Microsoft Aims at the Enterprise (Introduction)

By virtually any index one chooses to use-revenue growth, market share, profitability, market capitalization, number of employees-Microsoft’s growth over the last decade has been explosive. Its business has also proven to be relatively durable. As the technology boom skidded to a halt in late 2000, Microsoft continued to enjoy steady, if less-spectacular revenue growth, ending its 2001 fiscal year 10% higher than the year before. (Microsoft’s fiscal years end on June 30.)

But even that lower level of growth could be difficult to sustain, as it was propelled primarily by the growing popularity of the personal computer and single-processor network file-and-print servers. That market is saturated with Microsoft’s operating systems and productivity applications. Worse, growth in PCs has ceased for the time being-worldwide PC sales for 2001 are expected to be down 6% from 2000, and growth in 2002 is expected to be a modest 5%, according to Merrill Lynch.

In addition, the Internet has shifted the focus of desktop computing from locally run applications to browser-accessible Web sites, many of which offer functionality (e-mail, stock-tracking, and reference, such as address look-ups or encyclopedias) previously supplied by desktop applications.