Ingredient Branding

How they do it: Microsoft is known for its personal computer operating system software and has a widely known brand in the area of personal computing. Hence, on computers running the Microsoft operating system, Microsoft is also branded to signal the customer what software runs on the device. This is important as the operating system to many customers is as important as the actual device specifications.

Layer Player

How they do it: Especially in the area of personal computers, Microsoft is known as software provider. It’s core competency is to provide the operating system and compatible software such as the Microsoft Office package. However, in most of the cases, the company is not involved in the design and manufacturing of the hardware its software is running on.

Lock-in

How they do it: By providing the most used operating system for personal computers, Microsoft has the advantage to create an environment which prefers their other software solutions such as Internet Explorer or the Office package over competing products. Also, the programs on a Microsoft operating system are ususally not compatible with other operating systems from companies such as Apple or Linux. Hence customers have a barrier to switch to another operating system as they would loose their software programs.

Solution Provider

How they do it: Microsoft offers everything needed to run a personal computer. This includes the operating system as well as support software such as an internet browser of the office applications.

Subscription

How they do it: Microsoft used to sell their Microsoft Office programs for a one-time fee. New versions of the software had to be purchased again. However, they introduced Office365, allowing users to subscribe for a monthly or annual fee and always get the latest version of the Office software on their device. This also allows Microsoft to eliminate product CDs but can distribute its software via downloads from its website.