Challenge for Microsoft: Putting its brand to work

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In the wake of the antitrust case that could result in its breakup or reorganization, Microsoft Corp. faces the enormous challenge of mapping out an effective brand strategy.

The open-ended "Where do you want to go today?" mantra that some observers predicted would be scrapped remains; but the question is an ironically vexing one for Microsoft itself.

"This is a brand that's in perilous water," said Watts Wacker, futurist with FirstMatter, and co-author of "The Visionary's Handbook." Microsoft's image was tarnished not only by the antitrust suit but by its conduct during the trial, according to Mr. Wacker.

MORE COMPETITION

The damage to its corporate reputation has coincided with an ever-more competitive business climate. Microsoft faces intense pressure from younger players who embraced the Internet more quickly.

The company has reorganized to sharpen its focus over the last few months -- perhaps even as a pre-emptive strike against a government mandate -- into three broad groupings: desktop productivity solutions, operating systems and Internet businesses.

Company executives maintain that software remains the core of the brand.

The company's most recent ad campaign -- "The Business Internet," from McCann-Erickson Worldwide, New York and San Francisco -- seeks to position Microsoft as a partner that can help anxious entrepreneurs make sense of e-business. As such, Microsoft hopes to become the Internet brand for e-business.

"The Business Internet" theme is appropriate during a time of uncertainty, but Microsoft's genuine brand promise, at least to consumers, is compatibility, said Sam Hill, president of Helios Consulting.

"I think if they split it into three companies, they fundamentally have an issue with offering the real brand promise; that is a huge issue for them," he said.

Yet some industry observers see "The Business Internet" theme as more of a product pledge. "A [brand] promise is not the same as a slogan," Mr. Wacker said. "A product is an artifact of the truth of a promise; a brand is a promise. My question to Microsoft becomes, `What's yours?' "

A breakup or reconfiguration of the company would have a profound impact on Microsoft's product brands, as well as its overall corporate brand.

NOBODY KNOWS

"The issue is nobody really knows what is going to happen," said John Rubino, client managing director for brand consultancy Landor Associates, Seattle, which created the identity system for Windows 2000 and other Microsoft products.

"So far, everything that we've done and will continue to do, is driven by the guidelines, visions and attributes of the existing Microsoft corporate brand, product brands and new product brands," he said.

Bob Herbold, Microsoft's chief operating officer and brand steward, and Steve Ballmer, the company president who recently was also named CEO, have empowered divisions over the last few months to make their own marketing decisions, according to Mr. Rubino and others who work closely with Microsoft.

"Microsoft still has a strong corporate marketing group that owns the overarching brand, but I think they're defining themselves much more by their key brands than simply by the corporate brand," said a person close to the company.

TOO UNWIELDY

Many observers believe that some type of reconfiguration is more than likely, even if the government doesn't demand it.

"It's become so big and unwieldy. When a brand system gets too large, the meaning of it becomes very diffuse," Mr. Hill said. "There are brands that are so big that you just don't know what they mean anymore."

An executive from one of Microsoft's fiercest rivals agrees.

"The brand is getting more and more diluted everyday," said Mark Jarvis, senior VP-marketing for Oracle Corp., who characterized Microsoft as a "deer in the headlights."

"I think Microsoft's brand is so big and ubiquitous, and stretches across so many constituencies that it probably makes sense to form some smaller brand systems," Mr. Hill said.

Others put it another way. "The challenge to the Microsoft brand is less what the government might or might not do to the company, than where the Internet is going to push the category vis-a-vis the role of the PC," said Allen Adamson, managing director, Landor Associates, New York. In that way, Mr. Adamson maintains, the AOL/Time Warner merger poses a bigger potential threat in terms of content delivery systems and the brands that control access to them.

New initiatives -- including a mammoth Windows 2000 push, an aggressive move into wireless and mobile access strategies, and plans for software delivery via the Web -- make it all the more important that Microsoft address the branding issue.

"All successful brands need to change in order to stay relevant," Mr. Adamson said. "[Microsoft has] the resources to really do almost anything they want to."

Mr. Hill agrees. "I think they should welcome the opportunity to step back and think about what they want to do."

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