Write 5 pages with APA style on Analysis of Microsoft and its Strategic Challenge. The open-source, free software and operating systems have become more attractive for a lot of businesses. Because they offer IT applications free of charge. In addition, they could be modified and restructured. Some effects on the business of Microsoft were also happened due to a lot of system security holes that are well managed and handled by the Linux applications and operating systems. The continued development of the web has established the foundations of a new web that is acknowledged as web 2.0. The new web 2.0 economy has offered the opportunity to get better online interaction, security, communication, and data handling. It has also facilitated in improving the existing business areas by adding new features, services, and facilities in these systems (Wenzel) & (OReilly). Through the emergence of the new web, each business has tried to develop and improve the business cycle and tried to better manage the business and organizational resources. In this scenario lot of new business, applications came into the market for instance Service 2.0, Enterprise 2.0, and Oracle’s PeopleSoft development and launch in the business market regarding the corporate business management were the main steps toward the shift to deliver Web 2.0. Microsoft has also struggled to cover these areas and developed a new ERP that is acknowledged as Microsoft Dynamics. Its latest version is Microsoft Dynamics 5 that is released in 2008 (Microsoft). Microsoft has also effectively tacked the new business models such as software-as-a-service (SaaS) that has offered a new opportunity to customers pay only for the actual use of applications services. In regard to software-as-a-service, Microsoft has tried to facilitate ISVs to develop their corporate and businesses by presenting programs as well as tools to hold up the delivery of hosted software. By linking the ISVs with distribution a channel like that hosting providers .as well as telecoms operators produce novel business opportunities (Carraro and Chong). In order to carry and maintain effective business operations and management Microsoft needs to develop, maintain, and organize effective technology products in all areas. For example, Microsoft needs to pay attention to the scenario of the new business, operating systems. webs 2.0 based applications and bring new innovation in these areas.