DiversificationDiversification StStrategyrategy

Presented By: RahulRahul KumaKumarr (10/(10/PMB/0PMB/07575)) Company Pr ofile  Industry : Computer sof tware, Consumer electr onics Computer hardware, Video games IT consulting, Online advertising, Automotive sof tware  Founded: Apr Apr il 4, 1975 , Albuquerque, New Mexico  Founder(s)under(s)  HeadquartersHeadquarters OneOne Micr osof t Way Redmond, Washington, United States  Key peopleple SteSteveve BalB allmelmer ( CEO) Br ian Kevin Turner Turner (COO) Bill GatesGates (Chairman) Ray Ozzie (CSA) Craig Mundie (CRSO)  RevenueRevenue $6$62.2.48484 billion (2010)(2010)  Operating incomeme $$2244..00998 billion (2010)(2010)  Pr ofit $$1188..77660 billion (2010)(2010)  Employeesyees 89,89,000000 (20(2010)10) History

 Founded By Bill Gates with Paul Allen  Started selling a version of BASIC (a pr ogramming language) with Altair  1980, IBM selected Micr osof t to develop a OS for its PCs  Paul Allen lef t Micr osof t in mid 1983s  Micr osof t intr oduced Windows in mid 1980s  1993, it intr oduced Windows NT to competed with UNIX History cont.

 1998, US Justice department filed antitrust charge that Micr osof t had stif led Internet Br owser competition and limited consumer choice  1995, Founded Micr osof t Network (MSN)  Exper ienced toughest economic downturn due to burst of dott--ccom bubble  Aimed to position its OS and to diversif y in the other sof tware, IT services and other web based ser ives Development f actors in Emerging IT Industry

 Customers were expecting to get more out of their technology investments  Pr ocurement department became more involved in the IT purchasing pr ocess  In Addition, CEOs became more demanding of the return on Investment (ROI) on new technology spendings IT Spendings of companies

First annual decline after 1958 Trailing 3 calendar year revenue and operating pr ofit C AGR* 1 2 % O I M FT 1 3 % R EV 2 4 % ( $ ) 1 2 %

Or l - 1 % - 3 % - 7 % I t l - 4 % y r gr wth ($) REV OI 0 % M FT $ ,49 $4,4 I M 0 % ($) $ , 5 $ , 4 Or l ($ , 87) ($ 65) 9 % I t l ($ ,585) ($ , 54) ll 9 % I M $7 5 ($7) ll $9,564 $796 2 % - 5 % Ci Ci ($ ,678) $ 94

- % % % % %

* bbasedased on three year growth figures for operating ininccome,ome, excluding certain items and stock based compensation expense for calendar year 2003. A reconciliation of the nonnon--GAAPGAAP measures presented above to to reported GAAPGAAP operating incomeincome for the relevant perperiodsiods cancan be found inin slide #13. Towards the next big thing

 Although the IT industry looked rather gloomy in 2006, analysts predicted, based on previous cycles, that industry would take off again in 2007 or 2008.  In particular a number of f actor would dr ive the next gr owth cycle for the technology. Some foresaw that sof tware spending would reach US$325 billion by 2008, and the gr owth rate of the market was expected to be in the range of 3% to 7% annually. Factors  Service Or iented Architecture and Web Services  Enterpr ise Sof tware  IT Inf rastructure  Applications as Services  Downloadable pr ograms  Br idge between desktop and Internet computing  Web based Enterpr ise Applications  Extended Internet  Embedded devices  RFID  Biometrics  Social omputing  Gaming and Internet TV, Entertainment , IM, Blogging, streaming, Marketing and Media What does Micr osof t¶s business model look like today? us o er e

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uuss o erer e da a based on fiscal ear o da e infor a ion.