Microsoft to boost Windows 2000 with campaign

Scott Hillis

SEATTLE: Software giant Microsoft Corp. on Monday kicks off a $220 million advertising campaign for its Windows 2000 operating system, hoping to boost its flagship product that has so far seen only gradual adoption.

"This is a case where our marketing has actually lagged our products and delivery," Mike Delman, Microsoft's general manager of advertising and events, said in an interview.

"We are really feeling the need now to go out and tell a story about something we've been doing for quite a bit of time and not really probably gotten the credit for doing," Delman said.

Aimed at business PCs and the powerful server computers that run networks and dish up Web pages, Windows 2000 was launched last February after a three-year, billion-dollar development effort by the Redmond, Wash.-based company.

But while Windows 2000 has generally received high marks from the industry, and the desktop version has sold well, sales to the high-end server market where Microsoft is hoping to secure a foothold are thought to have been slow.

While Microsoft chalks that up to the need for corporate customers to evaluate the product and secure a budget, some analysts say the company may have dropped the ball in preaching the Windows 2000 gospel.

"The company, after its fairly mega-launch in February last year, hasn't done a particularly good job of marketing it in my mind," Dwight Davis, an analyst with Summit Strategies, said. "It certainly was not as high-profile as you might expect given the importance of Windows 2000 to Microsoft's strategic plan."

More bang for the buck

The marketing push also comes shortly after the departure of the vice president of Windows Server marketing, Jim Ewel.

Asked if the new campaign was related to Ewel's departure, Delman said only that changes in Microsoft marketing had been underway since last March.

Davis added, however, that Microsoft may have kept its legendary marketing machine idling through the initial period of tire-kicking and bug-fixing in order to get the most bang for its advertising buck.

"Microsoft may have calculated that this is the time to make the push behind because now there's an ecosystem of applications to make it more attractive," Davis said.

The stakes are high. Delman said the market for powerful server software was a whopping $93 billion, of which Microsoft claims a tiny $4.5 billion slice. Windows 2000 is Microsoft's biggest assault yet on a market that has been dominated by rivals Sun Microsystems Inc. and International Business Machines Corp. .

A trio of campaigns

The marketing blitz - one of three big Microsoft campaigns for this year along with the MSN Internet service and upcoming XBox video game console - will air ads on network television and in trade and business publications, Delman said.

Microsoft would spend $220 million to $230 million on the campaign over the next 12 months, but planned to maintain its message for three to five years as part of a new "long-term focus in talking to customers," Delman said.

The effort is being handled by Microsoft's advertiser of record, McCann-Erickson, a unit of advertising giant Interpublic Group of Cos Inc., Delman said.

Shares in Microsoft rose $5-1/2, or 9.9 per cent, to $61, last Friday, a day after the company reported profits that met scaled-back expectations and said it was starting to see progress in Windows 2000 sales.

"What really came out of our earnings on the positive side was the traction we are getting with Windows 2000 and our server products," Delman said. "That's where people think the upside is and momentum is gaining."

(C) Reuters Limited 2001.