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WAC II: Individual Assignment

Microsoft Search– Executive Summary

2010-2012

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Submitted By:

Section E

Executive Summary

This report is commissioned to examine the issues faced by Microsoft in online search industry, the opportunity available to it and the analysis of the various facts related to this. Further the report envisages the various options available to Microsoft, their evaluation, the recommendation and the implementation plan for the chosen recommendation.

Microsoft is one of the world leaders in technology based companies but it is a distant third when it comes to internet search and related online advertising market. Moreover, the revenue per search for Microsoft is lower than that for the industry leaders – Google and Yahoo. Its market share has constantly declined from 12.3% in July’07 to 8.3% in Nov’07. During the same period Google has gained a considerable market share. The revenue per search is only 57% of that of Google. The Search industry is a high margin industry with 60-70% gross margins and an expected CAGR of 20% approximately. Hence the opportunities are plenty, but at the same time, there is domination by few large players like Google and Yahoo. As the innovation and technology are difficult to sustain in the longer run due to easy emulation, the barriers to entry are high in the industry. Moreover, with consistent increase in web pages and growing expectations, the search is becoming more and more complex.

The report suggests and evaluates various alternatives such as, a new product in online search, acquisitions of smaller players, acquisition of Yahoo search and improving the current search engine capabilities etc. The evaluation is done on parameters such as feasibility, value addition, time of implementation and competitive threat. The alternatives are also evaluated on the bases of their pros and cons, if implemented. Based on the above analysis, we have recommended that in the current