Customer Description: Analyze the marketing and advertising strategies used by Microsoft Corp. since the creation of the company. Pay special attention to marketing mix of Microsoft. The research paper needs to have an extensive bibliography.

Paper Body:

In 1975 Bill Gates and Paul Allen created a company called Microsoft. A little more than twenty years later, Microsoft is a leader in the field of computer programming. Gates and Allen both had big plans for their fledgling company and came up with different ways of managing people and products in order to create possibly the most effective and versatile workforce of any corporation in existence. Microsoft's marketing strategy (mix) at any particular point on the network (e.g., at the home client or at the enterprise client) can only be understood and evaluated in the context of Microsoft's overall strategy. 

Microsoft pursues a strategy of leverage from product markets in which it is dominant, to markets in which its competitive position is weak. It targets particular markets, establishes marketing and, in particular, technological links to those markets from established monopolies, and then leverages its power to monopolize the target markets. 

As we remember, one of the "P's" of marketing mix is Product. Microsoft uses outstanding strategy to produce continued demand for their products by continually updating their products with new capabilities and features, which in turn eventually renders older versions of the same program obsolete. 

Chris Peters stated that "In a sense Office makes the individual apps(applications) obsolete" (Cusumano pg. 146). In short, in each of the four components of product peculiarities, Microsoft's overall business approach and strategy is based on the creation of technological linkages between layers within the same market (e.g., DOS to Windows on the desktop) and between layers in one market and corresponding layers in another market (e.g., Windows NT to Marvel to Windows 95 on the home client). To fully understand Microsoft's strategy and its economic implications, it is necessary to understand two additional strategic Microsoft technologies: OLE and Windows.

OLE (object linking and embedding) is a strategic technology for Microsoft on both the client and server side. It is the Microsoft-imposed standard for sharing information both among applications, and between applications and the operating system. During the earlier DOJ investigation, desktop application companies complained that Microsoft seeded OLE to its captive application developers before giving it to ISVs (independent software vendors), thereby giving its own applications a lengthy head start over the competition. 
Microsoft's first Windows products were targeted for the desktop and were built on top of Microsoft's dominant desktop operating system, MS-DOS. Because of their DOS legacy, these products are unable to take full advantage of the capabilities of the 32-bit microprocessors they run on. Microsoft's current product in this area is Windows 3.1, which is pre-installed on most desktop systems presently sold.

While Windows 3.1 can be used as a client for networked computing, Microsoft sells an advanced version of Windows 3.1 with additional networking features, called "Windows For Workgroups." Like Windows 3.1. Windows For Workgroups is built on top of MS-DOS.

Microsoft plans to proliferate Windows 95 (also known in the press as "Chicago" or "Windows 4.0") widely next year as the successor to Windows 3.1. Windows 95 is a true 32-bit operating system. However, it is being targeted to the mainstream personal computer market. Furthermore, Windows 95 breaks the reliance on MS-DOS that precluded long-file names and more efficient file servers. Because it includes advanced networking features, Windows 95 is expected to displace both Windows 3.1 and Windows For Workgroups.

Windows NT was Microsoft's first true operating system for 32-bit microprocessors. NT's principal use is in the server market (discussed below), but Microsoft has also targeted its NT marketing to power users running high-end personal computers or workstations.

Windows NT can also be used as an operating system for a network server. Microsoft markets a version of NT with advanced server capabilities, called Windows NT Advanced Server, as an enterprise-wide computing solution. Microsoft offers a suite of applications for Advanced Server called "Back Office" that includes database services, electronic mail, systems management, and connectivity to mainframe and minicomputers.

Microsoft's vision for enterprise computing is being marketed through its plans for a replacement for Windows NT currently code-named "Cairo." Cairo brings object-oriented technology into the file server and operating system. Microsoft already controls object standards through it OLE specification. As used in this paper, "leverage" means that Microsoft uses the installed base in a market it dominates (e.g., DOS) to create an installed base in a new market (e.g., Windows, or desktop applications). It uses both marketing and technological linkages to accomplish leverage, as explained in greater detail in the succeeding pages. For the sake of easy example, Microsoft's horizontal tie-ins within one layer or another represent the most trivial example of its marketing strategy. 

Thus, Microsoft has bundled for sale a number of desktop applications (under the name, the "Microsoft Office"), putting companies like Lotus, WordPerfect and Borland at a competitive disadvantage. Microsoft executes the same tactic on the server side by bundling its "Back Office" products to foreclose meaningful competition at the "server applications" layer (level 5). See Stuart J. Johnston and Ed Scannell, "Server Suite Could Squeeze Market," Computer World, at 4 (Oct. 10, 1994) (Ex. 2).

Microsoft also pursues other, more effective tactics. In particular, Microsoft derives leverage from its control of Windows products and logo; from its use of a consistent graphical user interface; and from its tight technical integration between interconnected machines through control of standards such as OLE. After establishing market power on one level, Microsoft will target an adjacent layer, establish proprietary technological linkages to that layer, and then leverage its market power to establish market power in the next layer. 

Two examples of this within the client side are DOS to Windows, and Windows to desktop applications. In addition, Microsoft uses its market power from one side of the network (server or client) to leverage to the other side, again by establishing linkages. Microsoft is already attempting to leverage its control of desktop into a control of servers. It will also use its market power in the PC-based financial and text software market, through the acquisition of Intuit, to leverage into the server...

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