Intel is picking up the tab for marketing windows xp, that's interesting.....
Microsoft XP Marketing Blitz Targets Wary Consumers (Update2)
2001-10-26 16:37 (New York)
Microsoft XP Marketing Blitz Targets Wary Consumers (Update2)
(Adds closing shares in sixth paragraph.)
Duluth, Georgia, Oct. 26 (Bloomberg) -- It may be months
before Microsoft Corp. shareholders can tell whether the parking
lot of the Best Buy Co. store in the Atlanta suburb of Duluth,
Georgia, was half-empty or half-full yesterday.
Ryan Studdard, one of the store's computer sales staff, said
he didn't see much enthusiasm over the introduction of Microsoft's
newest operating system, dubbed Windows XP. The biggest software
maker claims that its new features will change the way people
communicate, listen to music and exchange photos.
``I think that 95 out of 100 people don't care,'' Studdard
said. ``Most people use PCs for word processing or the Internet.''
Microsoft and allies including Hewlett-Packard Co., Intel
Corp. and Best Buy have said they will spend $1 billion on a
marketing blitz they hope will reinvigorate the PC industry.
In a bid to introduce the new operating system with a bang,
Redmond, Washington-based Microsoft has enlisted the help of
celebrities such as game-show host Regis Philbin, New York Mayor
Rudolph Giuliani and pop singer Sting.
Microsoft shares fell 36 cents to $62.20. They've gained
43 percent this year, making the company's stock the best
performer in the 30-member Dow Jones Industrial Average.
A Typical Day?
The marketing frenzy hasn't sent consumers flocking to
software retailers in droves.
In San Francisco, the city's downtown CompUSA Inc. store
didn't seem any busier than on a typical Thursday. Few customers
bothered to check out two kiosks filled with the new software
package, even though for $99 they could get a Windows upgrade kit,
free installation and a two-for-one airline-ticket coupon.
The store's Internet cafe, filled with iMac PCs that run on
Apple Computer Inc.'s OS X, was more popular. Customers had to
wait in line to surf the Web for free.
At Best Buy, Windows purchasers could choose from incentives
including free PC memory, networking equipment, music CDs or
digital-music players. Best Buy spokesman Jim McManus said that
nationwide the retailer yesterday sold more copies of Windows than
it had expected. He declined to elaborate.
PC manufacturers have high hopes for the new product. Ted
Waitt of Gateway Inc., Michael Dell of Dell Computer Corp. and
Carly Fiorina of Hewlett-Packard Co. all made appearances to show
their support for XP.
The 1995 release of Windows 95 fueled record PC sales and
contributed to the Internet boom. A year ago, Microsoft executives
and PC makers said they were optimistic that XP could fuel a
second such boom.
The economic slowdown and threat of terrorism have dashed
those hopes.
Momentum
Microsoft CEO Steve Ballmer said he hopes the product will
gain some ``momentum'' within the next six months.
``Within a year -- certainly a year and a half -- most of our
business volume will be with Windows XP,'' he said at an XP event
in Munich.
When consumers buy an operating system, they typically buy it
on a new PC rather than upgrading an old machine. Major PC makers
are expecting a weak holiday season, with fourth-quarter revenue
falling from last year, when sales failed to meet expectations.
The software maker's campaign promises Windows XP will make
PCs more stable, easier to use and more fun than ones running on
older versions of the operating system.
Marketing Push
Microsoft has said it will spend $200 million on marketing
Windows XP, while No. 1 chipmaker Intel, PC makers, retail stores
and other companies are expected to spend $800 million more.
Yesterday, Microsoft Chairman Bill Gates presided over a
Webcast from Times Square to promote the product, playing a
special Windows XP version of ``Who Wants to Be a Millionaire?''
with host Philbin. Other Microsoft executives spread out around
the globe to promote the software.
Giuliani, a gospel choir, Dick Clark and Starbucks Chairman
Howard Schultz also turned out for the event in New York.
Traffic was light yesterday at the Best Buy in Duluth, which
is about 850 miles south of Times Square. The store's manager, Joe
Casella, said he hopes that business will pick up tomorrow and
Sunday.
``XP is generating a lot of excitement,'' Casella said.
``Most people are interested in its digital-photo, MP3 and digital-
video features. Those are the main reasons people are looking to
buy it.''
--Jim Finkle in San Francisco, (415) 912-2996, or
jfinkle@Bloomberg.net, Andy Peters in Duluth, Georgia, (404) 507-
1302, and Peter J. Brennan in Los Angeles with reporting by
Hellmuth Tromm in Munich/jt/jac
Story illustration: To compare the performance of Microsoft's
shares to benchmark indexes, see {MSFT US <Equity> COMP D <GO>}.
For more Bloomberg stories about new software products, see
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