News

Microsoft To Renew Consumer Ad Push With Seinfeld Star

• By Kurt Mackie
• August 21, 2008

The deal is not "about nothing." Seinfeld, of 1990's sitcom fame, will get $10 million for his work, according to the Journal, citing an unnamed source. He may also appear in ads with Microsoft's Chairman Bill Gates.

According to reports, Microsoft wants to deflect Apple's "Mac vs. PC" ads that depict Microsoft's products as unhip. A slogan, "Windows, Not Walls," may have been picked, the Journal reported. Microsoft is currently working with a new advertising agency, Crispin Porter + Bogusky, known for its Burger King ads.

Apple has seen some recent market gains. The company shipped nearly 2.5 Macintosh computers during its third quarter of 2008, "representing 41 percent unit growth and 43 percent revenue growth over the year-ago quarter," according to an Apple announcement.  However, Windows-based PCs still predominate, with something like a 90 percent market share.

Microsoft has attempted to address the poor reception of its flagship Windows Vista OS, which has met with some resistance among corporate adopters, largely due to initial application incompatibility problems and higher hardware costs associated with running the new OS. For instance, a Forrester Research report found that Vista was adopted by just 8.8 percent of enterprises in June, more than a year after its release. Moreover, one estimate suggests that about one third of business users have downgraded their copies of Vista to Microsoft's older Windows XP.

On the consumer front, Microsoft conducted a focus group in late July called the Mojave Experiment to illustrate that Vista is receiving a bum rap. Consumers were shown a demo of Vista, but were told that it was a new operating system called Mojave. The project showed the respondent's positive reactions to Mojave (a.k.a., Vista).

The shift to a consumer focus doesn't reflect Microsoft's overall money stream. Microsoft's $60 billion fiscal-year 2008 revenues were derived mostly from the business side, rather than consumers. However, the company has lately been pouring capital into revving up its consumer and online products.

For instance, Microsoft had a $188 million operating loss in its Entertainment and Devices Division, which includes the Xbox video game console, the Zune music player, the new Surface table-top computer and mobile devices. Microsoft also lost $488 million on its Online Services Business Division, which includes ad search and various online offerings.

Microsoft's focus on the consumer world hasn't yet brought in the money, but it may be a way back to its business profit center.

The usual paradigm is exemplified by products like Microsoft Office, a cash cow for the company. Business use of Office had the side effect of increasing consumer adoption of that productivity suite. However, some Web collaboration tools, such as instant messaging, have taken the opposite route, having been popularized first at the consumer level and then later adopted by some businesses.

Microsoft's consumer push may be driven by this potential market shift, as online applications become more prominent in a future "software plus services" world.