As a technology leader, Microsoft has focused on assisting individuals, as well as businesses, throughout the globe, to attain their full potential. The company has transformed how people work, play, and converse with each other through numerous computing devices, and in particular, cloud and mobile technologies. The company is anticipating that three billion will be connected to Internet-enabled appliances in a few years’ time while trillions of dollars would be spent in advancing consumer needs and businesses. Cloud technology has become the platform of Microsoft success in 2014. This study will offer the analysis of Microsoft’s annual report of 2014, with an aim to inform the company’s stakeholders of the firm’s progress.
The growth of Microsoft in 2014 was due to a strong drive from cloud technology. In 2014, Microsoft oversaw its revenue rise from $77.849 billion, which was recorded in 2013, to $86.83 billion in 2014 (2014 Annual Report n.p). The operation income rose from $26.764 billion in 2013 to $27.759 billion in 2014 while the net income shot from $21.863 billion to $22.074 in the same period. This has enabled shareholders to receive cash dividends of $1.12 per share in 2014. To enhance revenue expansion, the first quarter of 2014 saw Microsoft change its organizational structure in an attempt to transform its products and service management. Organizational structure is fundamental in attaining the company’s strategy, as ineffective structures can hamper organization’s innovation capacity (Dhillon and Gupta 54).
Microsoft managed to complete the acquisition of Nokia Corporation for both devices and service business (also known as NDS) during the first quarter of 2014 financial year, with an assurance of higher revenue. According to 2014 Annual Report, the acquisition of NDS expanded Microsoft Devices Groups to include Nokia phones, Xbox hardware, Perceptive Pixel products, as well as accessories (2014 Annual Report n.p). According to the Nadella, the company’s CEO, disciplined decisions and bold innovation played a key role in revenue rise. The company’s announcement of Office on iPad resulted to millions of downloads for Word, Excel, and PowerPoint in iPad devices which became popular among Apple’s App Store.
The introduction of Cortana on Windows Phone 8.1 has enabled users to obtain information enthusiastically while safeguarding their privacy. The Surface Pro 3 tablet was invented as a substitute for the laptop. In addition, offering free licenses to individuals purchasing original equipment measuring less than nine inches has reduced the cost of Microsoft products, hence, gaining more customers throughout the year. Building the company’s success on cloud technology has raised the company’s market share on cloud-based services, which has resulted to expansion of the service all over the globe.
However, Microsoft has experienced severe competition for both its Windows operating system and smart phones. The Window operating system is facing high competition from Google and Apple, but the company is working on offering its customers variety of choices, value, security, and flexibility. The company’s major rivals in phone industry include Apple and Samsung. The company is optimistic that its phones will find favor among global users due to their unique designs, imaging technologies, and affordable prices. In an attempt to drive the company forward, Microsoft is planning to cut 18,000 jobs in 2015, mostly from the Nokia segment, as part of the new management (Warren n.p).
Microsoft is looking forward to expand its production through mobile and cloud technologies. For instance, the company has recently launched Delve, which is an office 365 cloud-based service, with an aim of connecting workers to relevant documents, data, and other relevant information, automatically. The company is also in the process of launching Skype Translator during this financial year to minimize language barriers in communications. Key areas that the company wishes to explore and expand investment include cloud operating system, the company’s hardware, as well as digital work experience. Due to high competition from other companies, Microsoft has embarked on thorough research to adjust to the changing technology environment.
The company’s research and development facilities are among the world’s largest research bases on computer science and technology. They have collaborated with top global universities to advance knowledge in computer science and future technology. The company’s technicians are reviewing new features that would enable the launching of the next edition of Windows, which is Window 10. The cloud offers businesses an opportunity to innovate while creating cost-effective devices. Through restructuring, Microsoft is striving to rationalize on engineering processes and simplify its organization structure to minimize operation costs, which would ensure long-term growth opportunities.
Microsoft is committed to ensuring that its consumers have benefitted immensely from the latest technology, as it focuses on transforming people’s culture through its numerous products. The company has embarked on acquiring other companies that can enhance its products through cloud capability. The 2014 financial year has seen shareholders of Microsoft receiving a larger share of the company’s profit, compared to the previous year. Microsoft has succeeded in acquiring a large global customer base that supports the company’s innovation and growing technology through owning numerous products and expanding its service portfolio. Microsoft is dedicated to create new opportunities to enhance customer satisfaction, business value, and internal processes through expanding its current technology and focusing on the future.
Dhillon, Ishneet, and Sonam Gupta. “Organizational Restructuring And Collaborative Creativity: The Case Of Microsoft And Sony.” IUP Journal Of Business Strategy 12.1 (2015): 53-65. Business Source Complete. Web. 6 Aug. 2015.
“2014 Annual Report.” Microsoft. Shareholder Letter (2014).” Web. 6 Aug. 2015.
Warren, Tom. “Microsoft’s Q4 2014 earnings show improved revenue, decreasing profits.” The Verge. July 22, 2014. Web. 6 Aug. 2015.