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Microsoft: Is the Creative Spark Burning Out?                                                                                                                                                                                                             
Product Ref: 11/484C Company: Microsoft Corporation

Product Type: Case Industry: Software & Services
Technology Hardware

Related Product(s): Teaching Note
In July 2010, Microsoft, the global leader in software, services and solutions, announced record revenue of US$62.48 billion for the year ending 30 June 2010, an increase of 7% from the previous year. This came as a relief to investors, given that the previous year had seen the company report its first-ever annual drop in sales. Founded in 1975, Microsoft's software pervaded computers worldwide. The company had traditionally been regarded as being on the cutting edge of software and services. However, for some time¡Xparticularly since the middle of the last decade¡Xit had been increasingly criticised for having had the opportunity for massive disruptive potential in the market but repeatedly allowing it to slip away. Its huge employee base of bright and talented engineers had not kept up with the creativity and innovation displayed by its competitors, whether it was Apple's iPod or iPad, Google¡¦s search engine, Nintendo's Wii, Amazon's Kindle, or social networking services such as Facebook and Twitter. Despite its undisputed financial success, Microsoft was being described as having become a "clumsy, uncompetitive innovator". In a tangible reflection of this concern, on 26 May 2010, Microsoft's position as the technology industry's most valuable player was overtaken for the first time in many years, when Apple exceeded the company's US$219.2 billion market capitalisation by almost US$3 billion. Then on 4 October 2010, Goldman Sachs downgraded Microsoft's stock, which it had supported since the company's initial public offering in 1986.

Why was Microsoft no longer creating the truly disruptive and breakthrough technological products and services that the company used to pride itself on? How could the company once again regain its position as the powerhouse of technology innovation?
Functional Area : Strategy & General Management

Issues: This case highlights the dynamics and principles of various types of innovation. Through this case, students can gain insight into how even highly successful companies can lose their competitive edge over time unless they keep at identifying and developing potentially disruptive technologies before their own traditional technologies are overtaken.
Length: 22 pages Country: United States of America

Pub. Year: 2011 Level of Difficulty: 2
This product type is available in the following language(s):      Traditional Chinese   English   Simplified Chinese
Related Information: N/A
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