Microsoft Plans Blitz to Fend Off Apple, Google

Fears Rivals' Cooler, Cheaper Consumer Products

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Microsoft bigs have long been fond of poking fun at competitors, like last year when Bill Gates publicly played down the threat of Google's word-processing program, saying it had fewer functions than even the bare-bones text editor that's part of the Windows bundle. But in Redmond, ridicule is quickly giving way to worry.
Microsoft pitch is being pushed at the highest levels.
Microsoft pitch is being pushed at the highest levels. Credit: Timothy A. Clary

As it feels the heat from competitors such as Apple and the aforementioned search giant, Microsoft is planning an ad carpet-bombing to hype its consumer products beginning next year. Company executives are hearing pitches from four agencies -- including agency of record McCann Erickson and industry darling Crispin Porter & Bogusky -- for a campaign backed by a $200-million-to-$300-million media blast.

Microsoft isn't talking about the pitch, but agency executives briefed on the particulars say it's being pushed at a high level in Redmond -- including by Mich Mathews, senior VP-central marketing group -- and is aimed at increasing preference for a suite of products that are thought to be "taken for granted" by consumers and that risk losing users to the cooler alternatives offered by Apple or the free ones developed by Google. Part of the mission will be to persuade consumers to switch out of those rival programs by touting Microsoft's reliability, whether on a desktop, the web or a mobile device.

'Product challenge'
But why would the marketer drop so much money advertising products everyone uses every day and therefore knows firsthand just how well they do or do not function? Even one of the briefed executives said, "This is not an advertising problem."

Robert Passikoff, founder-president of the consultancy Brand Keys, agrees. "It's a product challenge," he said. "The consumer offering isn't integrated. It appears cobbled together."

Not helping matters are lackluster product launches including Microsoft's Vista operating system, which met with reviews that were mixed at best, notwithstanding the massive marketing spend backing it. Vista's been nagged by reports of consumers buying it only to quickly switch back to XP. Contrast that with Apple's recent launch of Leopard, the latest installment of its Mac operating system. "Leopard: Faster, Easier Than Vista" was the headline for Wall Street Journal columnist Walt Mossberg's glowing review, the sentiments of which were echoed by other tech tastemakers.

Meanwhile, Microsoft's rollout of Windows Live, the umbrella brand for its suite of largely web-based services, has been criticized for being fragmented and poorly explained. Consumer take-up varies wildly on a service-by-service basis. For instance, the company's e-mail and instant-messenger programs are very popular, while Microsoft has struggled against Google and Yahoo in the search arena. The forthcoming campaign is likely to tout the reliability of these services, equating them to Windows and showing how they all integrate, according to one executive familiar with Microsoft's plans.

The bitter irony for Microsoft is that it's trying to use its vast media budget to buy the kind of consumer affection that Google has earned with a marketing spend of next to nothing. Rather than advertise, Google has relied largely on smart, simple products that organically generate word-of-mouth. Google, of course, has had its product bombs, but those typically make less noise that Microsoft's. Plus, its core business -- revenue from search advertising -- is booming, as are some of its web-based applications.

Google's reach
Google Apps, which has both free and paid versions, boasts a half million small businesses as customers, and two dozen to three dozen Fortune 500 companies are kicking its tires, said Rajen Sheth, senior product manager for Google Apps. Apps is also marketed to educational institutions, both in the U.S., where Arizona State University is using the suite, and internationally; 11 million Egyptian students are using the software.

"It's tough to tell overall market share, but our growth rate has been tremendous," he said. "We think this is a revolution in how computing is done, in terms of outsourcing computing to a service provider like ours and web-based applications."

Then there's the other front in Microsoft's defense of its empire: Apple, which has been putting its media dollars behind a comparative ad campaign aimed at Microsoft. Its first wave consisted of popular ads starring a hipster "Mac" that mocks a nerdy, Bill-Gates-inspired character. Recent banner ads show "PC" firing up a sign beseeching consumers, "Don't Give Up on Vista." The marketer's design-driven cool has led to a case of "Apple envy" at Microsoft, one executive said.

On a financial basis, Apple and Google shares both have outperformed Microsoft's in recent years. Google especially has been a Wall Street golden boy, with a stock price approaching $700 and market capitalization of $216 billion.

It's unclear when a decision will be made in the review. Besides McCann and Crispin, Fallon and JWT are in the hunt for the business.

Contributing: Abbey Klaassen, Rupal Parekh, Alice Z. Cuneo
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