The story of Microsoft started as a small company founded by two high school friends in 1972 and a relatively shorter period, these friends could manage to revolutionary innovations in the history of computer producers. Before them, the computers were using very confusing software for users. Microsoft Company has produced the computer operating system of Windows. The primary strategy Microsoft has followed is to create user-friendly applications and operating system. The software developed by Microsoft has made the use of computer very easy, and that helped the company increase its market share in the global market. Nowadays, Microsoft has a 95% of productivity software market, and 75% of server software market.
The company has faced some legal challenges because the company has been blamed for building a monopolistic power in the industry. Also, there are many tax issues with some countries. The company has almost over 90% of all the operating system software, and related applications industry, and the company follows a development strategy for increasing the market share in the different segments of the software industry. Considering that the other large corporations have taken substantial market shares in this marker, the high competition in the industry creates new challenges for Microsoft. The increasing competition in the market forces Microsoft to take more actions in the software related industries including mobile applications and other software for the laptop. The company has lost some market share to the other large software enterprises in the world (Shapiro).
Figure 1: Financial Statistics of Microsoft Company, Source-Microsoft Website
As can be seen easily in figure 1, the company has a revenue around 20 billion USD annually from 2012 to 2016. The income and the other related financial statistics indicate that the firm faces a fluctuation in revenue. The company runs its operations in three different industries: productivity software industry (90% market share), operating system industry (70% market share), and servers and SQL industry (75% market share). The Forbes expects that the company will lose its market share in the long-term (Microsoft).
The US economy has faced a big challenge due to the global financial crisis started in the sub-prime mortgage industry in the US in 2008. The US economy is still trying to recover from the negative influences of the world financial crisis. The most important factor lost during the crisis has been the trust in the economy. Many Americans have decreased their consumption and investment expenditures because they have lost theirs beliefs in the US economy.
Figure 2: Economic Growth Rate in the US economy
The figure 2 indicates how the US economy could generate income growth from 1970 to 2010. The average GDP growth rate has been more than 3% annually in the US economy until 2008. After 2005, the US economy could not generate this rate.
The slowly growing economy and even sometimes shrinking economy causes negative influences on industrial development, unemployment. The low level of economic growth is mainly because of low global demand. The US economy management and the other developed countries' economy managements are spending the effort to stimulate their domestic demand; however, the inflation rates in these countries are very small. It seems like that the low demand level will cause relatively more social and economic problems for these countries.
Figure 3: Economic Growth Rate in the US economy from 2009 to 2015, Source: Bureau of Economic Analysis
The US economy could recover from adverse influences of the global financial crisis; however, the domestic demand and the domestic production have not reached the desired level yet. The unemployment rate has increased sharply after 2008 and nowadays; it is around 5% which is quite high for the US economy. The US economy cannot produce enough business opportunities for unemployed people after the global financial crisis. The US economy management is spending the effort to increase the amount of capital inside the country for providing relatively better economic conditions for entrepreneurs in the US. The entrepreneurs are very sensitive to the interest rate. The economy management has kept the interest rate very low to stimulate the investments in the last five years, and recently, for attracting relatively more amount of capital to the country, the Federal Reserve is increasing the interest rate gradually.
Figure 4: Unemployment Rate, Source-Bureau of Labor Statistics
The figure 4 exhibits that unemployment rate has grown up to almost 10% percent after 2008, and nowadays, it is around 5%. Also, unemployment is quite high among the young people. Keeping the unemployment under 6% would be a great achievement for the US economy management considering that the global economy has still not reached its balance, and it might cause the new crisis in the short or medium period.
The current economic policy implemented by the US economy management is not following the classical economic approach or the Keynesian economic theory. The government is relatively more involved with the economic activities. Especially, after 2008, the government has spent a large amount of financial resources for bailing out the large American companies, and the controls over the economy have increased. Therefore, it is not possible to claim that the US economy management is implementing a Keynesian policy; however, the controls over the economy are increased. Many economists argue the issue of controlling economy relatively more. The free markets could not create a sustainable economy and caused bubbles in many markets. The explosion of bubbles has hurt many workers and entrepreneurs.
The open source software development in the industry has been a revolutionary movement. Many software developing professionals from the different countries including the developing countries as well as the developed countries have spent effort for developing new applications and operating systems.
Figure 5: Growth in New of Projects in each Repository by Year
Figure 5 indicates the number of projects run by four large software developing organizations. The global financial crisis has created a negative influence on the software developing business and the number of projects decreased after the crisis. The global financial crisis caused a decline in the budgets dedicated to the software development. Considering that the open source software development collects capital through subscription fees and aids to this organizations, the people who got hit by the global financial crisis cut these expenses. Subsequently, the main financial resources for the software development are not satisfactory.
The software industry could produce almost 3% of the total GDP in the US in 2013, and the industry has provided a large number of works for people. This industry is based on innovations, and each innovation has a multiplier effect on the economy. Considering that most of the products are exported to the other countries, this industry can make an enormous contribution to the US international trade balance. Almost 2.5 million workers are hired in the industry in 2014 inside the US.
The inflation rate has been quite low after the global financial crisis because the domestic demand and the global demand are not enough for stimulating the national economies. Considering that the software industry produces highly priced software, the industry does not have a satisfactory demand after the crisis. This industry hires highly skilled labor to develop software, and after the crisis, the diminishing financial resources for the industry have made it relatively harder to produce new jobs (Trefis Team).
The figure 1 exhibits that Microsoft cannot have a sustainable growth and the fluctuation in its revenue is quite high. Correspondingly, the investment and the employment statistics follow a similar up and down statistics. Subsequently, the software industry and Microsoft are suffering from the insufficient domestic and global demand and fluctuating revenue in the global markets (Trefis Team).
Consequently, the software industry has an essential potential for growing economies for developing a sustainable economy and sustainable employment; however, the global economy still could not recover from the negative influences of the global financial crisis. Taking that the software development is a more fragile industry because of a large amount of R&D works into consideration, this industry suffers a lot from the unstable economic conditions.
Works Cited
Microsoft,. "Quarterly Income Statements - Investor Relations - Microsoft". Microsoft.com. N.p., 2016. Web. 1 Sept. 2016.
Shapiro, Robert J. "The U.S. Software Industry: An Engine For Economic Growth And Employment". SIIA White Paper. N.p., 2016. Web. 1 Sept. 2016.
Trefis Team,. "An Overview Why Microsoft's Worth $42". Forbes.com. N.p., 2016. Web. 1 Sept. 2016.
