Görkem Gülan Carlos Hurtado Carmel Roche Lars Eriksen Renato Zanetti Microsoft

Agenda Background Strategy Product Specific Strategy Analysis Desktop Server Non-PC Recommendations

Microsoft Overview World’s #1 Software Company Founded in 1975 Ambition has come with a price – lawsuits Ballmer is now the CEO Change in company focus

Value Creation for Microsoft Extract Deliver Understand Create Communicate Choose Understand Market Drivers Choose Strategic Position Create – Product Development – MSDNCommunicate – Network Externalities Network / Lock-In / StandardsDeliver Innovation in Product Services

Setting the Standards Innovators Operating SystemApple Internet BrowserNetscape Office Related Word Perfect Lotus Search EngineGoogle GamingSony Business ServicesIBM, HP

Seven core business units 1. Windows Client (incl. Win XP desktop operating system, Win Information Worker, (incl. MS Office, MS Publisher, MS Visio, MS Project, and other stand-alone desktop applications) 3. Microsoft Business Solutions, (Great Plains, Navision, and bCentral™ business services) 4. Server and Tools, (incl. MS Win Server System™ integrated server software, developer tools, and MSDN®. 5. Mobile and Embedded Devices, (mobile devices incl. Win Pocket PC, Mobile Explorer microbrowser, and Win Smartphone) 6. MSN (MSN network, MSNTV, Hotmail, other Web-based services) 7. Home and Entertainment, including Microsoft Xbox®, consumer hardware and software, online games, and our TV platform.

Agenda Microsoft Overview Strategy Product Specific Strategy Analysis Desktop Server Non-PC Recommendations

Value Creation for Desktops Extract Deliver Understand Choose Understand Risk : Rapid Changing technology. Timing : For innovation and market penetration Standardization War Strategic Position Bet on different alternatives (IBM, Mac, Windows) Reduce lead times Alliances Wintel Product Development Windows 3.0 Office Create Communicate Network Externalities Derived from Windows OS 88% Market Share Windows became the standard OS Worldwide Lock-in effect Windows 95, Windows 98, Windows NT, Windows 2000 MS Office Internet Explorer

Market Development through Windows Supply Side Development with ISV’s Alliances with OEM’s and suppliers (Intel) Demand Side Suite applications. Office Marketing efforts to penetrate channels. Retail and Internet recently First get the platform to affect the both sides

Agenda Microsoft Overview Strategy Product Specific Strategy Analysis Desktop Server Non-PC Recommendations

Value Creation for Servers Extract Deliver Understand Create Communicate Choose The need for alternative solution for expensive mainframes Radical approach based on existing product line Large capability on PC Scalable architure Low initial investment Standard look&feel Leadership in server market Launch of NT in 1993 Proven distribution channel (MSDN network alliances...) Provision of new capabilities through improved and new product releases (Windows 2000 Windows 2003)

Threats and Responses Overall threats Radical changes in company communi- cations and technology New client server approach Bad reputation and stability New Thin Client approach Shift in empowerment from client to server Applications no longer needed on user PCs  Launch of Windows NT Termınal Server Linux platform Better stability and perfomance Lower TCO Microsoft licensing model too complex  New capabilities with Windows 2000 and 2003

Agenda Microsoft Overview Strategy Product Specific Strategy Analysis Desktop Server Non-PC Recommendations

Non-PC Development PCPC InternetInternet CommTVCommTV Boundaries disappeared (driven by mobility) Microsoft reacted by Strategy change Focused more on the new business units

Shift in Microsoft Strategy Original Strategy A computer on every desk and in every home. New Strategy Empowering people through great software, any time, any place and on any device.

Changing Trends Handheld PC Microsoft wanted to be the standard for this new trend with Windows, Office and Explorer Bill Gates visioned a world where any files or messages could be displayed on every device Mobile Phones Similar to the handheld devices, Microsoft wants to be the standard for mobility and this is also valid for mobile phones Microsoft wanted to be the Handheld PC and Mobile Phones standard to be the mobile comm. standard

Changing Trends – continued Broad Band Communications (Telephone and broadband networks with data transmitting posibilities) Microsoft wanted to be the standard in this arena as well. Acquired WebTV : Internet via TV Wanted to use the Windows CE version as WebTV OS Video Games Microsoft seen that home entertainment was one of the important trends and wanted to enter the segment with X- Box, as a support to its Broad Band Communication. X-Box&Broad Band communication will allow Microsoft to be the home entertainment standard

Agenda Microsoft Overview Strategy Product Specific Strategy Analysis Desktop Server Non-PC Recommendations

Increase industry collaboration Better reputation Raise further opportunity for other industry players Diminish the impact of legal issues Increase the information sharing Provide more information on software interfaces and capabilities Better interoperability with third party software application Improve technical product stability and reliability Reduce margin of Linux’s competitive advantage Improve product reputation

Strengthen strategic alliances for the new Non-PC areas (Bluetooth and others) to go hand-in-hand with mobility strategy of Microsoft  Windows Mobile  Windows Everywhere Recommendations - continued

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