Consider This CHAPTERCASE 5 GIVEN MICROSOFT'S LACKLUSTER performance since 2000, the once dominant company is now in turnaround mode. Over time, its competitive advantage turned into a competi- tive disadvantage, lagging behind Apple by a wide margin. Satya Nadella's strategic focus is to move Microsoft away from its Windows-only business model to compete more effectively in a "mobile first. cload first world, the mantra he used in his appointment e-mail as CEO. Under his lead- ership. Microsoft made the Office Suite available on Apple iOS and Android mobile devices. Office 365, its cloud-based software offering, is now avail able as a subscription service starting at $6.99 per month for personal use and $69 99 for business use Software applications can be accessed on any device, any time, with online storage, combined with Skype's global calling feature Yet. Nadella needs to work CEO DS have a com the approw hard to ensure Microsoft's future viability because Win dows and orice were cash cows for so long. They are still generating 40 percent of revenues and some 75 percent of profits, but both continue to decline. The problem he fuces is that the gross margin of "classic" PC-based Office is 90 percent (due to Microsoft's "monopoly" position), while the gross margin for Office 365 is only around 50 per- cent. The cloud computing space with Amazon, Alphabet (Google), Apple, IBM, and others is fiercely competitive." Microsoft 3. Microsoft to Micros before N w und has for why no 4. How compe genera Questions 1. Why is it so hard to gain a competitive advantage? Why is it even harder to sustain a competitive advantage? 2. Looking at the different ways to assess competitive advantage discussed in this chapter, does Microsoft NOTE ANI able in Con in- of ces is le er- et have a competitive advantage over Apple using any of the approaches? Why or why not? In which approach is Microsoft looking the best"? Explain. 3. Microsoft CEO Satya Nadella has made drastic changes to Microsoft's strategy. What was Microsoft's strategy before Nadella was appointed CEO in 2014? What is it now under his leadership? Do you agree that Nadella has formulated a promising business model? Why or why not? 4. How much longer do you think Apple can sustain its competitive advantage (not just over Microsoft, but in general)? Explain. NOTE: A financial ratio review related to this ChapterCase is avail- able in Connect