Secrets of Microsoft Success, Part 1

Over the next few weeks, I am going to discuss some of the reasons for Microsoft’s success in the marketplace and how those areas of success might lead to positive growth in other places. Let’s first look at the notion of how Microsoft has successfully exploited and created positive feedback loops.

In information technology success begets more success and Microsoft has shown the ability to use positive feedback loops to its benefit far more than any other company. The result is that Microsoft benefits from the image of being the “safe choice” in so many market sectors and that leads to further growth which has helped it in two critical markets.

Client operating systems is the classic example of this. User adoption of Windows has led to a nearly total support of hardware OEMs for Windows. Nearly all new PCs today ship with a pre-installed version of the operating system ( or enhanced new client versions like Tablet PC and Media Center). Support by users and OEMs has lead to greater independent software vendor support for Windows. Nearly all software for PC desktops is made available exclusively or first for Windows. The availability of this software further increases the rate of user adoption and OEM support, which in turn solidifies Windows position with ISVs.

Similarly, with Microsoft Office, users have adopted the software and trained their personnel in using it. Millions of files have been created using the Office file formats. The existence of the files and trained users create more demand for Office software. Of course, the demand for Office software leads to more trained users and more Office files.

Many organizations feel they need to use Windows and Office due to market momentum making it very hard for anything new to break into this market.

There’s nothing on the horizon that is likely to change this scenario, which is the reason that the Office and Windows Client groups account for the most positive revenue streams of Microsoft’s seven business units. It’s also likely that the tighter integration between the Office, Windows and the different Windows server products will help boost the overall growth of the Windows Server family over the next several years. Integration will also be a key defense against Linux, creating a non-substitutable infrastructure that will ultimately be difficult for IT departments to migrate away from.

Are there ways around this for competitors? Yes, but to date very few have exploited them. We’ll look at some of the areas where Microsoft has not achieved critical success and why that occurred in the future.

Posted by Michael Gartenberg at September 08, 2003 06:31 AM