Microsoft: A Clean Bill of Wealth
Annie Gurton looks at the slick marketing machine behind the Microsoft monolith to find out how it turned the software giant into a household name
Say what you like about Microsoft, no one can deny that its marketing is superb. Remarkably, it manages to take products which are often buggy, not necessarily the best in their field, subject to years of criticism and constant technical refinement before they stabilise, and yet it still captures the lion?s share of the market.
The company has long been at odds with the widely held religion of open systems which says that vendor and technology independence are essential for the secure and stable future of industry and users. Yet Microsoft has not only thrived without joining the open systems camp, but has created a unique who-needs-open-when-you-have-Microsoft message which has won credibility and gained widespread acceptance.
MS swims against the tide in so many ways and provides an example of how not to launch and market products, yet manages to be so successful that non-IT literate users, when asked what sort of computer they use, will say they use a Microsoft or a Windows computer.
It is not hyperbole to say the brand dominates the industry, so what is it about its marketing strategy which makes Microsoft so successful? Can resellers and integrators, which are having to find new ways of making their mark in the aggressive world of IT sales, learn lessons from the software giant?s approach?
David Smith, channel sales and marketing manager for Microsoft, says the key differentiators of Microsoft?s marketing strategy can be whittled down to a few points, all of which can and should be adopted by marketing managers in reseller businesses. He says: ?There is not one single message about Microsoft?s marketing strategy, but at the same time it is simple.
?The first principle is to keep focused. Microsoft, for example, has always recognised that it is only a software company and has limited its activities around that central core activity. Our competitors dabble in hardware, software and services, but that just confuses their marketing message.? Keep the brand simple, he says, and brand marketing is easier and more effective.
Focusing on being a software firm, says Smith, means MS is able to purify its R&D efforts and have strategic partnerships without contradictions or risk of misunderstandings. This has enabled the company to fulfil its second principle.
?When we enter a market, we first look at the customers, then the competition, and then aim to win the largest possible slice of market share,? explains Smith. ?There is no point in being satisfied with being an also-ran. You have to aim to capture the biggest slice, by all criteria, and make that your stated intent.?
Smith says MS has achieved this aim by being focused, which has in turn enabled it to have clean relationships with all of its business partners. ?Resellers, too, should aim to have a clear and clean idea of what they are doing, where they are going and how they work with other companies,? he says.
Microsoft?s Sean Orpen believes clarity of vision about the company is essential. He says: ?Microsoft made a decision early on that it was very important to associate the brand with only one line of business, so the Microsoft name is clearly linked with business software in its various guises.
?We have fulfilled that intention and it has contributed greatly to our success.? It will, therefore, be interesting to see whether there is any dilution of Microsoft?s success as it diversifies into other areas, like travel management software and electronic commerce.
Orpen says that there was also a maxim in the early days to concentrate on the big picture with classical marketing techniques, and not get sidetracked with novelty marketing. ?There was a drive for us to be innovative in our marketing, but we were cautious about throwing money at the marketing efforts. We did not get involved with sponsorship, for example, despite enticing requests. It can be very helpful to have long pocket marketing, but however long or short the pocket, it still needs to be targeted.?
Critics of Microsoft will say the company is more than just focused ? it is ferocious in achieving its objectives. Some even say that Microsoft will say or do anything to win the customer, without too much regard for the accuracy of its claims. ?Absolute rubbish,? says Smith. ?There is no point in being misleading because you will get found out.?
Both Orpen and Smith deny that Microsoft owes anything to luck. ?Certainly there was an element of being in the right place at the right time with the right message, but plenty of other companies could have been where we were and not achieved what we achieved,? says Smith.
Even having good products is no guarantee of success, such is the power of effective marketing. Orpen adds: ?There was nothing serendipitous about the way Microsoft emerged or the extent of its success. Every-thing we achieve is planned. We think things through.?
But being flexible is an important attribute. As everyone saw by Microsoft?s initial scepticism about the internet and then its total conversion to its importance, the company is not too proud or rigid to make fast decisions or backtrack if it realises that it has made a mistake. ?It also helps that we are a smallish company with a flattened management hierarchy,? says Smith.
Smith adds that it is important to be flexible when viewing and reacting to the market. He says: ?It is crucial to continually watch your customers, potential customers and the competition and then react to what they are saying and doing. Your competitors and what they are doing helps you define your marketing strategy, even if they are not the biggest players.? Watching the competition, says Smith, also dictates how you position your product and develop your brand. And watching the customers is the way to make sure that brand and product development are delivering what is required.
Smith says: ?There are plenty of people who criticise our products and say that we do not listen to what people want, but I say that we deliver exactly what people want, which is mainly ease of use and value for money. Those are the two most important things that people are looking for, and have been the two main guiding principles in our R&D over the years. Our marketing tells people that they are going to get what they want, and then the products deliver it.?
The third thing people want, says Smith, is IT that does what is says it is going to do. ?The marketing message has to get those things over: that this is software which is easy to use and gives value for money, and does what we say it will do.?
Smith agrees that it helps if these claims are rooted in a solid foundation of technology, but denies that MS promises technical advancement but delivers technical pragmatism. ?Our products offer features which are leading edge. People expect us to be able to have feature-rich and stable products, and it would be no good if we were still trying to sell character-based technology.?
But, he adds, ultimately it is all about customer perception, which is why the marketing is so crucial. ?High-tech critics and pundits will find fault in NT, but users don?t because whatever its weaknesses, it still delivers what people are looking for.?
Another factor in Microsoft?s success, says Smith, is the fact that the company has always emphasised the business benefits rather than the technology itself. ?This is a restressing of the point that it has to be easy to use, but we also make a strong feature of the beneficial effects on our customer?s business of using our software. It is a good sales point, and one which resellers should also follow.?
Smith believes that continuity and long-term commitment are essential and definitely pay dividends. ?We first launched Windows in the early 80s, but it has not settled down until the 90s. We were able to see the brand development through all that time,? he says.
?We stick to a strategy and persevere with it, and that way people learn the name and absorb the message.?
Orpen agrees: ?Successful marketing requires a long-term vision and the commitment to see things through, combined with the flexibility to change tack if it is necessary. It is a fine balance between the two.?
Orpen adds that the company has continual feedback through market research to keep in touch with how it is perceived and what customers are looking for. ?Our marketing strategy, although rooted in some fundamental principles which do not change, is also continually evolving. It is important not to forget the basics of marketing. A history of success is no guarantee of future success, as we are always reminding ourselves.?
That is the Microsoft angle, but it wouldn?t be Microsoft if there wasn?t a queue of people grinding axes ready to take a swing at Gates and co. Any of the big computer firms in the world, it would seem, are happy to take a swipe. One of those with a vested interest in the downfall of Microsoft is Novell.
Hence it comes as no surprise that, according to Tina Cowley, Novell marketing manager, Microsoft?s success is no more than a mirage. ?Microsoft?s marketing plays very well on the FUD factor but it doesn?t deliver on promises,? she says.
The FUD factor, first exploited by IBM in the 70s, is the fear, uncertainty and doubt that many users feel, which can be turned to decision-making advantage by canny marketeers. According to Cowley, Microsoft goes one step further than IBM ? it actually puts the FUD into users minds, while IBM just capitalised on that which was already there.
?To say that Microsoft is 100 per cent successful is gilding the lily. There are a lot of disgruntled customers, and a lot of IT managers who are uncomfortable with Microsoft?s interpretation of Open Systems,? says Cowley.
Microsoft?s marketing strategy has a lot to do with arrogance and pushing the customers in the direction where it wants to go, regardless of where they say they want to go, says Cowley. ?Despite what Microsoft?s executives say about it listening to customers and then developing its products and strategies, actually that is the opposite of what it does.?
?It says where the market wants to go, it decides what it thinks customers want, and it definitely does not listen to what customers want.?
Cowley is highly critical of Microsoft?s record of announcing products which are just vapourware, and then delivering products which are still at early beta stage. ?Microsoft is very good at seeding a market and creating an illusion of demand, but the fact is that often the technology is not appropriate and customers are not happy. There are many broken Microsoft promises.?
Considering the head- to-head market competition between Microsoft and Novell, it is hardly surprising that Cowley takes such an acerbic view, but there are many who would, quietly or vociferously, agree with her.
Cowley also believes that Microsoft is going to be caught out sometime in the near future. ?A marketing machine cannot keep sending out so many false messages of hype without the customers eventually wising up,? she says.
?There will come a time when customers will sit back and take a long, cool look at the philosophy, message and products that Microsoft is selling. They will decide that Microsoft is full of puff, and they really don?t want to be locked into one vendor. The Microsoft version of open systems is very seductive, but often IT managers and purchasers realise sooner or later that they are buying into an unhealthy uncompetitive market.?
Cowley believes that part of Microsoft?s success has come by default. ?Some other firms have not taken marketing seriously, regarding it as an extension of sales rather than a science in its own right. Consequently it has taken them a while to become as competitive, but now they are catching up fast. Microsoft is entering a vulnerable phase. It will start to find its market domination being eroded. There are several other vendors which are now very astute, and Microsoft is beginning to make marketing mistakes.?
Cowley cites Microsoft?s extension of its business into other areas which are only vaguely linked to its core business, and the fact that it has a lot of products and brands, as reasons for its imminent problems. ?Microsoft has been very heavily hyped, and in my view over-hyped. No company can sustain that position if it really does not have the products or the expertise behind the facade.?
Already, says Cowley, there are significant rumblings of discontent. ?The company has not really invested in the channel, and now there are many Microsoft solution providers and partners who are about to rebel. The trouble is that they have fallen under the effects of Microsoft?s FUD marketing, and are afraid of speaking out.?
Cowley is outraged by Microsoft?s hegemony, but she is more angry that Microsoft refuses to have free and open discussions with any other firm. ?Even its so-called partners operate under Microsoft?s direction and are at its beck and call.?
Microsoft?s marketing will stretch to limited co-operation, she says, but ?they make it as difficult as possible for us to work with them?.
Still, Cowley believes that Microsoft?s undoing will be to Novell?s advantage, and other vendors and resellers will benefit in the long run when the time comes for MS? marketing strategy to be exposed for the illusion it is. ?Users are already querying the fact that there are a lot of senior individuals and companies which do not work with Microsoft and are openly critical of them. Eventually, they will want to hear the marketing messages of the other contenders. Smart marketing without substance or anything to back it up can only succeed for a limited time before the world starts saying: look, the emperor?s not wearing any clothes.?
Perhaps the most disturbing thing is that these sentiments are no different from the kind of things we are hearing during the current election campaign, and they carry almost less weight. Smart marketing without substance? Perhaps; maybe; even probably. All the same, are we likely to see the demise of Microsoft in the near future? Unlikely. And what of the people carrying the axes? They are obviously full of substance.