Microsoft's fight against Apple ads seen as waste of money
With Apple's Mac home market share tripling in the past five years, Microsoft has fought back with its own advertising campaigns attacking Apple for the first time, a move one analyst sees as a mistake.
In Sunday's New York Times, Devin Leonard took a look at the advertising battle between Apple's "Get a Mac" campaign and Microsoft's "Laptop Hunters" and "I'm a PC" TV spots. He said that the ad war between the two companies is "destined to go down in history," with the likes of the Pepsi-Coca Cola rivalry of the '80s and '90s. But in a new note to investors, Charlie Wolf of Needham & Company said the Mac's recent market share gains are a result of much more than advertising. In addition, he said the Windows maker would be better suited using its money to combat overseas piracy in emerging countries.
"One has to admit that Apple’s 'Get a Mac' campaign was humorous if nothing else," Wolf said. "But why Microsoft responded with an ad campaign of its own is a mystery. The company erroneously attributed the Mac’s share gains to the 'Get a Mac' campaign... However, the damage done to Windows' worldwide market share was miniscule. While it’s true that the Mac’s market share has more than doubled in the past five years, Windows’ market share loss was just 2-plus percentage points."
He said that Windows' share of the worldwide PC market is only 70 percent, and that's mostly due to piracy of Microsoft's operating system. Chasing those pirates, Wolf said, would be a better value for shareholders of Apple's rival to the north.
Apple's own market gains with the Mac platform are attributed by Wolf to the iPod "halo effect," in which users become more familiar with Apple products and migrate to the Mac. In addition, he said constant updates to OS X as well as the company's consumer-friendly Apple retail stores have all given the Mac more market and mind share.
"Those share gains began long before Apple introduced its 'Get a Mac' campaign," Wolf said. Apple's share of the U.S. home market, which is the focus of its ad campaign, has already increased from a low 2.9 percent in the second quarter of 200r to 7.8 percent by the time the 'Get a Mac' campaign began, and it eventually rose as high as 12.1 percent in the second quarter of 2008."
In a separate report last week, Wolf went in-depth into the breakdown of recent PC and Mac sales, as Apple saw a 5.5 percent year-over-year increase in sales. He believes those gains were achieved through price cuts in the MacBook Pro lineup enacted on June 8, and that the Cupertino, Calif., company was able to make those cuts without affecting its bottom line due to high profit margins on the iPhone.
In the second quarter of 2009, Apple commanded 8.7 percent of the U.S. PC market, growing from 7.4 percent in the first frame of the year. That as the rest of the PC market slid 1.2 percent year over year.
Contrasting the styles of Apple and its rival, Wolf calls Microsoft's ads "a variation of cash for clunkers," focusing on price and emphasizing that more things are important than just brand.
"What's implied, at least from Microsoft's perspective, is that the only reason the Mac gained share was its ad campaign that derided the Windows PC," he said.
In Sunday's New York Times, Devin Leonard took a look at the advertising battle between Apple's "Get a Mac" campaign and Microsoft's "Laptop Hunters" and "I'm a PC" TV spots. He said that the ad war between the two companies is "destined to go down in history," with the likes of the Pepsi-Coca Cola rivalry of the '80s and '90s. But in a new note to investors, Charlie Wolf of Needham & Company said the Mac's recent market share gains are a result of much more than advertising. In addition, he said the Windows maker would be better suited using its money to combat overseas piracy in emerging countries.
"One has to admit that Apple’s 'Get a Mac' campaign was humorous if nothing else," Wolf said. "But why Microsoft responded with an ad campaign of its own is a mystery. The company erroneously attributed the Mac’s share gains to the 'Get a Mac' campaign... However, the damage done to Windows' worldwide market share was miniscule. While it’s true that the Mac’s market share has more than doubled in the past five years, Windows’ market share loss was just 2-plus percentage points."
He said that Windows' share of the worldwide PC market is only 70 percent, and that's mostly due to piracy of Microsoft's operating system. Chasing those pirates, Wolf said, would be a better value for shareholders of Apple's rival to the north.
Apple's own market gains with the Mac platform are attributed by Wolf to the iPod "halo effect," in which users become more familiar with Apple products and migrate to the Mac. In addition, he said constant updates to OS X as well as the company's consumer-friendly Apple retail stores have all given the Mac more market and mind share.
"Those share gains began long before Apple introduced its 'Get a Mac' campaign," Wolf said. Apple's share of the U.S. home market, which is the focus of its ad campaign, has already increased from a low 2.9 percent in the second quarter of 200r to 7.8 percent by the time the 'Get a Mac' campaign began, and it eventually rose as high as 12.1 percent in the second quarter of 2008."
In a separate report last week, Wolf went in-depth into the breakdown of recent PC and Mac sales, as Apple saw a 5.5 percent year-over-year increase in sales. He believes those gains were achieved through price cuts in the MacBook Pro lineup enacted on June 8, and that the Cupertino, Calif., company was able to make those cuts without affecting its bottom line due to high profit margins on the iPhone.
In the second quarter of 2009, Apple commanded 8.7 percent of the U.S. PC market, growing from 7.4 percent in the first frame of the year. That as the rest of the PC market slid 1.2 percent year over year.
Contrasting the styles of Apple and its rival, Wolf calls Microsoft's ads "a variation of cash for clunkers," focusing on price and emphasizing that more things are important than just brand.
"What's implied, at least from Microsoft's perspective, is that the only reason the Mac gained share was its ad campaign that derided the Windows PC," he said.
Comments
Seriously though, Apple are smart and know advertising is often used to reassure people after they purchase not just to persuade them to purchase. A new car buyer often takes home a brochure of the car he / she bought to read for example. Apple ads are feel good and funny and perhaps are aimed at switchers, post sale, as much as anything.
Yeah I know overseeing is spelled incorrectly but it is a play on the articles use of "piracy overseas" and the Johnny Depp movie, "Pirates of the Caribbean"!
Anyway, leave the pirates alone, maybe their OS is better?!
Apple's own market gains with the Mac platform are attributed by Wolf to the iPod "halo effect," in which users become more familiar with Apple products and migrate to the Mac.
That's what happened to me. I went through two HDD-based iPods, an iPod touch 1G, an iPod touch 2G, an iPhone 3GS, and I just recently bought a MacBook Pro and ditched my PC.
"Pirates of the Overseaing"
Yeah I know overseeing is spelled incorrectly but it is a play on the articles use of "piracy overseas" and the Johnny Depp movie, "Pirates of the Caribbean"!
Thanks for explaining - but if your joke needs that much explaining perhaps it ain't worth telling. Still, I guess you laughed out loud.
Further, those in the market for Macs aren't necessarily looking to save. When Apple operates mostly in the Premium end of the market with its Macs, showing middle-America compromising in some outlet store because it can't afford a Mac isn't going to work. Duh!
All Apple needed to do for record Mac sales in a recession was offer modest savings on their fresh Mac models (something they've done historically anyway), which still amounted to $1000+ price tags.
I agree Apple is not a threat to M$ right now, but the tide may turn, and maybe that is what M$ is trying to avoid.
Many years ago when Mac was growing market share one of the ways this happen was student coming out of college and people who bough a mac for home use began bringing their macs to work and over time companies saw the benefit and began support and buying mac for people at work. M$ at that time saw a drop in their corporate accounts, which did not last long because John Scalley screw that up.
Not sure this will happen again, but I am seeing a little of this, especially with the Iphone, people are bucking the system just to have an iphone.
The laptop hunter and 'i'm a PC' ads come across as Microsoft yelling 'nuh-uh!' like a child.
People don't shop for Windows. Period. They either buy what they must, to be compatible with work, for gaming, or they buy something based entirely on hardware/price. Advertising Windows is silly. No-one's really considering it as a positive or negative on its own. It just *is*.
Also, if you want to talk about a waste of money, trying to chase piracy is it. MS likely spends more on copyright protection and activation/authorization schemes than they lose already; and particularly in countries where a Windows license only goes for $10 anyway.
Making Windows impossible to be pirated, even if that were plausible, isn't clearly desirable either. If you did it, those developing nations would switch to Linux. They'd have to. As long as they can pirate it, Microsoft's momentum keeps them as the default choice.
This guy Wolf is speaking out of his A$&!
Here is the article ( I posted it for you all previously on Monday):
http://www.nytimes.com/2009/08/30/bu...edia/30ad.html
Which all goes to show Gates had more brains than Ballmer by never doing this. I suspect Ballmer just got mad. Perhaps is was the use of a fat guy as 'I'm a PC' was taken personally?
Seriously though, Apple are smart and know advertising is often used to reassure people after they purchase not just to persuade them to purchase. A new car buyer often takes home a brochure of the car he / she bought to read for example. Apple ads are feel good and funny and perhaps are aimed at switchers, post sale, as much as anything.
if the "i'm a pc" guy ever did coke in the ad, ballmer would be taking it personally, otherwise, i don't think so...
I agree Apple is not a threat to M$ right now, but the tide may turn, and maybe that is what M$ is trying to avoid.
Poignant observation. In business, 'if you ain't growing, you're dying!' As clumsy as MS is and as deft as Apple is, they both know this truism to be....er, 'true.'
sadly, the main reason "the tide is turning" is the incredibly poor Vista.
if MS had a decent OS they wouldn't be losing so many customers.
Microsoft is going to push windows 7 and push huge with advertising.
this is going to stop the bleeding, no doubt. i don't think anyone who's switched to mac will go back, and luckily, apple sill has the caché of being high end.
People realize that for their own personal use, they don't want the headaches associated with Windows, they don't want to use the same dam thing they use at the office where the local IT guy fixes everything.
Consumers have chosen Mac's because if they need to they can run Windows via Bootcamp and keep from using it online except for updates.
The unbiased NY Times article states that the latest Microsoft ads have been very effective when you consider what they've spent vs Apple. Apple even lowered the Mac prices in responce to MS ads and had their lawyer contact MS to stop the ads.
1) It is 'unbiased' because it is pro-Microsoft?
2) The article's measure of 'effectiveness' is primarily regarding employee morale in the company. Frankly, it made me cringe thinking about what a sad internal state of affairs must prevail at Microsoft, if a Lauren-type ad and their senior managers getting some media attention is the source of corporate morale upliftment.
3) Apple lowered the price for a number of reasons (incl. the recession, the fact that market prices for computers were falling, and the drop in component prices that enables them to maintain margins). There is simply no way you can make the claim that it was in response to Microsoft's ads.
4) Apple's lawyers got in touch with Microsoft to point out information distortion in the ads regarding Apple's pricing, nothing else. And, Microsoft had to redo (at least one of) their ads as a result.
Please stick to facts.
I also fail to see how someone who pirates the OS but still uses a PC is not a PC user...that hardware was not free.
Apple has done the right thing with SL, its darn cheap, most people will pay for it cause of the cheap price....though those that pirate, will not even pay the current rrp, they would not care if it was $5, they would still torrent it.
This guy must be a major Apple fanboy. The unbiased NY Times article states that the latest Microsoft ads have been very effective when you consider what they've spent vs Apple. Apple even lowered the Mac prices in responce to MS ads and had their lawyer contact MS to stop the ads. That's not effective?
Actually, as I recall from reading that article, it said that while it at first appeared that MS's adds were effective, that the rebound of Apple's sales indicates that all that was going on was that economic conditions had made it temporarily look as though the ads were effective. In other words, the belief that they were effective was simply a confusion of cause and effect.
The laptop hunters ad just reaffirms the warm happy feeling PC geeks get when they point out that they don't have to spend a $1000 to get a computer like Apple's and have a "comparible" experience. Which misses the boat entirely.