While Microsoft has been an iconic company in the tech industry for years, their recent business strategy seems to have failed them in many ways. Since Steve Ballmer’s takeover from Bill Gates as the company’s CEO in 2000, Microsoft’s market share has declined. And despite Ballmer’s claims that the iPhone had “no chance” of gaining a significant market share, Microsoft has continued to be outpaced by Apple. In fact, shortly after his statements about the iPhone were made public, Apple’s device was named the Invention of the Year by Time magazine and now holds approximately a third of the market share for smartphones. Windows holds just 5% of the market share.
Microsoft’s business strategy and product design for Kin, a compact smartphone, lost the company at least $240 million, and just 48 days after its release, prices were slashes dramatically in a last-ditch effort to try to sell the product. Other failed endeavors for the company include the Zune and the Bing Rewards Program.
In 2001, Microsoft’s stock sold for $66 a share, but as of 2011, it was just $24 a share. When you look to the company’s strongest competitor, Apple, their stock was just $19 a share in 2001, but it has since exploded, reaching $338 a share by 2011. In addition, in 2000, Apple and Microsoft were nearly neck and neck in terms of revenue growth. However, by 2011, Apple’s growth was estimated at more than 80% compared to figures below 20% for Microsoft.
In a tech market place that is changing so quickly, it’s important not to let past success dominate your thinking about future business decisions. In fact, Microsoft’s decline in recent years is certainly a good example for business students to examine.