Based on text bellow

1. Explain how the diversification strategy reinforces the position of Microsoft or contributes to its repositioning in the market.

2. Identify and evaluate the means through which Microsoft implemented its diversification strategy.

3. How do you categorise and evaluate the strategy on innovation to support the diversification strategy?

Microsofts Diversification Strategy Microsoft continued to diversify as the desktop software market matured and hoped to make headway into the non-PC markets. The company expanded its product lines into enterprise software, consumer products, and services markets. Facing fierce competition on all fronts, Microsoft was driven to reinvent itself. In September 2005, Microsoft announced a major restructuring exercise, which reorganized the company into three business units. The new diversification strategy was to group products and services with high synergies, streamline decision-making, and further realign the company to become nimbler in producing software. The first unit was the Platform Products and Services Division, which oversaw the Windows Client, Server and Tools, and MSN groups and aimed to leverage MSNs success in developing Windows-based products. The second unit was the Business Division, which oversaw the Information Worker (Microsoft Office-related products) and Microsoft Business Solutions (enterprise application software products) groups. The third group was the Entertainment and Devices Division, which oversaw the Home and Entertainment Group (Xbox videogame) and the Mobile and Embedded Devices group. It aimed to compete with players such as Apple and Sony. Ray Ozzie, the highly regarded guru from Groove Networks, would assist the three units in adopting a network-based development approach Microsoft had ventured into the services market through MSN in order to generate new revenue. MSN was a Web portal that offered a wide range of online services, including news, information search (which was once based on Googles technology before Microsoft developed its own search capability), e-mail (Microsoft acquired Hotmail in 1997), instant messaging, online shopping and games, chat rooms, and message boards. In addition, MSN also operated various fee-based services, including dial-up Internet service, MSN TV (interactive television based on WebTV Networks, a company purchased by Microsoft in 1997), Hotmail Plus (upgraded e-mail service), Radio Plus (commercial-free online music radio), MSN Music (online music business), and an online travel service that was offered in partnership with Expedia. In 2001, after acquiring Great Plains Software, a long-time partner and a specialist in accounting applications for small and midsized businesses, for US$1.1 billion, Microsoft Business Solutions was formed. The new division combined the expertise of Great Plains with its existing small business software operations, including the Central small business services unit. In terms of the consumer market, one of Microsofts most important moves was its entry into the video gaming business in 2001. Since the first launch of the video game console Xbox, the software giant has sold 22 million units worldwide. With the new Xbox 360, Microsoft was determined to capture the top spot in the gaming business's latest cycle and challenge Sonys dominant position. 2022-2023 Page 6 of 8 In addition to gaming, Microsoft ventured into the mobile communications market. For years, the software giant was denied entry into the market by mobile handset manufacturers. In fact, these manufacturers even deliberately formed a consortium (called Symbian) to prevent Microsoft from developing smartphone software. In order to address this disadvantage, Microsoft went to the mobile operators. During this time, many mobile operators, particularly in Europe, started to leverage original design manufacturers (ODM), mostly in Taiwan, to produce handsets that would bear their own brand names in order to create market differentiators. Microsoft spotted this opportunity and persuaded the operators and handset manufacturers to develop phones based on its Windows Mobile operating system. In 2002, Orange launched the first Windows-based smartphone developed by High Tech Computer Corporation (HTC), a leading ODM in Taiwan. In 2005, the company acquired Groove Networks (founded by Lotus Notes developer Ray Ozzie), a collaboration software maker; Sybari Software, an anti-virus security provider; and FrontBridge Technologies, an e-mail security developer. These technologies were critical to Microsofts existing platform product lines. Subsequently, Microsoft extended its Windows operating system as an online service (namely Windows Live). In addition, to complement its platform products and Internet services, Microsoft further strengthened itself in the Web services technology market by leveraging its .NET technology, which was originally developed to compete with the Java technology created by Sun Microsystems. Moreover, Microsoft had developed a number of essential tools that would help customers build the key elements in SOA platforms and develop specific Web service-based modules and solutions. In 2011, Microsoft diversified its product line yet again by acquiring Skype Global for $8.5 billion in cash. Although Microsoft had previously ventured into the Internet communications industry with Windows Live Messenger, Skype offered Microsoft broader device support, mobile video calling, and access to over 170 million Skype users, potential new clients for Microsofts existing products. Microsoft considered Skype a valuable acquisition due to the strategic fit between the value chain activities of the two companies. Moreover, Skypes communication expertise combined with Microsofts market reach offered an opportunity to generate new competitively valuable resources and capabilities. With the communications industry gradually shifting toward more face-to-face calling, Skype gave Microsoft an already-established visual communications platform to complement its existing Xbox Live services, Office Suite, and new Windows 8 software. In turn, as the world's leading operating system (OS) software developer, Microsoft could expand Skypes scope and reach by pre-packaging future Windows OS releases with Skype software.