As compared to Apple, Microsoft takes a newer approach in doing business and innovation.
For years, Microsoft dominated the computer industry with its Windows software; Apple was an afterthought for more than a generation of operating products. Before Google Web browsing began to dominate the market, Microsoft gave away Internet Explorer for free and drove Netscape out of business.
The Microsoft revenue model historically relied on just a few key strengths. The first, and most important, is the licensing fees charged for use of the Windows operating system and the Microsoft Office suite. After a few years of increasing irrelevance in the race against Google and Apple, Microsoft unveiled a new vision in April 2014, instantly shifting focus to make Windows software more compatible with competitor products, such as the iPad. Microsoft also has a few successful products, highlighted by the Microsoft Surface and Surface Pro, that challenge Apple devices.
Moving forward, however, Microsoft realises it cannot simply stick with the same old method and continue to compete with Apple and Google. Paid software is a more difficult to sell in an age of low-cost alternatives. Additionally, tablets and phones are replacing PCs. A newer Microsoft business model has been telegraphed by CEO Satya Nadella, one that emphasises product integration and a “freemium” software package.
For example, Microsoft wants customers to be more engaged and fixated on its products. In 2015, CMO Chris Capossela explained this concept with a simple example: “Rather than using Skype on Sunday night to phone home, you are using Skype for messaging 15, 20, 30 times every single day. That’s engagement.”
Lastly, the Google model may familiar to most of us, as they envision an accessible database for everyone, for free.
Unsurprisingly, the heart and soul of the Google revenue stream is its search engine and Web advertisements. While Google is not the only company to give away free services and bundle them with other goods, few do it as well or as successfully.
Google services do not cost the user anything. Instead, Google lures in users and collects their data, and then sells access to eager buyers across the planet. Every marketing firm in the world wants the kind of information and repeat usage Google enjoys. Moreover, the company keeps getting better and more sophisticated at targeting consumers and businesses, syncing preferences and playing economic matchmaker.
This no-fee model is not just profitable, it is very disruptive to Apple and especially to Microsoft. While Apple and Microsoft keep competing to find better and more innovative products to charge consumers, Google is all too happy to find a way to monetise activities for which users are eager to stop paying.
Google does not charge for Android, which is one of the chief reasons manufacturers are so drawn to it. The Google Web apps, which bear a striking resemblance to Office programs, are also free. Since Google began offering a free operating system and computer software, sales for Microsoft Windows and Office have slowed and, in the long term, threaten to die out.
Indeed, all 3 big companies offer various benefits to consumers, improving our lifestyle and the way we use the internet, yet threatens our use of internet in one way of another, be it our privacy or our unsusceptibility to their business marketing strategies. Through their business models, we gain an insight into the vision and strategies employed by the company, making us more informed users of the internet.