Microsoft Corp. made marketing history with the Windows 95 hoopla, delivering on the strategic goal to generate excitement.
The software giant borrowed heavily from classic consumer marketing. But never has any marketer so effectively used such strategies to turn a new product into a global sensation.
Combined marketing expenditures for the 22-country rollout-including spending by Microsoft, retailers, and hardware and software companies-could reach $700 million, estimated Rob Enderle, senior analyst at Dataquest, a San Jose, Calif., market research company.
That spending appears unprecedented in consumer marketing. It is happening with Win 95 only because software and hardware marketers alike are betting heavily that this is the new technology standard.
"It's a defining moment," said Jim Garrity, VP-communications at Compaq Computer Corp.
"I don't think the tactics are revolutionary in the business of marketing as a whole," said Glen Mella, VP marketing-business applications at Novell and a one-time marketing executive at Frito-Lay and Dial Corp. "But it's so rare for the high tech industry."
This global marketing phenomenon used every medium and marketing scheme imaginable, ranging from TV, print and co-op ads to massive in-store promotions, public relations and publicity stunts.
Win 95 became an event because all of the elements lined up. It carries the celebrity of Microsoft Chairman Bill Gates, who this year became the world's richest resident. With the new Microsoft Network online service, the story adds the hook of the trendy Internet. This was a marketing event that cannot be repeated.
Sales success is assured: Win 95 is the new PC operating system standard, the software that will be installed on most new home computers and many business computers.
Microsoft will sell an unprecedented 62 million copies of Win 95 in the next 12 months as upgrades to existing computers and as installations in new PCs, estimates Computer Intelligence InfoCorp, La Jolla, Calif. The package retails for about $100.
Yet Microsoft has created such high expectations for Win 95, and its MSN companion, that it may hit some serious bumps.
At the Aug. 24 launch event in Redmond, Wash., a top marketing executive at a major PC company privately ticked off the technical glitches his department ran into in recent weeks as it switched over to Win 95 on internal computers, noting he spent 2 hours on the phone with a Microsoft manager just to resolve one bug. His company is installing Win 95 on all its consumer models.
A content provider on MSN, meanwhile, moaned that the overloaded system kept crashing last Thursday.
The bugs, though, seem manageable, and MSN already has plans to cut off membership temporarily at 500,000 so it can check out the system.
MSN shouldn't have trouble getting customers to try the service since access is one mouse click away on Win 95, but whether customers stick around with a service still in formation is another issue. So John Williams, MSN's group manager of market development, said MSN will focus on retention marketing at least through yearend, communicating with customers through e-mail and direct mail.
Novell and Microsoft are fierce rivals in software, yet Mr. Mella gladly displayed his word processors and the like at the launch because he recognizes that's the operating system his customers are moving to.
"Every so many years, a catalyst comes along in this industry that is strong enough to convince people to move from where they are. This has that potential," he said.
The Win 95 launch event, an odd blend of carnival and trade show on a soccer field at Microsoft headquarters, included tents featuring products from more than 150 hardware, software and peripherals marketers.
Advanced Micro Devices used the event to announce it's sticking a "Designed for Windows 95" logo on its PC chips. Compaq billed itself as "Lead Systems Partner for Windows 95."
So, Aug. 24 really is the starting point for a series of battles across the industry as customers who have settled on Windows 95 decide whose PC to buy and what software to run.
Dan Ness, director of business development at Answers Research, a computer consultancy in Solana Beach, Calif., believes four major PC marketers-Compaq, IBM Corp., Digital Equipment Corp. and Hewlett-Packard Co.-trumpeted price cuts days before the Win 95 launch specifically so they would be top of mind when the software's big day arrived.
"This is a very well-calculated gamble to cash in on this early Christmas," he said.
Media clearly are cashing in. At Ziff-Davis Publishing Co., four major computer magazines are up an average 61% in ad pages for this September vs. a year ago. Microsoft itself accounts for only a small percentage of that spending.
It would be hard to find a computer industry company not aligning itself with Win 95. IBM is defending perennial also-ran OS/2 software in ads, yet it on Aug. 24 announced it also will offer Win 95 on PCs.
"That really completes the licensing of Windows 95," Mr. Gates said.
Apple Computer, meanwhile, is running anti-Windows ads and introducing powerful new notebook computers, yet its Claris software division was at the launch hawking Win 95 software. Mr. Gates insisted he's not waging a battle of Win 95 vs. Mac. He doesn't need to; the biggest challenge to the success of Win 95 is inertia among users of the old standard, Windows 3.1.
"We don't think of the Macintosh as a competitor," Mr. Gates said. "..... This is a growing market, and we're going to do our best to make sure that [Win 95 and Mac] are both products that thrive."
At the invitation-only launch, it was hard for the 2,500 customers, computer executives and journalists not to come away with the impression that Win 95 is an event for the industry, not just Microsoft.
But it also was easy to come away convinced that Microsoft will be the biggest winner.
With Win 95, Microsoft is simultaneously rolling out new versions of Microsoft Office, the top-selling business software suite, and Microsoft Money, an also-ran finance program that Microsoft initially will give away to drive market share. Key rivals are months behind in bringing out complete Win 95 versions of their products.
Win 95's romp in the consumer market is assured. Many observers, though, wonder how quickly business will move to Win 95 and whether a lot of companies will instead move to Windows NT, a hot operating system for servers and workstations that's expected to be updated next year. But 95 or NT, it's a Win/Win for Microsoft.
The Win 95 launch shows how discipline and attention to detail make Microsoft so successful, and so feared. Product packaging, point-of-purchase materials, advertising and everything at the launch event-signs, cups, the polo shirt worn by Mr. Gates-carried Win 95 design elements like an on-screen start button and a blue-sky-and-clouds motif. Many people asked how much Mr. Gates paid for the perfect blue sky over typically overcast Seattle.
Microsoft went so far as to ask marketers doing demos to use Microsoft-brand keyboards and computer mice. Davidson & Associates, an educational software company, readily agreed when a Microsoft staffer said the company could keep the boards and mice after the event.
Microsoft-style intimidation also was in the air. After the invited guests left, marketers displaying products were required to stick around to do a private showing to Microsoft employees.
"Absolute power," one visitor marveled. "It's kind of scary."
The Win 95 introduction is not just a big marketing story, but one of the biggest general news stories of the year, rivaling TV news coverage of the Bosnian war, Walt Disney Co.'s takeover of Capital Cities/ABC and Kirk Kerkorian's takeover attempt of Chrysler Corp.
According to a Medialink Public Relations Research analysis, the Win 95 launch has received 345 U.S. TV news stories since Aug. 17, when the bulk of the coverage kicked off, compared with 432 for the war in Bosnia during the same period. Disney received 558 stories since announcing its takeover of Cap Cities on July 31 and Mr. Kerkorian's takeover bid for Chrysler has received 319 stories since April 12.
Among TV newscasters, Microsoft Network partner NBC appears to be showing the greatest bias, according to Medialink. Since Aug. 5, NBC and its CNBC cable channel have run 54 individual news stories, or 70% of the total coverage on Windows 95 by the major network news organizations, including ABC, CBS, CNN and Headline News.
Contributing to this story: Alice Z. Cuneo, Joe Mandese, Laurel Wentz, Kathy Catrambone, Michael Wilke, Charles Waltner, Jennifer DeCoursey and Raymond Serafin. Also included is information from Daily World Wire reports.