Why MSFT’s TV Ads Are Stupid

  • Posted: 25 April 2009 03:18 PM

    There’s a challenge for PC OEMs. It’s called pricing control. The netbook craze continues to put pressure on OEM margins and lack of pricing control means the price/demand curve is quite elastic. Any effort by a Windows PC OEM to raise prices will be met with market resistance.

    Published reports indicate the global PC market contracted by a whopping 7% in the first calendar quarter with volume moving to lower-priced (and lesser-equipped PCs). This will plague MSFT and Windows PC OEMs before, during and after the release of Windows 7.

    If Microsoft insists on price comparisons to justify buying a PC v. a Mac, it becomes a slippery slope for OEMs. By pushing comparisons based on price it’s apt to work against any Windows PC OEM desiring to position product for better margins. In the end it works against MSFT’s effort to release premium Windows 7 versions to the public. A focus on price and a further commoditization of the PC market will further erode pricing control and limit the appeal of the more expensive versions of Windows 7 to enter the market.

    Now here comes the trap: A price comparison is only effective if functionality and performance is perceived to be the same. Snow Leopard will see it commercial release long before Windows 7 arrives on store shelves and is installed on PCs. Absent a perception of similar functionality price comparisons become invalid.

    Perhaps the ad campaign is capitulation Windows has reached a mature market stage in which price becomes the determiner and innovation has reached its practical end. This ad campaign is apt to discourage the purchase of premium-priced PCs than it is to dissuade consumers from buying a Mac.

         
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    Posted: 25 April 2009 05:38 PM #1

    I wonder what Dell thinks, as they try to launch the Adamo to compete against the Macbook Air

    At $ 2,000 minimum I guess Mr Softie can’t get a Dell. Microsoft is doing neither Intel nor their OEM any favors.  The expectation on the PC laptop side is you can get a full feature laptop for $500 and a limited version for $300.  Why would anyone consider paying more.  Performance has no value which means the next generation of Intels processor are not needed because the current version is good enough.  Apple still realizes that some customers value their time and rather then wait an extra hour to process a video file or remove malware, they will pay extra upfront and be rewarded with a much more enjoyable computing experience.

         
  • Posted: 25 April 2009 06:28 PM #2

    In the current PC environment Windows has reached market maturity and the more focus place on price as the motivation for a purchase decision the less innovation that will result. Windows has reached an economic dead-end and the market is moving beyond the desktop and even mobile PC environment. OEMs are not in an attractive place in terms of margin potential as the costs of Windows works against hardware margins and the market moves increasingly to handheld devices.

    Perhaps this ad campaign is a response to OEM complaints MSFT is not supporting its platform nor assisting the OEMs in pushing sales. But its impact is counter-productive to an increasingly commoditized and price-focused product.

         
  • Posted: 26 April 2009 04:11 AM #3

    DawnTreader - 25 April 2009 09:28 PM

    Perhaps this ad campaign is a response to OEM complaints MSFT is not supporting its platform nor assisting the OEMs in pushing sales. But its impact is counter-productive to an increasingly commoditized and price-focused product.

    It was supposed to be an initial run of five ads. They have launched three so far. I wonder where the other two are?

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    Posted: 26 April 2009 10:27 AM #4

    Along these same lines, before every computer purchase,  it alludes to doing a Mac spec & price comparison. 
    Indeed a slippery slope . . .

    (Considering that many people would never even consider a Mac, Apple should thank MSFT for the vote of confidence.  :wink: )

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    Posted: 27 April 2009 10:13 AM #5

    I love this article on Mac’s found in all places PC World

      Here

    Contrary to Microsoft marketing honcho David Webster’s snarky recent assertion, Macs aren’t “washed with unicorn tears”—at least as far as I know. However, lots of extremely rational reasons exist to choose a Mac running OS X over a Windows PC. Macs can leave you happier and more productive than you would have been if you’d bought a Windows system, and feeling you got good value for your money even though a Mac is never the cheapest option.

         
  • Posted: 27 April 2009 01:42 PM #6

    Two big problems with Microsoft’s latest ads:

    1.  Reveals information that the customer either already knows, or will find out immediately once they start shopping for a new computer.  For most people, a computer is too big an expense to be an impulse purchase.  Most people will do their homework and shop around.  So people who are not willing to ante up for a Mac will end up buying a PC -even without seeing the ads.  An ad touting lower prices works for medium-ticket items where most consumers won’t be that motivated to shop around but will still choose the cheaper product IF THEY KNOW IT"S OUT THERE.  For big ticket items, the ads that make a difference inform potential customers of key features and product characteristics that are not discovered by merely checking out the display models.

    2.  The ads position PCs as the discount brand; the Walmart of computers.  This recession will eventually pass, but bringing the Windows/PC brand down market is forever.  Nothing wrong with that if that’s what Microsoft really wants, big problem if they think they can go up market once the economy recovers.  Microsoft is courting serious long term damage to the Windows/PC brand name.

      Established brands that recently tried to go up market and failed:  1. Walmart (Introduced ‘designer’ line of clothes) 2. Volkswagen ($70,000 Phaeton).

      Established brands that recently tried to go up market and succeeded: 1. Still thinking . . .

         
  • Posted: 27 April 2009 02:21 PM #7

    To tundraboy’s #2 comment:

    I agree with you that taking their brand to the position of “Walmart of computers” seems a mistake; they’ll proabably never be able to come back up from that. Still, you could argue that it isn’t bad positioning in one sense; Walmart does very well and is huge because “good enough” has become all anyone cares about lately. In the race to the bottom “good enough” is all you ever need to be to a consumer. I’m quite sure how far down that bottom is.

    I live somewhere where great mom & pop Italian restaurants are all over the place, and yet Olive Garden is always packed. Why take a risk when Olive Garden is “good enough.” Makes me sick…

    Still, these ads will fail because the only thing they seem to be trying to compete on is price. The whole ad is based on some arbitrary amount of money given to the customer/actor. As the PCs get cheaper and cheaper when will an OEM dump Windows when they realize it’s the most expensive component of their product and there is no way to the make the hardware even cheaper/crappier?

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    Posted: 27 April 2009 02:23 PM #8

    tundraboy - 27 April 2009 04:42 PM

    big problem if they think they can go up market once the economy recovers.

    That’s why this is not a good series of ads. as you said it puts the PC and Windows <by implication> as the cheap solution. In the long run I feel they are shooting themselves in the foot. I’d be more worried by the “I’m a PC commercials. They are clear and have a simple message; with Windows anyone can do anything. A 4 year old can do photo editing. This is their stealth campaign and I think it has much more chance of being effective just because it blunts the Macs ease of use argument. Why spend more for a Mac if you can do the same thing on a PC? True or not it erodes the perception of the Mac as a better computer.

    [ Edited: 27 April 2009 03:08 PM by geoduck ]

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  • Posted: 27 April 2009 02:35 PM #9

    Another funny web-ad version of I am a Mac and I am a PC seen on macdailynes.com:

    PC as easy as 1 - 23

         
  • Posted: 27 April 2009 05:36 PM #10

    geoduck - 27 April 2009 05:23 PM

    I’d be more worried by the “I’m a PC commercials. They are clear and have a simple message; with Windows anyone can do anything. A 4 year old can do photo editing. This is their stealth campaign and I think it has much more chance of being effective just because it blunts the Macs ease of use argument. Why spend more for a Mac if you can do the same thing on a PC? True or not it erodes the perception of the Mac as a better computer.

    Those commercials are excellent. The fact that “I’m a PC” should be “I’m a PC user” is lost on most television viewers anyway. All they see is a young child doing something interesting and moderately complex on a Windows PC.

    Microsoft should be focusing all their energy on the “I’m a PC” ads. Most people are already familiar with Windows and seeing that they can do “anything” with the system they already know will stop 99% of people from even considering an alternative.

    Apple probably benefits more from the Lauren (and similar) ads than Microsoft does.

         
  • Posted: 27 April 2009 06:00 PM #11

    Using tech-ignorant, poor people doesn’t seem like a good way to sell anything. The ‘customers’’ rationalizations are weak and/or ill-informed. They want ‘quality’ without paying for it. They accept the labels’ specifications as gospel…. Oh, wait - that strategy actually worked very well for the GOP for a couple of terms….

    Very funny, that first one. The guy trying to convince us that he’s “picky” and that’s why he prefers a low-budget PC and doesn’t do any research before spending his hard-earned money. I guess the demographic to which these boxes are supposed to appeal won’t have the intellect to see through that brand of ‘logic.’ The unfortunate thing is: that demographic is shockingly immense.

         
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    Posted: 27 April 2009 08:07 PM #12

    geoduck - 27 April 2009 05:23 PM
    tundraboy - 27 April 2009 04:42 PM

    big problem if they think they can go up market once the economy recovers.

    That’s why this is not a good series of ads. as you said it puts the PC and Windows <by implication> as the cheap solution. In the long run I feel they are shooting themselves in the foot. I’d be more worried by the “I’m a PC commercials. They are clear and have a simple message; with Windows anyone can do anything. A 4 year old can do photo editing. This is their stealth campaign and I think it has much more chance of being effective just because it blunts the Macs ease of use argument. Why spend more for a Mac if you can do the same thing on a PC? True or not it erodes the perception of the Mac as a better computer.[/quote

    I have colleagues who use PC’s. A couple have quoted the ads in a way that says that they make them “feel good”, eg they like their pc’s and are glad MSFT is fighting back. It’s a keep them in the fold ad. Effective, but not earth shaking.

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  • Posted: 27 April 2009 09:40 PM #13

    The unfortunate thing is: that demographic is shockingly immense.

    And they also listen to political commercials.

         
  • Posted: 28 April 2009 03:00 AM #14

    tundraboy - 27 April 2009 04:42 PM

    2.  The ads position PCs as the discount brand; the Walmart of computers.  This recession will eventually pass, but bringing the Windows/PC brand down market is forever.  Nothing wrong with that if that’s what Microsoft really wants, big problem if they think they can go up market once the economy recovers.  Microsoft is courting serious long term damage to the Windows/PC brand name.

    That is much of my original point. MSFT may be creating it’s own version of the “Dell dilemma.”