Emerging Markets Present New Challenges

Emerging markets play a prominent role in Microsoft’s growth forecasts, but most emerging economies are only a fraction of the size of those in developed countries, and even their rapid growth will generate only modest increases in Microsoft revenue in the near future. More important, while Windows plays a major role in computing worldwide, other critical Microsoft products such as Office and server software are less dominant and face stiff competition from less costly alternatives. Microsoft will need to refine its current strategies and possibly make major changes to product lines and pricing to tap into these emerging markets effectively.

Emerging Markets Defined

Definitions of emerging markets differ, but they are generally countries with low-to-middle per capita income, developing capital markets and economies, and stable governments. Morgan Stanley Capital International lists some 25 countries in this category. (For a list of these countries, see the illustration “Emerging Markets“, and the chart “Emerging Market Statistics“.) The so-called BRIC quartet of Brazil, Russia, India, and China are of particular interest because they have very large populations, growing economies, and regional or international political clout.