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Microsoft Current Market Conditions Essay

1331 words - 5 pages

Current Market Conditions PAGE 6
Current Market ConditionsUniversity of PhoenixECO 361Team B: Sara Leon, Charles HillTimothy JeffcoatJune 4, 2007Microsoft Current Market ConditionsMicrosoft is the leader in software, and services that assist people and businesses capture their full potential. Microsoft is leading in the operating system business. Microsoft has been such a powerhouse it has been one of the few corporations of becoming a monopoly. Although Microsoft was convicted of breaking the antitrust laws in the US it has still maintained its leadership in the technology industry. This paper will discuss Microsoft's current position in the market.Market StructureMicrosoft's market share in Personal Computers operating system is typical of a monopolistic market power. Microsoft Monopoly power is an example of market failure which occurs when one or more of the participants have the ability to influence the price or other outcomes in some general or specialized market. The United States v. Microsoft case concerned the allegation that Microsoft illegally exercised its market power by bundling its web browser with its operating system (Wikipedia, 2007). The former company is a monopoly; the latter is not, but have been so accused and convicted in accordance with antitrust legislation.Impact of New Companies entering the marketThe competition between Google, Yahoo and Microsoft in the emerging mobile search market is the latest struggle to gain market share. The mobile search market is the most current in the emerging market it is up for grabs as the vendors experiment to develop useful layout designs and search algorithms. "Web activities previously limited to PCs. Informa Telecoms & Media, a division of Informa PLC, expects spending on mobile phone ads to reach $1.5 billion this year, double its 2006 level, and to hit $11 billion by 2010. No wonder Google, Yahoo and Microsoft are racing to dominate mobile search" (Gobring, 2007).PricesMicrosoft latest operating system Visa will result in about a $100 increase in the cost of the bill of materials of a PC (Purchasing, 2007). Desktop PC's running Windows XP contains components that collectively cost PC original equipment manufacture's slightly more than $500. Personal Computers that are running Vista, the cost will jump to slightly more than $600, a 20% increase(Purchasing, 2007). A PC buyer will pay significantly more than $600 to buy a Vista-ready machine due to the PC makers' added margins.ProductivityMicrosoft continued with its aggressive acquisition strategy to increase its future growth by acquiring 11 companies in 2006. Microsoft acquired Softricity, a provider of application virtualization and dynamic streaming technologies in July 2006. Virtualization is now the key technology for reducing the cost which would make virtualization more affordable and accessible for customers. This approach would assist Microsoft customers to reduce costly application management process, accelerate...

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