Can There Be 'Wow' in Vista Marketing?

Yesterday's Microsoft marketing bravado is just too funny. So now, 17 months after general availability, Microsoft will promote Windows Vista? Get a life.

The big talk and promises came from Microsoft's Worldwide Partner Conference, in Houston, where Brad Brooks fessed up about Vista marketing mistakes and promised there would be response to Apple's "Get a Mac" ads. They say that confession is good for the corporate soul. I say that it's not good enough.

Microsoft should never have abandoned the original "Wow" Windows Vista marketing campaign. It brought new meaning to the term "marketing blitz." The campaign flashed by before anybody could blink and say, "Wow." Even if Microsoft executives loathed the ads, better to keep them than have nothing. I remain convinced that the Vista marketing campaign could have been very effective. The TV commercials were aspirational, potentially creating positive feelings about the then-mysterious Windows Vista.

Products don't sell themselves. There are good reasons why companies market their stuff. Products must be sold. The best sales pitch is life betterment. Why are people waiting a week in line to buy Apple's iPhone 3G? Because they believe the device will make better their puny little lives. Apple iPhone TV commercials run during most popular primetime programs. The marketing works.

There has been nobody out there saying how good is Windows Vista. But there are plenty of voices, including Apple's "Get a Mac" ads, shouting about how bad is the operating system. It's disgusting that Microsoft showed so little Vista marketing concern for so long. Any ad would be better than none.

Suddenly, there's bravado. Microsoft is making promises about real Vista marketing. Earth to Microsoft, it's going to be too little too late. Windows Vista is the high school outcast. It has got a bad reputation, and people won't easily forget. Marketing damage control is better than nothing, but it could have been avoided. Microsoft should never have given up on "Wow."

Whatever Microsoft does next can't be much worse than nothing. Still, the new marketing campaign, presumably for Windows Vista plus Windows Live, has got to have punch. The marketing must be creative, funny and aspirational—why your life will be better for buying a Windows Vista PC. Microsoft has to make people want Vista.

I grew up in Northern Maine about 16 kilometers from the Canadian border. The local CBC TV station, out of Saint John, New Brunswick, ran these crazy shampoo commercials. The theme: An American would try to smuggle the shampoo into the United States, only to be repeatedly caught by Canadian Customs. The shampoo was only sold in Canada, but was so good Americans would risk going to jail for smuggling out the hair contraband. The ads tapped into feelings about Canadian pride, American disdain and the product's value. You wanted to buy that shampoo.

To repeat: Microsoft marketing has to make people want to buy Windows Vista. The marketing will fail if it's about features or appeals to the intellect. Most purchasing decisions are emotional. Featuring people in ads is one of the most effective ways of generating good feelings about products. After all, people can connect to other human beings—there is common base—and people use the products. Apple's "Get a Mac" ads are effective because of how well they use people as metaphors for conveying typically complicated technological gobbledygook.

This afternoon, I drank some coffee to fire up the synapses, pondering what kind of commercials could be effective. I humbly offer up a couple, starting with response to "Get a Mac" anti-Vista propaganda. Microsoft shouldn't directly attack Apple. Better: Parody the "Get a Mac" ads, making a subtle but important point about Windows PCs. For this one, viral video would be better than commercial broadcast.

Here's what I'd do: The video opens with two guys standing against a white background, just like Apple's commercials. The viewer hears the familiar "Hello, I'm a Mac." "And I'm a PC." Then another guy appears, "And I'm a PC." Another and another and another appears, with popping sounds, each saying, "And I'm a PC." This goes on for about 10 seconds, with hundreds of PC people from different races and cultural attire popping up to overlapping choruses of "And I'm a PC." Then there is silence. The Mac guy looks at the thousands of PC people and mutters, "Wow." Across the screen flashes text: "You can be alone. Or you can have friends." The Windows Vista logo flashes. Video ends.

Everybody knows that there are more Windows PCs than Macs, right? The commercial would play on connotations of safety in numbers, community and fear of being alone. Human beings are social creatures, after all.

Here's another idea, and the last one. I'm not an advertising expert. These concepts are tough for me to think up: The scene opens on a park playground, with a woman facing us; she taps on a notebook resting in her lap. The camera zooms in as her friend walks up pushing a baby carriage. The woman immediately closes the lid, and her friend reacts with surprise. "Jane, what was that for? What are you hiding?" There is short silence, and the woman flips the lid to show the Vista desktop. "It's Windows Vista. I've heard so many bad things, I'm a little embarrassed about using it. But I really like Windows Vista. It's simply amazing." The friend shakes her head and smiles. She reaches into her tote bag, pulls out a laptop and flips the lid. It's Windows Vista. Both women laugh.

There are lots of ways Microsoft could wrap up the commercial; I'm more anxious to blog this post than make suggestions. I can't imagine Microsoft ever airing such a concept, though. But Microsoft needs something this aggressive—that hits hard at the Vista negativity and appeals to people that like the operating system. The commercial could easily feature two teens instead of mothers. Kids understand about being ostracized, as do many parents of middle or high school students.

How will Microsoft really market Windows Vista? We may soon find out.

Microsoft's Extinction-Level Event

If you're a dinosaur, extinction is inevitable.

But dinosaurs aren't replaced by mammals overnight. Evolution is a long process, which is why Microsoft can get away with its convoluted approach to partnering on hosted Web services. And I don't believe Microsoft's partner pitch; snake oil salesmen and pyramid schemers have made it before.

Simply put: Microsoft hosted services will bring some partners to extinction, because to make the big money they'll have to commoditize their own market. Shall I repeat that?

To quickly recap: Today at the Worldwide Partner Conference in Houston, Microsoft announced pricing for its Online Services, which initially will be available in Deskless and Business Productivity suites. The Deskless version costs $3 per employee per month for light versions of Exchange or SharePoint. The full suite, at $15 per employee per month, offers up hosted Communications, Exchange, Office Live and SharePoint products. Microsoft partners that sell the suite get up to 18 percent back the first year and 6 percent back thereafter.

"Once a quarter we send them a check," said Eron Kelly, director of Microsoft Online Services, during a conference call today.

Eron used the example of a partner selling 3,000 seats of Microsoft Online Services, which would have "almost $100,000 in residual fees." By my reckoning, that's $540,000 to Microsoft the first year and $97,200 for the partner—or $24,300 for the first partner payment. That's a helluva lot of upfront incentive for a partner to sell Microsoft hosted services.

But Eron's additional-year partner payback didn't initially add up for me. "By the end of the third year, that would grow to $162,000 if they were able to add those 3,000 seats each year." By my math, the partner would get $32,400 per year or $64,800 at the end of the third year. Near the end of the conference call, I asked Eron to explain his math. He's assuming that the partner would sell an additional 3,000 seats, not keep them as I assumed he meant.

Let me be clear: I know Microsoft isn't selling some kind of pyramid scheme, but it sure feels like it. The only way to sustain the revenue stream is to sell more seats in subsequent years. Here's how the math works out: In year two, the partner would make $129,600 by selling 3,000 more seats. In the third year, that take would be the aforementioned $162,000. In the fourth year, again adding 3,000 seats, the incentive would be $194,400. Half that amount, $97,200, would be equivalent to the partner's take from the first year incentive.

Partners must continue selling more hosted services seats to sustain Microsoft's payback. From Microsoft's perspective, it has got to be a sensible model. Partners make more by selling more. It's Partnering 101. But the process also cannibalizes the partners' market, by commoditizing server software that they would otherwise sell or service.

Microsoft Is the Landlord
Eron put forth some lamebrain perspective about how much partners would make selling additional services, such as Active Directory and Exchange e-mail integration, to support Microsoft Online Services. D`oh, these are short-term, not long-term services. There is a point where the work is done, because the customer has moved out of the owned property into a rental unit.

Microsoft is the new landlord, when the moving is done. The partner then gets paid by property owner Microsoft rather than by the enterprise business owner. Microsoft pays less over time, unless the partner moves more of its customers to rental units. By providing direct services under contract to businesses that own their own property, so to speak, the partner can collect ongoing services, maintenance and help desk fees.

I haven't done the hard math on this yet, but let's try a hypothetical scenario. Partner Bill has 12,000 seats, same number which in my aforementioned example he would have converted to hosted services over four years. Hypothetically, Bill collects a mere 10 bucks per seat for providing comprehensive site maintenance, including testing, deployment and management services. That's $120,000 a month in service fees, or $1.4 million a year. What if Bill made just $3 per seat per month, same as Microsoft charges for its Deskless suite? That's $36,000 a month, or $432,000 in one year. Bill doesn't need to aggressively sell 3,000 more seats each year, but simply organically grow his business and properly service existing customers to maintain them.

The example oversimplifies, because the partner assumes additional costs that would reduce margin of profits. For Online Services, Microsoft would assume more of the costs of doing business, but by no means all. Example: Sales and marketing. In the ownership example, the partner maintains customers and steadier revenue stream. For Microsoft rentals, the partner turns over customers to Microsoft, reducing the long-term pool of customers, commoditizing server software services and requiring further commoditization to continue generating revenue.

For partners looking to expand their businesses, Microsoft has given them incentive to get new customers and for a handsome first-year cut of the proceeds. But the gains, whether from hosting sales or partner-provided migration services, are short term. First benefit goes to Microsoft, which fosters commoditization to its benefit; better that Microsoft gets paid for hosted services than Google, Salesforce.com or other Web 2.0 platform companies.

Microsoft doesn't want to be the dinosaur, which is why the model now embraces hosted services. But Microsoft's partner approach to hosted services is sure to ensure that many partners will remain dinosaur's bound for extinction. Perhaps this year's Worldwide Partner Conference should be called Microsoft's "Extinction-Level Event."