Abstract: The following research is designed to provide the reader with an understanding as to how Microsoft and Sony have developed as a company throughout the years. The research will show the combined efforts of two large companies and there mark into the gaming industry. Microsoft and Sonys environment, company, and leadership styles are what have kept the company on the leading edge of technology. However, where do the companies begin to mark their niche into the market will be interesting to see with the difference in the two companies and their corporate ideas. The research will also focus more on the market issues, design issues, and economic impacts of the corporate wars going on. Thus, the research will provide the user with a better understanding of Microsoft and Sonys position for market control of the gaming industry.
Microsoft is arguably the most influential IT company ever, controlling standards in both the corporate and domestic computer marketplace. With their share of the desktop PC software market and a substantial proportion of the server business, Microsoft is now dictating many of the standards on which today’s information systems are built, and has achieved an unprecedented level of recognition among business management. Microsoft is following a long-term strategy to dominate four interconnected core markets (the enterprise, the Internet, electronic commerce, and information appliances), and looks set to exert a major influence on every aspect of IT over the next few years. How large enterprises react to these developments will affect their business strategy into the next millennium.
Despite the rapid acceptance of Microsoft technology within the enterprise, there are real concerns about the direction the company will take in the future. The company clearly faces stiff competition on several fronts within the business-critical environment. In addition, legal issues and software delays, together with the technical shortcomings of some of Microsoft’s key offerings, have raised doubts about the company’s long-term success.
Sony the Japanese consumer electronics giant has been at the cutting edge of new technological developments since the company’s founding by Akio Morita and Masaru Ibuka in 1946. Sony is one of the most respected companies world-wide. Its ability to innovate new markets and constant drive for self-improvement earned Sony world-wide sales of $36 billion in 1995. Sony manufactures video equipment, televisions, audio equipment, but is not just a leader in the world of electronics. Its acquisition of CBS Records in 1988 and Columbia Pictures Entertainment in 1989 have raised its profile as an entertainment company, backed by the recent launch of its own games console, the Sony Playstation. Unsurprisingly, the Sony name enjoys world-wide recognition, and has recently been measured as the world’s second largest brand name.
Vision and Planning
Since 1975, Microsoft Corporations mission has been to create software for the personal computer that betters the lifestyle and workmanship of people in the workplace, at school, and at home. It has done so by providing products for client/server environments, business and consumer productivity applications, interactive media programs, and Internet platform and development tools. However, market trends have led the company to begin to seek new ventures and design changes to their company development. This year alone, Microsoft has spent its reengineering phases for a gaming console that could compete in the video game industry, a step forward towards breaking the main idea that Microsoft is a company only involved with the software industry.
Sony on the other hand, was established as Tokyo Tsushin Kogyo Corporation in May 1946. (The company name was changed to Sony Corporation in January 1958). Sony pursues a policy of continuous improvement, known in Japanese as ‘kaizen.’ Its considerable investment in research and development bears witness to this. Sony’s history is dramatic and unique. This is not the story of quick riches but of extraordinary vision, effort and business genius. The firm, previously known as Tokyo Telecommunications, began life in a small corner room on the third floor of the burned out, blackened and nearly empty department store several weeks after the Japanese surrender. In the first year sales were merely $6,944 and it employed 35 people. The company has been a continual innovator in personal electronics since its 1946 founding, introducing the first home-video camera and personal stereo, and with Philips Electronics, inventing the compact disc.
Microsoft is very well known by its trademark name, a name that has become a household and business terminology name for just about everything that is remotely computer software based. Worldwide, many products and services are identified by the Microsoft name. Microsoft offers a broad array of products that demonstrates the exciting possibilities that are enabled by software, such as: access to information, ideas, entertainment, software-development tools, and connections between people and places. Microsoft software has become an integral part of the way people work, live, learn, and communicate today. In pat with their vision and goals the company strives to organize a lot of their software with the dedication of producing high-quality products built on the belief that it will be an empowering tool that helps people improve their lives.
However, Sony is also introduced as a household name thanks to high-impact products such as Walkmans and PlayStations, Sony makes more than just televisions, stereos, VCRs, and other home entertainment staples. The Tokyo-based electronics giant also manufactures semiconductors, laptop computers, cellular phones, LCDs, and batteries. The Columbia TriStar Motion Picture Group, Aiwa, Loews Cineplex Entertainment, and the Columbia and Epic record labels are also part of the Sony Empire, along with businesses in the finance and insurance fields. The company does 30 percent of its business in the United States. Overall the conglomerate has 1,080 subsidiaries worldwide. The empire appears intent on cutting back a bit, though. Sony has announced that it will reduce the number of its employees by 10 percent and close 15 of its 70 plants by 2003 in an effort to streamline its electronic businesses.
Product Structure and Development
So where does all of this history lead to the need for to different market companies to compete in an industry that has such a large demand. Microsoft and Sony both have been in part a technological leader from software to electronic devices. Last year, Sony hit the market with its all new Playstation 2
Manufacturing and Operations
Microsoft contracts out most of its manufacturing activity to third parties. Outside manufacturers produce various retail software packaged products and hardware. There are other custom manufacturers Microsoft could use in the event outsourced manufacturing becomes unavailable from current vendors. Their product CD-ROM manufacturing facilities are located in Puerto Rico and they have multiple sources for raw materials, supplies, and components. Microsoft is often able to acquire component parts and materials on a volume discount basis.
Although the company out sources their manufacturing, Microsoft manages all product fulfillment, licensing, and logistics services. They have regional operations centers that support all operations activities, including information processing, vendor management, logistics, and related supporting functions by geographical regions.
Marketing and Competition
The sales and marketing group seeks to build long-term relationships with customers of Microsoft. The OEM sales group includes the sales force that works with original equipment manufacturers that preinstall Microsoft software on their PCs. In addition to the OEM channel, Microsoft has three major geographic sales and marketing organizations: the South Pacific and Americas; Europe, Middle East, and Africa; and Asia.
The software business is intensely competitive and subject to rapid technological change. As the company pursues its largest strategic initiative, Microsoft .NET, the Company could experience more intense competition during the transition from the traditional core businesses to its new products based on the .NET platform. Microsoft continues to face movements from PC-based applications to server-based applications or Web-based application hosting services, from proprietary software to open source software, and from PCs to Internet-based devices. A number of Microsofts most significant competitors, including IBM, Sun Microsystems, Oracle, and AOL Time Warner, are collaborating with one another on various initiatives directed at competing with Microsoft. These initiatives relate in part to efforts to move software from individual PCs to centrally managed servers, which would present significant challenges to the historical business model of Microsoft. Other competitive collaborative efforts include the development of new platform technologies that are intended to replicate much of the value of Microsoft Windows operating systems. New computing form factors, including non-PC information devices, are gaining popularity and competing with PCs running Microsofts software products.
Microsoft faces formidable competition in these new areas and in all areas of its current business activity, including competition from many companies much larger than Microsoft. The rapid pace of technological change, particularly in the area of Internet platforms and services, continually creates new opportunities for existing competitors and start-ups and can quickly render existing technologies less valuable. The Company also faces relentless competition from software pirates who unlawfully copy and distribute Microsofts copyrighted software products, depriving them of large amounts of revenue on an annual basis. Microsofts competitive position may be adversely affected by one or more of the above mentioned factors in the future, particularly in view of the fast pace of technological change in the computing industry.
Microsoft was founded as a partnership on April 4, 1975, by William H. Gates and Paul G. Allen, and later incorporated on June 25, 1981. Since that time a new senior-level decision-making team has been formed in order to meet the new visional goals of the company. The new team was formed in March of 1999 ad has since replaced the Executive Committee that had been in place since December of 1996.
The Business Leadership Team as Microsoft calls it, includes key management from across Microsofts divisions. The business practice of management to be practiced will focus on the day-to-day running of the business, and will meet continuously with Bill Gates and new President and CEO Steve Ballmer to ensure that the company is on track with its vision, planning, and processes
As of June 30, 2001, Microsoft employed approximately 47,600 people on a full-time basis, 33,000 in the United States and 14,600 internationally. Of the total, 19,400 were in product research and development, 22,500 in sales, marketing, and support, 1,900 in manufacturing and distribution, and 3,800 in finance and administration. Microsofts success is highly dependent on its ability to attract and retain qualified employees. Competition for employees is intense in the software industry. To date, the company believes it has been successful in its efforts to recruit qualified employees, but there is no assurance that it will continue to be as successful in the future.
At Microsoft, people are considered to be the most important asset of the company. From people that work for the company to the actual consumers, Microsoft relies upon the people in order to maintain a healthy structure for growth. Microsoft corporate culture nurtures an atmosphere in which creative thinking and employees can develop their fullest potential. This concept places a high value that Microsoft places on its people that extends well beyond the companys corporate campus. Microsoft has a strong belief that if you provide for people the resources they need, they can then accomplish greater things. These are the issues that revolve around the management styles and beliefs of Maslows Hierarchy of Needs. Microsoft plays of the basic principle needs in an attempt to allow an individual to attain self-fulfillment during their time working in the company. That philosophy is the foundation of the software business. It is also the foundation of their community affairs efforts.
Microsoft employees currently receive salaries, incentive bonuses, other benefits, and stock options. New government regulations, poor stock price performance, or other factors could diminish the value of the option program to current and prospective employees and require Microsoft to pay higher salaries and other cash compensation.