Can Microsoft Sell Value in Tough Times?
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News Analysis. Rather than walk away from economic crisis, Microsoft is embracing it as a sales opportunity. |
[Editor's Note: This is the first of two posts looking at what Microsoft can offer cash-strapped businesses during the economic downturn. The second is about the Microsoft Tax.]
Microsoft made a strong value-oriented sales pitch overnight with launch of the next iteration of its People Ready marketing campaign: "It's Everybody's Business." Microsoft's message is simple: There's no better time than now to invest in the future.
The question the blog title asks should really be for open source, which conceptually should have stronger appeal during tough economic times. Nothing beats free, right? But it's Microsoft and not open-source proponents that is taking industry and marketing leadership, calling businesses to continue investments even in tough times. Microsoft is setting the right tone, for itself, its customers and partners.
During last week's Consumer Electronics Show, Microsoft CEO Steve Ballmer told attendees:
As this recession ripples across the globe, it feels like we've entered a period of reduced expectations, a time when we may be tempted to temper our optimism and scale back our ambition. But no matter what happens with the economy, or how long this recession lasts, I believe our digital lives will only continue to get richer...I believe that companies and industries that continue to pursue innovation during tough economic times will achieve a significant competitive advantage positioning themselves for growth far more effectively than companies that hold back.
Steve made Microsoft's investment position clear:
Microsoft continues to focus on R&D, investing more than $8 billion last year alone. And we will continue to invest more than ever. Why do we continue to invest, and why do I continue to strike this optimistic chord? Because at the end of the day, it's the power of ideas and innovation that drive us forward regardless of the economic environment. And the opportunity we possess, we in this room, to truly change people's lives though technology has not diminished in any way, and is in some sense more powerful today than ever before. There is so much more opportunity ahead of us.
Perception Is Everything
What a strange role for Steve Ballmer, of all people, to take: Economic optimist, at a time when bulls are gouging bears to the death. But somebody has to raise a shout of hope, and, of course, Microsoft has self-benefiting motive: Sales of software and services. Maybe, but Steve is right. Hard times are good times to invest and to take risks. Business is as much about perception as execution. Those businesses that are perceived to be strong, even if weak, can instill convince in potential customers and partners. Positive perception can make the difference between utter failure or continued success.
I'll retell a story from an October Apple Watch post: My uncle brags about a Houlton, Maine, bank that survived the runs that closed countless institutions during the Great Depression. Houlton is the Aroostook county seat and located about 50 miles south of my hometown.
Mainers are known for their cunning and ingenuity, which the one bank manager demonstrated with gusto. He placed security guards outside the main window, which he filled with stacks of 100-dollar bills. People could walk up to the bank and see their money, know that it was safe. The tactic prevented the kind of run that closed most other banks in Maine during the early 1930s.
The bills were 1-denominations with hundreds only on top. The bank manager only created the perception that people's money was safe, which it probably was as long as they believed it so. Their disbelief would have led to a run that would have eventually closed the institution and taken their savings with it.
Because of postiive perceptions, the bank profited from its competitors' misfortunes. My uncle claims that only one other Maine bank survived the Depression. Those two banks built up new business from the wreckage of others.
Microsoft has nearly $25 billion in the bank, huge assets and large customer base. The company is reasonably well positioned to push through even a prolonged economic downturn. But many of Microsoft's customers and partners are more vulnerable. The company is right to tell at least some of them to bulk up infrastructure and external perceptions. The time to compete tougher is during tough times.
What's the Value to You?
Value marketing is something Microsoft knows well. The company started out as the cheaper alternative, first with its PC clone partners as low-cost alternative to mainframes and later as more affordable choice to products like Lotus 123 and WordPerfect. Anyone else remember when WordPerfect for DOS cost 500 bucks, just for the word processor? Microsoft has long positioned itself as the value alternative. Last week, Steve reaffirmed value, and it's quickly becoming the theme permeating most, if not all, Microsoft marketing during the 2009 release cycle.
Microsoft took the value position when in November launching 2009 versions of Essential Business Sever and Small Business Server. Other value-marketing examples: Zune Pass pricing and last week's anti-Mac Apple Tax guerrilla-marketing outreach to bloggers and journalists.
Then there is launch of the new "It's Everybody's Business" campaign, which will span online, print and television. The theme is chock full of surprising connotations that extend farther than just value and investment.
For example, the worldwide economic crisis has many causes, with lacking transparency being one of them. Many financial institutions, particularly mortgage lenders and investment banks, weren't transparent enough about the risks or the kind of investment bundles that they traded. There is growing demand for accountability, increased transparency. It's everybody's business what your business is doing.
In my 2009 advice to Microsoft, I recommended: Advertise everywhere. The economic downturn will have all kinds of companies pulling back marketing dollars. Microsoft should spend even more. Recession is opportunity for smart companies with strong brands and loads of cash to maximize marketing effectiveness.
Microsoft is doing two things right here: Encouraging investment and advertising about it. Who else is talking about value or making technology investments to come out ahead on the other side of the economic downturn? You tell me. I hear Microsoft and nobody else, which I find strange. As I expressed in the third paragraph, shouldn't open-source supporters be selling a value message?
Even Google has missed the opportunity, which is strange considering how much of its stuff is given away for free. Economic crisis should be opportunity to advertise the value of free products and services when companies like Microsoft charge so much more. But Google isn't yet taking a leadership role here. For that, Microsoft and its partners can laugh all the way to the bank, where stacks of bills fill the plate-glass window.
[Please send your tips or rumors to watchtips at live.com].
Comments (19)
I saw a very strange commercial for this during 24 last night. Started as a Coke commercial and somehow morphed into an MS ERP commercial. Confused me. I guess a lot of ERP people must like 24. Given the plot of 24 involved terrorists taking over all the US government computer systems (especially air traffic control), perhaps security might have been mentioned. On the other hand the systems taken over appeared to be Unix, perhaps hence the MS sponsorship.
Posted by smist08 | January 12, 2009 2:54 PM
Of course they can sell it. Microsoft has become a sales organization. They are responding to the current economic problems with a rather unimaginative sales pitch. There is basically nothing different or more advanced in Microsoft's pitch than in the value ads currently returning to vogue with supermarkets.
Isn't the real question whether Microsoft can DELIVER value in tough times? Since they already enjoy a near monopoly position in many markets they are competing against themselves. Do their new product versions really deliver the value to warrant the outlay for upgrades?
Can IT justify Software Assurance when the company is strapped for cash? If you're already running a lean IT organization and your budget is cut then your choice to maintain across the board SA probably means cutting staff. So do upgrades to Windows 7 from XP deliver enough value to warrant cutting the muscle in your staff?
Posted by Phil | January 12, 2009 4:21 PM
Joe says:
"Can Microsoft Sell Value in Tough Times?"
Microsoft has basically renamed Vista with a few minor tweaks, and pushed it out the door. Vista/2 or Seven, will follow the same selling pattern as did Vista before it.
It will come on OEM machines, pre-installed, you know, the Microsoft Tax. That is how most people will get it, as upgrading an older XP machine, will mostly not have the drivers for Vista/Seven. Plus, those older XP machines may also not have enough resources to run the "newer" Vista, named Seven. So expect the full version in a box of Seven to not sell a whole lot of copies, the same way that Vista disappointed M$.
Where M$ might gain in sales on the full standalone boxed sales of Seven, is from those with Vista, that want to upgrade. There, they might see some gain.
Seven seems to have actually increased the amount of DRM in it, and long run, this once people find out, cannot help sales. At least this is what I read in the other post here at MS Watch, with the TV Cards, etc.
It will be interesting, to see how well Vista/2 (Seven) will work on the Netbooks. Also, the fact that M$ is releasing this OS in a middle of a very bad recession, cannot help sales.
Posted by chips b malroy | January 12, 2009 7:20 PM
There's a big difference between value and cheap. You get Windows for $60 with a PC, which is cheap but you have to pay for all the extras like virus protection, reinstalling every 18 months, weird errors and failures, not to mention being locked in. That is not good value.
Posted by billybob | January 12, 2009 8:00 PM
@Joe;
Come on, my friend. Microsoft is an outstanding Marketing Company. Sure they make software, but they market it like no one else on the planet. Maybe that's why "chips b malroy" incessantly uses the "$" in every redundant reference he makes.
Joe, do we know how much Microsoft is planning to sell Vista SE for?
Needless to say, Windows Seven will sell, and sell the hell out of it. Will it top XP's 65% of the market?
Not right away, and the recession is of course, going to greatly impact it, no matter if it is the savior of the universe as far as anyone maybe concerned.
Linux in the "cheap seats" where the lightening is poor, and that's at best, would really hit a home run at the expense of our economy, but it won't. A free alternative for the last two decades will rise up on in a few point percentages, but that is all I personally see.
Now just think if Linux had some sort of magnum star marketing campaign, you know, spend millions, and let's not go overboard as say that it can compete against "Billions" like Microsoft can. Well, then, we maybe seeing a real competitive edge as Linux would be entering a brightly lit ring against a champion of Marketing.
America loves and underdog, and I for one do, so Linux, you've been around twenty years, your not a baby any more, shut up or pay the price and launch a "real" marketing campaign against Microsoft!
Besides, I love a great fight, I really do. Of course, Linux would have to generate real revenue, serious bucks, and how will they do this?
1.) Sell Linux Distros... That's for starters. Xandros which in my opinion is a wonderful Linux base OS costs as much as XP Professional, and a damned good one --
Hey, how about all the fans of Linux, cut Ubuntu a Tax deductible donation for marketing?
Just a thought, I'm not picking on the good ole' Linux folks. I am just saying, perhaps, "Linux, put your money where your mouth is at, and start some heavy swinging!!!"
Posted by Draoi Dubh | January 12, 2009 10:38 PM
Why is everyone referencing Vista and 7?
That's not what this campaign is about. It's about the essential kits, the SMB packages, the cloud offerings.
Microsoft is more than just Windows.
I find it kind of interesting to see that the only people usually(!) replying here all see stuff from a consumer point of view. This is purely aimed at businesses. That's where MS get's the bulk of their money. And for the large enterprises they already have their foot between the door. They are aiming at SMB's here.
Posted by Charlie | January 13, 2009 1:49 AM
Quote Dranoi "Now just think if Linux had some sort of magnum star marketing campaign, you know, spend millions, and let's not go overboard as say that it can compete against "Billions" like Microsoft can. Well, then, we maybe seeing a real competitive edge as Linux would be entering a brightly lit ring against a champion of Marketing."
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Yep, youre right, because MS spends millions on advertising its the better system and of course people are all mindless sheep and will not think to do their own research.
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There are however some strange people like myself that dont judge a piece of software on how well marketed it is. We judge it on how it performs for us. Moving onto cost, the fact that Linux is free, is not a selling point (as the "selling point" is that it is a solid system) its more of an added extra. I moved to Linux because of experience and research, not some advert telling me too. Whilst there will always be people who can be led in this way, I think youll find the majority are far more savvy and will actually research themselves.
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If Linux was a proprietary platform, Id be buying it over Windows. Thats for me, others may differ.
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Whilst Dranoi is making comments about marketing he seems blissfully unaware of the series of recent failed MS ads with a US comedian in them and this marketing campaign of MS looks pretty flat when you see the public feeling and the allegations of paying bloggers to post favorably about MS. Even MS wont mention Vista in their adverts, so what does that say about previous Vista claims? were they lies? did MS know the system was rubbish put still chose to promote it? Why is it, even our die hard Vista PR people seem to want to distance themselves from the V word?
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Dranoi also seems blissfully unaware of how most distros/open source works. The point is you dont sell them. The idea is that contributors donate their time (in many cases) for free, with no other reason other than an overiding belief that software should be free and functional for everyone.....what a disgusting thought for proprietary pushers?
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Quote "America loves and underdog, and I for one do, so Linux, you've been around twenty years, your not a baby any more, shut up or pay the price and launch a "real" marketing campaign against Microsoft!"
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There is no underdog, Linux has been very happy all these years without being seen as a victim, and now, as its popularity has been increased, that IMO is why MS supporters are trying to cheapen it. Youre little theory there would be a dream come true for MS. The reason (IMO) MS cannot fight Linux is, as Roy puts it "more than one neck to throttle" How can MS fight something which is free and people donate their time to? If Linux was an off the shelf product it (IMO) would make it very easy for MS to destroy it and lessen the choices for the home user.
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Dranoi I dont think Linux wants your pity, its not a victim, and even if the migration towards Linux based systems is slow, IT MAKES NO DIFFERENCE TO US.
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Why are you so concerned with Linux? Why should it matter how it goes about attracting users? Why do you think this is an issue of competition? Why cant Linux (and MAC) simply be seen as an alternatives? I would never seek to force anyone to use Linux. I would hope they try it, but if they want to stay with Windows thats fine by me.
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One thing though that I really do hope youre right on: "A free alternative for the last two decades will rise up on in a few point percentages, but that is all I personally see."
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Like I say, I really hope that is correct. We've seen in products like Vista/Zune/Silverlight what happens when a company is "marketing well" and has mainstream usage. Thats why I use Linux.
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Check out for yourself all of Dranoi's "Underdogs" at http://www.distrowatch.com
Posted by Goblin | January 13, 2009 5:44 AM
@Goblin:
I think you have about nicely summed things up. And since this article of Joe Wilcox is about "VALUE", let me add some more comment here.
First of all, I don't see the "Value" for Windows users in taskbar and UI changes. M$ would have been better off making changes where it was needed, like improving the internet security. While its not funny to laugh at others misfortunes, still I found it ironic that Joe Wilcox had to put off upgrading to Seven because, quote, "I would have upgraded on Wednesday night or sometime Thursday, but my main test machine caught a nasty virus."
That was the major piece of Value that should be included in Windows Seven, but is not.
Everything else, is like the trinkets that were traded for Manhattan Island, pretty and useless.
I do see the Value in Linux. And yes I would buy it and have supported it. Having a system that I do not have to be paranoid about the next piece of Malware to infest is a joy. Not having to constantly update, scan, defrag, search the web for false positives, is another plus, and a saving in time and frustration. Not seeing the BSOD or some failure to boot up, and having to have another machines around just to search why the windows machine will not boot up this time, to trouble shoot it, Priceless. It more stable than any Micro$oft windows version. Also, not having to reboot the machine so ofter is a plus, Linux does not seem to have all the memory leaks as XP did. Sure, they going say that got all those fixed now, like they have been saying that with every release of windows.
The free cost of community distros, that value too. And for some, I guess that could be a reason, especially in the 3rd world poor countries. As far as free, I do see Value in the 20,000 apps and games in the debian repo's that are also free to install one your debian based system. Mepis, Sidux, are some based on debian. Ubuntu has there own repo's based on debian. I do see value in installing as many apps/games as I want at one time, and very easy with synaptic package manager, available in most debian based linux distro's. Also, I see huge value in the fact that many Linux distro you can download for free and many of these have LIVE cd/dvd's. The value is you can run by booting up to a live cd and check to see if your hardware is supported before you ever install. Windows, cannot do this.
Also I see value in most Linux distro that come with either OpenOffice, KOffice, or Abiword, already installed. Save you a lot of bucks over that other one that spies on you.
Chips recommends to try the free, Mepis, PCLinuxOS, Mint, Unbuntu, Sidux at distrowatch.com
Posted by chips b malroy | January 13, 2009 12:20 PM
@DD
I read your comment and have to agree with you. Nowhere do you say that "Microsoft is a better system." Or that Linux is. I also noticed that goblin had to comment and take it personal that you attacked Linux. He is so utterly and shamelessly predictable.
The article was clearly marketing, not religious debate by all people, "Goblin."
Have you ever notice how these people act like a pack of dogs in for any attack?
For me, it's not that Linux is a bad OS, no far from it, it because of the likes of people like "Goblin"
Linux as it is set up, can't compete against a Herculean brute in marketing like Microsoft. Goblin should of spent more time actually reading your comments. Obviously you struck a cord with this Linux simpletons.
You're right, the Linux community should put there money where they're mouth is and cut Ubuntu a check for advertising!
Posted by Dave | January 13, 2009 1:33 PM
"Linux as it is set up, can't compete against a Herculean brute in marketing like Microsoft."
Palm chose Linux over Windows Mobile as a base for their new Mobile OS, so it must compete on some levels.
Posted by billybob | January 13, 2009 2:11 PM
@Dave
Quote "Or that Linux is. I also noticed that goblin had to comment and take it personal that you attacked Linux. He is so utterly and shamelessly predictable."
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Shame? You have the nerve to talk about shame when we have had deceptions here from those with a pro-MS viewpoint?
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Nice, "Obviously you struck a cord with this Linux simpletons." The insults start, and proves when I actually hit some points, the only argument people can come up with is an insult.
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Where did I attack Dranoi? I dont believe I insulted him, like you have tried with me. What does that make you?
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Take it personally? What did I take personally? If I am so shamelessly predictable, then the following link wont surprise you:
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http://boycottnovell.com/2008/12/29/jimmi-hugh-wikipedia-censorship-on-ms/
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and check out the allegations against MS and their practices in regards to censorship. Much like what we saw on Microsoft Watch recently, when facts are confused by those who have other agenda's.
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Theres so much good stuff to quote in your little post "Dave" although, im unsure who you are talking to when you say @DD. I was talking with Dranoi, Im not sure who you are speaking with. Maybe you could clarify?
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Quote "The article was clearly marketing, not religious debate by all people, "Goblin.""
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Priceless. Im not sure where my debate has ever turned religious, maybe you could enlighten me?
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As always, I challenge you to highlight the parts of my posts that you have outlined in your response. Its difficult for me to respond when I dont know what part of my post you are talking about.
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I get the impression, that just like the posters that had to be deleted by Joe for abusing the system, you seek to cheapen my view, not with hard facts or anything you can quote but by generalizing and "fudging" the issue.
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Stand by your convictions and quote me if you have a problem with anything I say.
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Could you please also explain how I am "so utterly and shamelessly predictable."
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Id love to know. In the meantime, please come back and respond. In the spirit of fairness this thread will be linked on my blog so that others can read it and decide for themselves.
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and on a final point, I would suggest you "practice what you preach" If you are going to claim I am a simpleton, then Id suggest you read what you are typing, lest you come across as that which you seek to condemn others as.
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I quote our friend Dave "Goblin should of spent more time actually reading your comments. Obviously you struck a cord with this Linux simpletons."
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How can the post strike a cord with me if I hadnt read his comments properly? That doesnt make sense.
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LOL thanks very much for your post. Id suggest in future you check my blog, Ive actually given some posting pointers for people like yourself who dig themselves into holes.
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Best regards.
Goblin "The Linux Simpleton"
Posted by Goblin | January 13, 2009 5:42 PM
Goblin
I don't think Draoi Dubh was attacking Linux, but challenging the marketing aspect to go after Microsoft in reading his comments. He was not saying anywhere in his or her comments that Linux is a terrible operating system. It is "viewed" by many as an "underdog" as far as the marketing aspects goes, and in my opinion, he's right in consideration.
"Linux in the "cheap seats" where the lightening is poor, and that's at best, would really hit a home run at the expense of our economy, but it won't. A free alternative for the last two decades will rise up on in a few point percentages, but that is all I personally see."
I see this too in the marketing arena. I think many others do too. I don't think Draoi Dubh is "blissfully" missing anything in his comment. Seemed pretty clear on what he said in his view point in the marketing arena. You presumed too much in what he or she wrote, hence the long comments on your part -- Perhaps, and mind you, I appreciate the information in it.
Goblin, right or wrong, Microsoft is more of a marketing company than software in an aspect which I agree with Draoi Dubh.
I really do think that perhaps Draoi Dubh is challenging Linux to go after Microsoft, and what's so terribly wrong with that? Competition is a good thing. Generally speaking, the public doesn't know or care about Linux, and ultimately, who is responsible for that? Microsoft?
Nope, Linux's lack of marketing, You see folks like you, Draoi Dubh, and other "techies" read up, test, evaluate, and through various mediums, "advertise..." but the general public doesn't go to places like this to "educate" themselves. I wouldn't say because they're stupid, no sir, just not informed of the other possibilities and solutions out here and how is the public, the general public going to "hear" about these?
People in general are complacent, right or wrong, Microsoft is advertising their wares through the popular mainstream media, and again, Draoi Dubh is right to challenge the Linux community on that, and only that aspect. Least in my own humble opinion.
I've been using Linux for years, and I am a proud user of Xandros for the last 6 years. I appreciate that Draoi Dubh made mention of this product by the way. You may have over-looked "...Xandros which in my opinion is a wonderful Linux base OS costs as much as XP Professional, and a damned good one --"
I seriously wish that Xandros would market more, I can't thank them enough for the value in this product.
Posted by Gerry | January 13, 2009 7:10 PM
@Goblin;
Are you indeed, Roy, the author of that blog you listed the link here in the comments?
Posted by Scott | January 13, 2009 10:00 PM
Wonder why there are some many here saying get Xandros, Suse, or the commercial (pay for) linuxes, Is it because Xandros, Suse (Novell), TurboLinux, and Linspire (failed and bought out by Xandros), all made deals with Microsoft?
And then theres others that recommend something like Gentoo, which is not for New users at all. What gives, are these folks pawned by Microsoft?
Ubuntu is easy, and you don't have to pay for it, go for it people, not what the Microsoft people are telling you.
Posted by real linux user | January 13, 2009 10:28 PM
Firstly am i Roy?
LOL No. However its difficult for me to prove that on this forum, so id ask you to go over to the Boycott Novell site and look at the publically logged irc chats ive had with him. Unless you want to say they are false.
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Moving on, id really hope that anyone (drenoi or dave) that post about Linux marketting in such a way is joking, else they dont understand what has made Linux the product it is today.
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Linux success (and how successful depends on your viewpoint) is mostly based on the help of people that do it for free because its free. how many distros are there that are maintained by one or two enthusiasts? Giving Linux a mainstream push, would in my opinion start to erode the community that has developed. What about the GPL? what about the fact that anyone can take the ubuntu distro and release their own?
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Anyone who truely believes that future of Linux is to have it is an off the shelf proprietary offering much like windows IMO has completely failed to understand the concept of opensource and the foundation on which is was built.
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As I said before, its my opinion that MS would like Linux as a proprietary solution, since they would then be able to fight against it. How can MS fight against the hundreds of distros and thousands of contributors, hell, ms cant even stop people sharing its products over the bt protocol.
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Lets put all of that to one side and go with this idea of proprietary Linux, do you know the estimated cost of Linux (id sugest you look at that) which open source contributors would want to give their time for free to a proprietary product? and since dranoi claims that Linux has sucha small percentage of users, how on earth are they going to make a profit? id suggest people read Mark Shuttleworths writings, im sure he would have something to say on the cost and viability of mass Linux marketing. To me, in this climate it would be a sure fire way of bringing down any distro that engaged in it. IMO.
Posted by goblin | January 14, 2009 5:10 AM
and can i just add to prevent any sillyness. yes i know there are proprietary Linux solutions, but to market it in a mainstream way like windows is what im talking about.
Posted by goblin | January 14, 2009 5:14 AM
I am amazed with it. It is a good thing for my research. Thanks
Posted by Enlargement | January 17, 2009 2:57 PM
I think you are thinking like sukrat, but I think you should cover the other side of the topic in the post too...
Posted by Natural | January 19, 2009 6:56 AM
I think you are thinking like sukrat, but I think you should cover the other side of the topic in the post too...
Posted by Natural | January 19, 2009 8:24 AM