Microsoft’s Search – Case questions

Competitive Disadvantage

1. Discuss the concept of competitive disadvantage with respect to Microsoft’s position in

search in 2008. Detailed comparisons with Google are expected (Hint: use data in Exhibits to
bolster analysis)
a. Why are advertisers paying less for a click on Microsoft’s search engine
b. Why is the clickthrough rate lower on Microsoft’s search engine than on Google
2. What is your understanding of the nature of costs in the search industry? How does
Microsoft’s cost per search compare to Google’s

Competitive Dynamics

3. Discuss the concept of competitive dynamics

4. What is likely to be the fate of Microsoft if the market is left to evolve naturally without any
significant intervention
a. Impact on relative WTP
b. Impact on its relative cost
5. What are the dynamics of the ‘search’ marketplace? Discuss with reference to the concepts
of
a. Network effects
b. Feedback loops
6. Why is Microsoft’s share fading

Decisions

7. Is search going to be an attractive industry in the long run?

8. What’s your assessment of Microsoft’s management of threats to its competitive advantage
9. Should Microsoft persist in the search business – clear rationale is expected? If yes, how will
it make money in this business
10. What are the options available to Microsoft? How would you characterize Microsoft’s
position in the search market in 5 years