Clouds over Microsoft’s brand
Recent articles in Computerworld and InfoWorld examine the future of Microsoft Windows from a customer perspective, and they don’t find that future especially bright. What they describe is a growing gap between Microsoft’s self interests and the needs of customers, at both the enterprise and personal level. One indicator of this gap is slow or grudging customer migration to new Microsoft offerings. Another indicator is the growing consideration of alternative platforms, such as Apple. These are signs of a deepening brand disconnect at Microsoft, or of no brand presence at all.
At stake: Microsoft brand trust and brand leadership
What’s at stake is trust in the Microsoft brand, and the brand’s ability to lead. A key issue is Vista, Microsoft’s much-maligned new operating system. A detailed customer survey indicates that for many users, Vista threatens to make Windows computing worse, not better, at least when compared to the stability and efficiency of the current Windows XP.
Microsoft has loads of fence sitters or hold outs to worry about. Thirty-seven percent of all businesses—48 percent for those with 10-999 employees—do not plan to “implement” Windows Vista within two years. Thirty-four percent—40 percent for businesses with 1,000 or more employees—are unsure.
In the words of an AP report, many Windows XP users “dread” switching to Vista.
When customers dread your latest innovation, your brand trust is broken. When customers pay specialists to physically remove your latest innovations from their computers, your brand is your own worst enemy.
Consequences of Microsoft’s approach
As I’ve noted previously, delivering brand value has not been a high priority at Microsoft. Rather than deliver the best brand experience to customers, Microsoft decided years ago that it was easier (for them) to make Microsoft the only brand in town. This encouraged Microsoft to treat its customers by the rules of market power, not brands. The result was a brand agenda of maximum customer containment and minimum innovation.
Microsoft can play this card (and keep control of its customers) only as long as it retains dominant market power. Microsoft is betting that almost all PC customers will eventually migrate to Vista, whether they wish to or not, since 95% of all new computers ship with Vista, and Windows XP is being taken off the market.
The downside of this approach is that it conditions Microsoft to think about innovation as a means of customer control, rather than new ways to deliver brand value, or to grow customers into new markets. The more Microsoft “locks in” customers, the more it “locks out” market-changing innovation. If you’re a Microsoft customer, the future might appear as one of infinite gloom.
Microsoft’s approach opens doors for competitors
Another downside of Microsoft’s “non-brand” approach is that it opens doors for competitors: Google, Apple and new entrants whose strength is a digital cloud that frees customers from current constraints. Microsoft is, of course, one of those constraints. To a certain degree, Microsoft now competes against the whole innovative sector of Web 2.0 and social computing.
Cloud computing is brand computing
Indeed, in the coming era of “cloud computing” many software functions will migrate from the desktop to the ubiquitous Internet “cloud,” a happy place of fleecy white puffs where users can do more with less and be “always on.” But cloud computing is a major challenge for Microsoft, because cloud computing is brand computing. It will be predicated on brand trust. Lose that trust and customers can turn elsewhere, since there are few “legacy” clouds in the Internet sky.
Those ominous clouds over Microsoft may send customers toward more inviting clouds, and to the brands behind them.
May 12th, 2008 at 8:13 am
Fascinating take on the Microsoft situation. I like the linkage you make between brand effectiveness and the role of competition in the mind of Microsoft leadership. If you view your job as winning competitive battles, as opposed to helping customers, then you put your brand trust at risk. Steve Ballmer is nothing if not a competitive guy.
May 14th, 2008 at 7:10 am
I think it also has to do with how a company views its customers: as territory to be “conquered” and contained, or as innovation partners to help grow larger markets. In this regard, a Microsoft/Apple comparison may be apt. Microsoft approached the digital music business with heavy-handed DRM schemes that handcuffed customers. In contrast, Apple used a much lighter DRM approach that gave customers immense freedoms to share and organize their music. Apple became a music “enabler” while Microsoft took the approach of a controlling “gatekeeper.” The choice for customers was obvious. The iPod took off, and the rest is history, with Apple now emerging as the market leader in digital music, and possibly in digital movies and TV.