“In an attempt to undercut Goodle’s standing as the most popular guide to the Web, Microsoft announced yesterday that it was offering cash incentives for people who use the company’s often-overlooked search engine.” - Washington Post
Microsoft is really starting to embarrass itself as it attempts to enter non-core markets. Who remembers Microsoft’s Cordless Phone? Who uses a .NET passport? How many of you own a Zune? Microsoft seems to have an awful lot of also-ran products. Why does this matter? Because of brands.
Brand power is recognized as a major influence in the average customer purchase decision. A well-constructed brand conveys security, quality, value, and/or other qualities that a single product simply doesn’t have. A brand alone, even without the products, can be worth hundreds of millions of dollars.
Microsoft understands this. Despite the hate-Microsoft bandwagon that seems to trundle round every few months, the Microsoft brand name has real power. That’s why Microsoft thinks it has the ability to march into any profitable computing-related market and claim a piece of the pie. What they don’t seem to realize is exactly how much they are risking.
Each new product Microsoft launches, whether it be a search engine, a gaming console, a phone, an authentication protocol, or MP3 player, has a launch campaign designed to use the Microsoft brand. This should help the new product gain traction with consumers thus increasing the product’s market share growth.
However, brand power is a dynamic beast. Each time a product fails to gain momentum (e.g. the phone) or encounters significant resistance (e.g. the Zune), Microsoft looks like an also-ran. The aggregate effect of browser wars, search engine wars, MP3 player wars, console wars, etc. is to slowly tarnish the Microsoft brand image. Obviously, each of these conflicts is driven by Microsoft’s brand. Equally, each of these conflicts contributes to Microsoft’s brand image.
In the eyes of consumers, Microsoft is becoming a reminder of a greedy latecomer who wants to barge into a party and then claim they threw it themselves.
Furthermore, these activities create a lot of enemies during a time when the internet is focused heavily on alliances, cooperation, and shared technologies. Other companies with new and innovative ideas don’t look to Microsoft as a collaborator or partner. Instead, they try to “Microsoft-proof” their concepts to head Goliath off at the pass.
Rather than attempt to find a battle on every front, Microsoft needs to pick a core business platform and one or two related markets. By focusing on these, Microsoft can win enough to burnish the brand and build a bridge to other markets. The hydra’s heads need to work together and go after a single target.
(Of course, there is one market where Microsoft has really succeeded in going from an also-ran to a leader. Console manufacturers have really had to cede ground to the Xbox series. Perhaps Microsoft can accelerate some of the learning in that division to its next big target?)
(People might point to Google as a similarly multi-focused entity. However, Google enters markets much earlier, either through acquisition or direct competition, and tends not to fight multiple major companies at the same time. This helps Google avoid a bullying brand message for the average consumer. It also confines itself to web technologies for the most part.)
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