Wed, Oct 22, 2003 page12

• Microsoft plans to spend big on its Office upgrade

  MARKETING The company will spend at least US$150 million to promote the new version of Microsoft Office, five times what it budgeted for Office XP two years ago

  • NY TIMES NEWS SERVICE
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  There is marketing muscle and then there is Microsoft. After all, what other company would spend five times as much to promote a product upgrade as it did on an earlier upgrade just two years before? Microsoft, of course.

  Could it be that Microsoft is finally hearing footsteps from competitors in the office suite software market?

  Analysts say maybe so; Microsoft says of course not.

  At hand is the introduction scheduled for yesterday of a US$150 million ad campaign to promote the latest version of Microsoft Office.

  The company is hoping to transform the suite's image from that of a set of taken-for-granted desktop equipment to a system that can make everyone a winner.

  The system, this time around, is shown less as a key to personal productivity than as a way to enhance collaboration and team success.

  One goal, naturally, is to solidify the company's already intimidating market position, analysts said, by fending off challenges from competitors like Sun Microsystems, which has introduced its own StarOffice suite of business programs, and IBM, which is aggressively pursuing small and medium-sized businesses with software and hardware offerings.

  "They have an awesome presence in the small and medium-size business market," said Richard Sherlund, a software industry analyst at Goldman Sachs in New York, speaking of Microsoft.

  "Having said that, everyone wants to get into that market. IBM, Sun, Oracle and others want to compete against them in that space," he said.

  But a Microsoft executive said it was also crucial to persuade existing Office users to upgrade from older versions.

  "This is more robust and broader than everything we've done in the past," said Michael Dix, director for Office branding at Microsoft. "Our primary competitor is ourselves from our past," he said.

  For Microsoft to battle the biggest marketing behemoth out there -- itself -- takes money, said Robert Lerner, senior analyst at Current Analysis in Sterling, Virgina.

  "Microsoft is not a stupid company," Lerner said. "They're very aggressive."

  To that end, the advertising budget for the next six months, expected to total US$150 million to US$200 million, far eclipses the US$30 million spent to advertise the introduction of Office XP two years ago.

  The challenge for the Microsoft agency, the San Francisco office of McCann-Erickson Worldwide Advertising, was to communicate computer power and human excitement at the same time.

  Michael McLaren, executive vice president, director for client services and worldwide account director for Microsoft, said Office needed a big branding campaign to make people focus on it.

  "Office in some respects is probably the most underestimated brand in the technology space," McLaren said.

  "People know it's there but take it for granted," he said.

  Some analysts were skeptical that the sports analogy would translate into sales.

  "That's not how people think about their jobs," said Ted Schadler, principal analyst at Forrester Research in Cambridge, Massachusetts. "No computer ever turned their employee into a sports star," he said.
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