Analysts expect Microsoft to up ante as case drags on

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Microsoft Corp.'s appeal of its landmark antitrust case is likely to be a protracted affair. During the appeals process, the software giant is expected to spend handsomely on a wide variety of advertising and direct marketing tools.

The company, which two years ago deployed an extensive public affairs campaign for which it was roundly criticized, has bulked up again on lobbying, direct mail, public relations, targeted advertising to lawmakers and other key Beltway-bound constituencies.

Brand experts and analysts say as Microsoft approaches the start of its new fiscal year on July 1, it's likely to increase spending on all forms of marketing, including advertising. With $42 billion of cash on hand, most say it won't be a problem. Microsoft has already touted a plan to support software developers and vendors with $2 billion in incentive programs over three years.

"I think they'll be spending more than usual," said Mark Anderson, publisher of the Strategic News Service, an online newsletter. Mr. Anderson predicted the $2 billion figure could double to $4 billion over three years to support all of the company's marketing efforts.

Microsoft executives declined to specifically comment on plans for fiscal 2001.

Spending increases aside, how should Microsoft act in the second phase of the case?

"Well, what they are going to do and what they should do are probably two different things," commented John Diefenbach, partner at Wolff Olins, a brand consultancy. "I'd raise the question about whether Bill Gates should be the profile of the company . . . should Microsoft become more about a company than a man?"

Mr. Diefenbach said he believes Mr. Gates should maintain a low profile and that the company should focus on products.

Mr. Anderson disagreed with that approach: "I think that the company will continue to project an ever-more statesmanlike image and Bill will be projecting that image as well. You'll see more of it in the future."

Allen Adamson, managing director, Landor & Associates, New York, gives Mr. Gates a B+ for his conduct and performance during the recent flood of media coverage. "The best thing he can do is to say, `Let me tell you about this new technology.' They should put Gates in product ads talking about the products and not the issues."

Jordan Goodman, financial analyst, said polls show the ads Microsoft has run have resonated with consumers. "People admire [Gates]."

Mr. Goodman's advice? "I'd tell consumers, `Don't worry, we'll work this out and your product won't be harmed.' " Further, he believes people are on Microsoft's side, "I don't see the protests, people are not screaming, `We need more operating systems,' " contrary to the Justice Department's bid for consumer choice.

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