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|CHAPTER 3 Analyzing the Marketing Environment 93

Microsoft has lost some of its luster. In the year

2000—due largely to the collapse of the stock market

technology bubble—Microsoft’s value plummeted

by 60 percent. And whereas other tech stocks recov-

ered, Microsoft’s share price and profits languished

at 2000’s levels for a dozen years or more.

But recently, Microsoft has begun a dramatic

transformation in its vision and direction to bet-

ter align itself with the new digital world order.

Today, rather than just creating the software that

makes PCs run, Microsoft wants to be a full-line

digital devices and services company that de-

livers “delightful, seamless technology experi-

ences” that connect people to communication,

productivity, entertainment, and one another. Its In the fast-changing digital marketing environment, mighty Microsoft is making
mission is to help people and businesses realize fresh moves to reestablish itself as a brand that consumers can’t live without
their full professional and personal potential. in the post-PC world.

To make this mission a reality, over the past Getty Images
few years, Microsoft has unleashed a flurry of

new, improved, or acquired digital products and services. Over Windows tablets, Windows phones, and even Macs via the

one short span, it introduced a new version of Windows that SkyDrive cloud. Or you can tap into a continuously updated,

serves not just computers but also tablets and smartphones; a online-only version of Office from almost any device. In fact,

next-generation Xbox console; a music and movie service to Microsoft views Office as a service, not software. It sells the

rival iTunes and Google Play; an upgraded version of Skype service by subscription: $99 per year will get you Office 365,

(acquired in 2011); a SkyDrive cloud storage solution; and even 20 gigabytes of SkyDrive storage, and 60 minutes of Skype calls

an innovative new tablet—the Microsoft Surface—that it hopes per month. “It embraces the notion of social,” says Microsoft’s

will give it a firmer footing in digital devices. Also rumored to recently departed CEO Steve Ballmer. “You stay connected and

be in the works is an Xbox TV device for TV streaming. And share information with the people you care about.”

the company recently acquired Yammer, a Web-services pro- Perhaps Microsoft’s biggest about-face is the development

vider and hip maker of business social networking tools—a sort of its own hardware devices. In the past, the company has relied

of Facebook for businesses. In its boldest expansion move yet, on partners like Dell, HP, and Nokia to develop the PCs, tablets,

Microsoft recently paid more than $7 billion to acquire Nokia’s and phones that run its software. But to gain better control in to-

smartphone business. day’s superheated digital and mobile markets, Microsoft is now

More important than the individual new devices, software, doing its own hardware development. For starters, it developed

and services is the way that they all work together to deliver a full the cutting-edge Surface tablet. The Surface not only employs the

digital experience. It all starts with Windows 8, a dramatic digital- Windows 8 interface and connectivity, it sports a nifty kickstand

age metamorphosis from previous Windows versions. Windows 8 and thin detachable keyboard that also serves as a cover, making

employs large, colorful, interactive tiles and touchscreen navi- the Surface a unique combination of tablet and mini-laptop. The

gation, making it feel lively and interactive. It works seamlessly Surface, plus Xbox and the Nokia smartphone acquisition, will

across desktops and laptops, tablets, phones, and even Xbox, pro- give Microsoft better control of access to three important new

viding the cloud-based connectivity that today’s users crave. digital screens beyond the PC—tablets, TVs, and phones.

Using Windows 8 software and apps with Windows-based Thus, Microsoft’s sweeping transformation is well under

devices and cloud computing services, you can select a movie way. The company is putting a whopping $1.5 billion of market-

from a tablet, start playing it on the TV, and finish watching it on ing support behind its revamped mission and all its new soft-

your phone, pausing to call or text a friend using Skype. What ware, hardware, and services. Still, Microsoft has a long way to

you do on one Windows device is automatically updated on other go. Windows 8 and the Surface tablet are off to slow starts, and

devices. Playlists created or songs and TV programs purchased many tentative customers are still playing wait-and-see. Many

from a mobile device will be waiting for you on your home PC. still see Microsoft as mostly a PC software company. It will take

And Windows 8 is a social creature; for example, it updates con- a sustained effort to change both customer and company think-

tacts automatically with tweets and photos from friends. ing. Some skeptics think that Microsoft may still be too tightly

The latest version of Microsoft Office, Office 365, has also wedded to the olds ways. “Just having the Windows name

been transformed for the connected age. Using touchscreen still around captures the problems of this company,” says one

interfaces, you can use an Office app and share files across PCs, technology forecaster. “In their heads, they know the personal