The ruling that Microsoft Corp. violated antitrust laws will tarnish the brand in the short term but won't do serious long-term damage--even if the company is broken up.
That's the word from brand experts who believe Microsoft's overall image can withstand a seemingly endless storm of negative publicity and probable disciplinary measures. U.S. District Judge Thomas Penfield Jackson ruled last week that the software giant used anticompetitive measures to quash innovation and maintain a monopoly position.
"Microsoft is such a strong, huge brand that it can take several torpedoes and really not be in danger of sinking," said Allen Adamson, managing director of Landor Associates. "It would take a lot to destabilize it."
Like a dismemberment of the company? Apparently not. "Even if the worst-case scenario happens," Mr. Adamson said, "I'm not sure the brand would be significantly damaged." He and others pointed to AT&T Corp.'s continued brand strength nearly two decades after a court-ordered dismantling of the company's former businesses.
John Grace, executive director of consultancy Interbrand, believes Microsoft faces different challenges than do other companies that have experienced brand crises, such as Exxon Corp.
"Microsoft is not in the same position. All along, Microsoft has provided products, service and support that have been more than satisfactory to every user group, so the products they've developed have really been in the mainstream of American computing."
STILL A 'TOUGH COMPETITOR'
Andrew Salzman, VP-marketing and branding at software provider Siebel Systems, and a former marketing executive at Compaq Computer Corp., believes a breakup is unlikely and that the image issue is too early to call.
"Strong brands do manage to endure," Mr. Salzman said. "I don't think Microsoft has been sullied anywhere near what anyone says. It's known as a tough competitor."
Most agree that the way Microsoft behaves in its advertising and marketing communications during the period leading up to the penalty phase or during the appeal process will say a lot about potential damage to the brand.
"The risk is how they manage the brand into the future," Mr. Grace said. "Microsoft must carefully navigate the alligators in the swamp, and its brand is one of the few marketing elements within the control of management."
GATES TALKS TO CONSUMERS
Microsoft last week broke a 30-second TV spot with its chairman, Bill Gates, speaking to consumers about how the company's innovations have improved their lives without mentioning the court's finding. The spot, from McCann-Erickson/A&L, New York and San Francisco, will run for a week in prime-time programming and on network news broadcasts. An open letter from Mr. Gates and CEO Steve Ballmer broke last week. The company said that, except for the one-week TV flight, its corporate advertising strategy will remain the same.
"We are going to continue to focus on the same themes of Microsoft as a technology visionary and innovator that builds software that improves people's lives--those themes are not going to change," said Mark Murray, Microsoft public affairs director.
Copyright April 2000, Crain Communications Inc.