MESSAGE
| DATE | 2006-03-17 |
| FROM | Ruben Safir
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| SUBJECT | Subject: [NYLXS - HANGOUT] MS Vs IBM
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March 17, 2006
Microsoft Reveals Plan to Take Business From I.B.M.
By STEVE LOHR
Microsoft began a $500 million marketing campaign yesterday to stir
enthusiasm among corporate customers for its new products and grab
business from I.B.M., its biggest rival in the business technology
market.
Microsoft's marketing drive and its strategic assault on I.B.M. comes as
it prepares to roll out a series of new products in the second half of
this year, led by Windows Vista and Office 2007. The company is
positioning the new desktop offerings as a kind of dashboard for
managing businesses, especially when linked to other new Microsoft
programs for worker communications and collaboration, searching company
databases, business intelligence and customer relationship management.
The new products, taken together, can help companies reduce costs,
increase worker productivity and hasten the pace of innovation, Steven
A. Ballmer, Microsoft's chief executive, told a gathering of corporate
customers and industry analysts in New York. The networked style of work
is a departure from the way most office workers have used Microsoft
desktop software in the past — as personal productivity programs for
reports, spreadsheets and presentations, which are then passed around as
e-mail attachments.
The Microsoft approach, Mr. Ballmer said, is to offer new software tools
for what he called "the next wave of improvement in business
operations." That path, he insisted, is very different from that of
I.B.M., which he portrayed as mainly a services business whose
consultants help companies and then depart.
"We're talking about giving people in business the tools to be more
productive every day," he said. "I.B.M. is talking about a project."
At the conference, Microsoft gave a series of demonstrations of the
capabilities of its new products. These included phoning in for e-mail
and having messages read back using voice recognition and translation
technology, searching corporate databases, creating virtual workspaces
that automatically sync documents and calendars for team members, and
analyzing worldwide sales patterns from an Excel spreadsheet.
Several corporate technology executives said the range of capabilities
demonstrated was impressive, though they noted that it would require a
sizable further commitment to Microsoft products.
Ken Bisconti, a vice president in I.B.M.'s software group, said the
Microsoft demonstrations, which he saw on a Webcast, were a display of
"more functions than people need or want in a pure Microsoft software
environment."
"Microsoft," Mr. Bisconti added, "is clinging to a pre-Internet,
proprietary software model."
While a huge services company, I.B.M. is also the world's second-largest
software company, after Microsoft, with $15 billion in yearly revenue.
I.B.M.'s Lotus Notes and Workplace Web-based offerings compete with
several of Microsoft's desktop products.
Building momentum in the marketplace for Windows Vista and Office 2007
is crucial for Microsoft. The last major release of its Windows desktop
operating system was six years ago, and three years ago for the Office
suite. Microsoft needs to add new capabilities to stay ahead of free
alternatives to its desktop offerings, like the Linux operating system
and OpenOffice applications.
Microsoft's stock price has barely moved in years, even though its
profits have grown by more than 10 percent annually since 2000. Despite
its strong performance, investors question its growth prospects.
In the long run, products like Microsoft's Xbox video game console could
be big winners, Mr. Ballmer said in an interview. "But for the next two
or three years, the real big growth for Microsoft is going to come from
the products and scenarios we showed here," he said.
Microsoft's marketing campaign uses the phrase "people-ready software"
to describe its new products, meant to underline the long-time Microsoft
theme that its software helps individuals do their work more
efficiently. Yet the new marketing program is aimed mainly at so-called
business decision makers, who determine technology strategy in
companies, instead of individual computer users.
"This is about explaining the business value proposition of the
Microsoft brand," said Mich Mathews, senior vice president for
marketing.
The campaign began yesterday with eight-page advertisements in The Wall
Street Journal, The New York Times and other newspapers. The $500
million to be spent over the next year will include ads on television,
newspapers, magazines and online, and for Microsoft-sponsored events.
Microsoft's advertising agency is McCann Worldgroup in San Francisco, a
unit of McCann Erickson, which is part of the Interpublic Group of
Companies.
Corporations, unlike consumers, can take months or even years to decide
what products to buy. So any payoff for Microsoft's marketing investment
could stretch out over years. Shares of Microsoft slipped 9 cents
yesterday, to close at $27.27.
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