Task:
Please read the abstract below from BusinessWeek and answer the question that follows:
Microsoft's Aggressive New Pricing Strategy
Reviewer: CharlesNewman, PhD
Abstract:
Microsoft's CEO Steven A. Ballmer hopes that extensive price cuts on everything from Office software to Web services will expand the company's market share. Microsoft has long enjoyed Olympian profit margins, using its monopoly power to maintain prices on its software even in tough times. But now, amid a terrible downturn and rising competition, it is shifting to a scrappier approach, cutting prices on a variety of fronts, according to the BusinessWeek article, "Microsoft's Aggressive New Pricing Strategy," (July 27, 2009).
The idea is to accept lower margins in some businesses but boost overall earnings by going after a grab-bag of growth opportunities. These range from expanding its share of big companies software purchases to lowering the price of Office software so consumers in emerging markets pay for it rather than pirate it. While Microsoft expects most customers to pay for the program the way they always have, less powerful, ad-supported versions will be available free on the Web. All of these moves amount to a risky experiment in price elasticity.
By lowering prices, the company hopes to increase sales of existing products while making fast headway with new ones. If the company can gain enough market share to cover its massive costs in Web services and Internet search-particularly its vast data centers-every extra dollar will be pure profit.
Write a one page paper about Microsoft pricing strategy from the point of view of Porter's Competitive Advantage framework.