The five most significant initiatives that Microsoft has invested in are the Internet the Things (IoT), Big Data, corporate social responsibility (CSR), mobile telecommunications, and healthcare IT (HIT). We will review why each initiative is among the most important, why Microsoft became involved in each, and how the initiative has or will affect the company in the future.
Internet of Things
IoT refers to devices being connected to the Internet. These devices contain embedded sensors and software that allow them to talk to other machines, providing data that can lead to better decision-making. In recent years, Microsoft has entered into many strategic partnerships with companies like Toshiba, Fujitsu, and Texas Instruments to target this market (Singh, 2015). Their most recent release in IoT is the Azure IoT Suite, which will integrate IoT technology into their cloud service (McLaughlin, 2015).
The market potential here is so large that any telecommunications company stands to gain from capturing even a segment. It is estimated that IoT will contribute $US 10 - $15 US billion to global GDP in the next two decades (Press, 2014). This is due to the convergence of several factors, including the drop in sensor prices, increased adoption of broadband, memory becoming affordable (thereby allowing for greater data storage and analysis), and the adoption of IPv6. This last factor will allow for an essentially limitless number of Internet connected devices. Only about 10% of the IoT financial impact will be the result of the devices themselves. Most of the impact will be from how those devices are connected (Bauer, Patel, & Veira, 2014). It is likely that Microsoft became involved in IoT at this time because of the size of the potential market, and they stand to make a significant financial gain if even the less optimistic predictions are correct.
Equally important to IoT will be the collection, storage, and processing of the large data sets IoT will generate. These initiatives fall under a variety of names, including business analytics, business intelligence, and data science. However, the umbrella term “Big Data” is generally used because with the cost reduction in storage, almost all data is becoming “Big.”
Microsoft has made significant progress in this space. They have developed a variant of SQL (called U-SQL) to run with Azure Data Lake Store, that has been specifically designed for large data sets (Patrizio, 2015). Products such as Business Analytics Accelerator are targeting the telecommunications sector, while their acquisition of Revolution Analytics targeted the R programming language that is primarily used for data analytics (Brust, 2015). Furthermore, the company is slowly developing a reputation for making accurate predictions using Bing Predicts (Stenovec, 2015).
The integration of technologies such low cost storage, affordable bandwidth, ubiquitous sensors, and sophisticated machine learning are likely to change how a great deal of decisions are made. Up until now, decision-making relied on data models where the data was limited and the statistical techniques conformed to those limitations. However, as sensors collect data constantly and in real-time, the available data sets will come closer to reflecting a truly comprehensive and accurate picture of conditions as they unfold (Mayer-Schönberger & Cukier, 2013). It is likely that Microsoft is investing in Big Data because it promises to be a revolutionary technology; one which will allow them to gain market share in a lucrative industry segment while improving their own forecasting and decision-making.
Corporate Social Responsibility
Microsoft’s CSR initiatives are wide-ranging. They include such diverse projects as bringing solar-powered wireless Internet access to rural Kenya and providing computer science training through YouthSpark for students who would not normally have access to technology (OPIC, 2015).
Research indicates that the public’s desire to interact with a company, whether making purchases or seeking employment, is more heavily weighted toward their perception of the company than their perception of the products and services provided by that company. 42% of how people feel about a company relates to their corporate social responsibility (Smith, 2012).
A corporation’s reasons for engaging in CSR are usually a mix between how they believe it will affect their earnings, and what they believe their responsibility is to the greater community in which they operate. One school of thought claims that a company’s only responsibility is to their shareholders. In the strictest sense, this means increasing the value of the stock. However, most companies today choose to take a more holistic view, whether within their local communities or on the broader stage that Microsoft inhabits.
Microsoft specifically uses the word “responsibility,” saying that they must fulfill their responsibilities to the public through social initiatives (Smith, 2012). Microsoft’s significant resource commitments to public sector issues, both through their company and through the Gates Foundation, suggest that the reason they are involved in these initiatives does support their rhetoric. Judging from how well they do in CSR rankings, it is likely that these efforts will continue to have a positive affect on attracting and retaining their customer base.
Microsoft’s major initiative in mobile technology was the acquisition of Nokia in 2014. While they have a small segment of the mobile devices market, the prevalence of Microsoft software means that most of their services are available for use on tablets and smartphones. Satya Nadella, Microsoft’s CEO, has stated part of the company’s strategy under his tenure will focus on mobile and cloud services (Blattberg, 2014).
Smartphone penetration rates have surpassed personal computer rates (Basenese, 2013). Mobile device such as the smartphones and tablets have replaced the large collection of consumer electronics that used to be required for the same set of activities. A smartphone now acts as a camera, phone, answering service, GPS, video camera, music player, radio, calculator, and the list goes on. Because cellular phones are generally cheaper than personal computers, they are capable of accessing a wider variety of untapped markets, such as the developing world and low income households in the developed world.
This is one initiative where CSR is most likely to overlap with market growth, expanding on the ideal of “doing well by doing good” (Brainerd, Campbell, & Davis, 2013). Large portions of the globe still do not use technology products, and mobile devices are the most likely foothold into that market. Often the gains made by access to technology in the developing world allow for great improvements in social conditions, such as the examples of farmers being able to access weather and crop price data, or rural communities being alerted of impending natural disasters (Schneider, 2015). Continuing to invest here should allow Microsoft to focus on a largely untapped market that shows remarkable growth potential, while also reaping the benefits of an effective CSR strategy.
Microsoft has been integrating features into their software platforms that target the healthcare industry. They have been working to enhance Skype as an alternative to dedicated telehealth products (mHealth, 2015). Windows 10 includes security standards that meet healthcare standards and collaboration features that allow healthcare providers to share patient documentation (Kern, 2015). In this way they are offering their software platforms as an alternative to costly electronic health records (EHR), whose deployments have generally been problematic. This allows them to target medical centers that are not ready to commit to EHR, but would still like to utilize technology to decrease costs and improve efficiency (Healthcare Innovation Editors, 2015).
Healthcare is one of the few industries that has maintained robust growth even in the face of the global economic crisis. Much of this is due to the fact that the worldwide population is aging. The elderly population (those 65 and over) is projected to triple by 2050, going from 531 million in 2010 to 1.5 billion in 2050 (Kochhar, 2014). This will mean more long-term management of chronic health conditions and more in-home care opportunities, such as telemedicine and home testing devices. This is another large market that is relatively recession proof, and increasing investment should lead to steady growth, if only due to demographic factors.
These are the five initiatives that Microsoft should put the most focus on. All five have the potential for increased or sustained growth, with some promising significant growth, while allowing the company to enhance its corporate image and engage with the worldwide community in meaningful ways.
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