Microsoft Launches $500 Million Ad Blitz to Target IBM Customers

Microsoft has launched a US$500 million marketing campaign aimed at using its new products, including Windows Vista and Office 2007, to wrest enterprise customers away from rival IBM.

Microsoft said Vista and the new version of Office will enable desktop computers to become control stations for hard-working enterprise applications that manage everything from employee messaging to database access, business intelligence software, enterprise search and customer relationship management (CRM) programs.

CEO Steve Ballmer debuted some of those features and announced the marketing effort during an event for corporate customers and industry analysts Thursday in New York City on the 20th anniversary of Microsoft’s initial public offering. Microsoft made it clear it plans to emphasize the ease-of-use of its products with a “people-ready” tagline to the ads.

“We’re talking about giving people in business the tools to be more productive every day,” Ballmer said. “People-Ready is a natural extension of our founding vision of empowering people through software.

“Getting the most out of their people is on the mind of every business leader I speak with,” he added. “Successful businesses understand that people drive business success and growth.”

The campaign kicked off this week with ads in The Wall Street Journal, The New York Times and other newspapers and will include a year-long blitz of similar advertising messages on television, online and in business publications read by corporate technology decision makers.

People Get Ready

There is little doubt that Microsoft has Big Blue in its crosshairs with the push, since that company is its main rival in the business operations software market, but has focused heavily on consulting services as a value-added attraction for its software. For instance, Microsoft’s Outlook e-mail and scheduling program goes head-to-head with IBM’s Lotus Notes.

The blitz should also help build anticipation for the product rollouts that Microsoft is working toward. Vista and Office 2007 are expected to be available in the second half of this year, with the Windows release especially anticipated because Vista represents the most significant changes to the operating system in several years.

The demonstration by Ballmer had similar goals. The CEO said the programs users will be able to access through Vista benefit from some $20 billion worth of targeted research and development investment.

Ballmer also sounded a familiar theme in citing the upgraded security to be baked into Vista, though he gave few details. Vista is seen by many as a critical release for Microsoft since it comes at a time when the company faces its most significant competitive threats, including the rise of open source and Web-services challengers such as Google, which just last week announced it would buy Web-based word processing program maker Writely.

Large corporations, meanwhile, are just one market Microsoft hopes to convince of the value of Vista and other new products. It also targeted smaller businesses this week, hosting a small business “summit” at its Redmond, Wash. campus to highlight its offerings for that market.

Core Strength Featured

Microsoft has won mixed marks for its marketing in the past, with many experts questioning the choice of the Vista name — the new Windows had long been known as Longhorn during its development stage.

The tension between Microsoft and IBM is centered on the services model that Big Blue has adopted and used to effectively propagate its business software, Enderle Group Principal Analyst Rob Enderle told the E-Commerce Times. Microsoft hopes to remind technology buyers of the ways its products can boost productivity, he added.

“So much of the technology that IT buyers look at in a given year is steeped in features, but increasingly, it requires a substantial commitment to services to make it work,” Enderle said. “In a way, much of the industry, and particularly IBM, is using software as kind of the free razor to drive a very expensive service model.”

With the “People Ready” push, Microsoft is trying to leverage its historic focus on reducing labor costs and making workers more productive, Enderle noted.

“At the end of the day the IT shop is faced with limited resources in terms of both cash and humans and Microsoft is suggesting that by focusing on making the products easier to implement and use, the IT executive can address both concerns rather than enhancing one to the detriment of the other,” he said. “Campaigns that focus on a true strength, if executed well, tend to do well and this one does focus on one of the historic strengths Microsoft has brought to the market. “

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