MICROSOFT'S SMALLER RIVALS GIRD FOR BATTLE

By Published on .

Following an unprecedented spate of software mergers, newly emboldened marketers are preparing to give monolith Microsoft Corp. a run for the money. And the result is likely to be a boost in ad spending on both the product and corporate advertising fronts.

There have been at least a half-dozen merger deals in the past six months, and software sellers are now building product arsenals, brand power and distribution strength. Those elements are key to survival in the growing but profit-squeezed industry and to countering Microsoft's awesome momentum.

Last year, Microsoft claimed 43.6% of the $8.3 billion worldwide personal computer software market, according to market researcher Dataquest, San Jose, Calif. And now Microsoft is contemplating an estimated $40 million global corporate campaign (AA, April 4), one more threat to the industry.

Microsoft increased its market share by 6 percentage points last year alone, a growth record that has left many weak players in the dust. Yet market watchers say Microsoft does not, and will not, ownthe market.

More realistically, the software market appears to be shaping into a Big 3 of Microsoft; Novell and its acquired WordPerfect Corp.; and Lotus Development Corp., vying with smaller but vibrant niche players.

"You might call it the bikini theory," said Brent Williams, a software analyst with International Data Corp., Mountain View, Calif. "You have a top, you have a bottom, but the middle goes away."

Among the deals announced recently or in the works are: Electronic Arts' buy of Broderbund Software; Pearson's acquisition of Software Toolworks; the merger of desktop publishing pioneers Aldus Corp. and Adobe Systems; Microsoft's purchase of Softimage; and Symantec Corp.'s planned buy of Central Point Software.

At the very top, Microsoft last week reiterated that it hadn't decided whether to take the plunge on its first worldwide corporate campaign. Liz Welch, general manager of corporate marketing, said the company had sent a questionnaire to upwards of 20 agencies. Among those believed to have been contacted are Ammirati & Puris, New York, and Goodby, Silverstein & Partners and Hal Riney & Partners, both San Francisco. Ogilvy & Mather, Microsoft's U.S. product agency, is pitching the corporate account through its New York office.

Industry watchers say such a campaign makes more sense for Microsoft than other software companies. In part, that's because Microsoft's product line has become so broad, ranging from PC games to high-end computer operating systems. Also, Microsoft is starting an aggressive move to display its products together in such chains as Wal-Mart Stores and Lechmere.

International Data's Mr. Williams said he sees no reason most software marketers would have to react to a Microsoft megabucks branding effort.

He likens software marketers to movie studios or book publishers, where the product is more important than the company.

A corporate campaign may make as little sense as the much-ridiculed "We're Beatrice" campaign once fronted by Beatrice Cos. "Who cares?" Mr. Williams asked.

In this article:
Most Popular