforms. This lead to increasing focus on cloud- based services that present
competitive risks and execution.
Microsoft Corp. has able to maintain the compatibility, performance and utility of cloud-
based services through computing devices that includes smart phones, gaming consoles, tablets
and television related devices. This also ensured cloud based services to fulfil the expectations
for the consumers by retaining their reliability for data security (Joo et al.). The organization
further make significant capital investments for development, marketing and research related to
existing technologies, products and services. Microsoft organization is completely based on
appealing and retaining its skilled and talented workers.
Windows in the recent times faces major competition in the business environment. Other
software products besides high usage of alternative devices and platforms give major
competition that is mostly related to Google and Apple (Microsoft.com.). This Windows

7
MICROSOFT’S 10-K REPORT
competes more effectively with value, customer choice, flexibility, compatibility and security
this enable the productivity.