o Microsoft earns great revenues from its business and windows division however this industry is growing at a very slow pace. Therefore, it is advisable that they focus resources on innovations in online services/ social media and the entertainment/gaming section which is growing tremendously these days. o The company has been making acquisitions in these segments to gain an edge but has not been successful. Microsoft’s R division does not look suited to create Social Media applications. The more time passes the more difficult it is going to become for Microsoft to make headway in this segment. o The windows division is growing at an even slower pace and its profit margins are also decreasing. The increased usage of smartphones and tablet computers that do not use the windows operating system are now a major threat to Microsoft.Therefore, the company should invest more in the creation and marketing of a better operating system suited to these products. o The company’s Business Division and Entertainment Division have created products that create high value for customer and hence enjoy heavy growth and high margins. The future looks bright for these divisions and Microsoft will certainly be able to maintain competitive advantage. o Despite frequent attempts, Microsoft has been unable to gain a competitive advantage in online services/social media. The company has rarely been the first to invent or create a product, yet they are extremely efficient at improving existing concepts and has used its massive cash flow for R&D operations. Similarly, Microsoft should use the same notion in the Online Services Division and instead of creating totally new products, they improve their strategy in a way which helps them fashion better products that create higher value for customers. o Microsoft could also create new competencies that would allow it to increase dominance in the Online Services segment. o Microsoft should enter intolong-term cooperative relationships with mobile phone and tablet hardware manufacturers. These relationships would give Microsoft greater mindshare to dominate the software space of the future. o The relationship should be structured so that Microsoft and hardware manufacturers engineers work together to generate innovative products by leveraging each player’s expertise in a particular segment. Good products introduced through such partnerships would benefit both Microsoft and hardware suppliers.