Microsoft Corporation: The Introduction of Microsoft Works

Submitted by : Group 9
Lokesh Bavne
Pratyush Biswas
Raj Mohan
Rakesh Kumar
Shatabdee Tripathy
 INTRODUCTION

• Microsoft Works was an integrated software suite that included a

spreadsheet, word processor, graphics program, database and
communications program
• It was initially launched in 1988 and was smaller, less expensive and had
fewer features than Microsoft Office
• The major issues in the case is related with design changes to Works to
make it more attractive for local markets and about its positioning in USA
and in global markets
• 41% of Microsoft’s revenue came from countries outside the United States
thus making it critical for the different country managers support for the
marketing strategy
• Every country has local needs based on the user segment
• Types of users- Breadth vs Depth users
 Market and Opportunity analysis
• The microcomputer software industry emerged in the United states during mid
1970s
• In 1986 industry’s size was over $5 billion
• The market is highly fragmented with major players being Lotus and Microsoft
• Low end PC market is on decline (Exhibit-6)
• Also forecasted sales in USA is decreasing while in countries like Italy, Spain, etc
are increasing
• Forecasted price for Works also varies across countries
• Based on the product sold this industry was divided into system software and
application software
• As 41% of revenue for Microsoft comes from countries outside USA, global
markets has huge potential in terms of growth
• Competitors such as Lotus and Ashton-Tate were aggressively expanding their
international sales
• Microsoft Works would be competing directly with Software Publishing’s PFS
series and Borland’s Sidekick ,which were easy to use and low priced products
• There is an opportunity of localization to suit country specific needs as in this
industry early entrants enjoy substantial advantage over latecomers
Competitive position of MS and reasons for the launch of MS Works

• Lotus and Microsoft were the leading players in micro-computer software

industry
• Microsoft products were positioned as softwares which are compatible with low
end IBM PCs
• Strong alliances and timing of launch of its products contributed to its
competitive advantages
• Microsoft follows bundling strategy
• Microsoft’s Multiplan and word were market leaders in a number of countries in
Europe and Asia, which was being challenged by Lotus
• As other hardware manufacturers were introducing PC clones, Microsoft was
expected to develop a MS-DOS version for their machines
• Microsoft Works was launched to cater to lower segments and to counter Lotus 1-
2-3 as Microsoft Excel served only the higher segments
• It was targeted at breadth customers who were mostly the first time buyers and
preferred a product that would enable them to do little bit of everything like
spreadsheet ,word processing, database, graphics and communications at low
prices

Four dimensions were considered in analyzing market segments for software products
Computer Hardware
environment
• Developed application
software products to meet
the needs of customer who
prefers to buy ‘standard’
types of computer hardware.
• Number of companies who
introduced PC compatible
computers
• Primary Target Hardware was
any IBM PC or PC-compatible
• Simple, inexpensive software
was needed for million of
customers who were planning
to buy inexpensive machines
for use in homes and small
business.
Market Segmentation
Usage Situation
• According to customer usage there were four major
segments: business/professional, home/hobby,
scientific/technical and education.
• Business segment consists of people who used
microcomputers for a variety of functions in organizations.
• Professional Market was further divided into large and small
organizations.
• Large Organizations- Extensive data processing capabilities,
more formal buying procedures and more sophisticated
requirements
• Small – Less structured buying process and simpler needs
• Home segments-Individuals and families who use computer
for practical and recreational purpose.
• Scientific/Technical: Tasks that ranges from analysis of
laboratory experiments to computer aided design and
computer aided engineering.(Word processing, spreadsheet,
database, graphics and communication software)
• Education segment includes students, teachers and
administrators in school, colleges and universities. Students
uses word processing, spreadsheets and graphics.
 Market Segmentation
Customer’s Depth and Clarity of
Software Needs
• Software market has further divided
into “breadth customers” and “depth
customers”.
• Breadth Customers: Managers who
did a little bit of everything and
needed a combination of
spreadsheet, word processing,
database, graphics and
communications.
• Prefers Low price, simplicity in
software and integration
• Depth Customers : Specialists who
made heavy use of at least one
function
• Less Price Sensitive, more willing to
learn a complex product and driven
by need for power and satisfaction to
do all that they demanded.
Country and Language
• Differences in Hardware: Differences in
keyboard layouts, printers according to various
countries.
• Microsoft’s Competitive position and
corporate Image:
 Lotus 123 is market leader in Italy and Holland
whereas Multiplan is market leader in France
and Germany
 In France Microsoft products are perceived as
‘ease of use’ whereas In Germany , Microsoft
products are perceived as ‘Software for future’.
• Price Sensitivity: In England Customers want
the software at lowest possible price whereas
in France and Germany Price is compared with
the quality.
• There is difference in metric scales of
France/Germany and England which affects the
spacing
 Positioning issues

• The major challenge was to distinguish it from other Microsoft products,

thereby minimizing customer confusion
• Positioning was difficult to be executed on a global basis
• Other issue was that Works might lead to cannibalization of sales of other
Microsoft softwares such as Multiplan and Word in European countries
• Country specific positioning was also a challenge

Issues related with R1C1

• In France and Germany, Microsoft’s Multiplan was the leading spreadsheet

product , so country managers wanted Works to be labeled as R1-C1
making it easier for Multiplan users to learn Works(while in Italy and
Holland, the reference number started with A1)
 Demand of country managers

Country managers have a lot of autonomy when it comes to making marketing strategy.
Different country managers had different demands :

• France and Germany wanted a software “toggle switch” to let customers choose whether
Works cell references appeared as A1 or R1-C1
• Additional conversion programs to be written so that Works files could be converted to the
Multiplan file format

Without the above two changes ,Country managers argued that Works was unlikely to be
successful in their local markets. It would also mean that Works would be undermining the
market position of Multiplan by promoting Lotus 1-2-3 user interface and file formats

Options Available

 Launch it on time

 Delay launch by making changes to design

- missing the deadline
- competitor’s threat