Emerging, Mature Markets Segmented

With much of Microsoft’s growth coming from outside the United States, the company is refining its marketing and licensing strategies in emerging markets. In emerging markets the company will focus on building a broader user base, with a long-term goal of reaching another billion customers by 2015. In mature markets, the company will focus on increasing the revenue it gets from existing customers. However, these strategies could affect the company’s profitability.

Mature vs. Emerging Markets

Figures released at the company’s annual Financial Analyst Meeting in July 2007 showed that although total commercial revenue grew 10% in Microsoft’s 2007 fiscal year, revenue in emerging markets grew 26%. The hottest growth is in the Brazil, Russia, India, and China (BRIC) group, where growth has averaged 39% over the last three years. While emerging markets remain a relatively small part of Microsoft’s overall revenues (collecting about 13% of the revenue generated by Microsoft’s field sales operations), annual revenue growth from the BRIC group is actually accelerating, from 19% in 2005 to 33% in Microsoft’s 2007 fiscal year. (These figures exclude revenues from sales of Windows on new PCs.)