Microsoft’s Billionaire Budgets (& Extravagant Launches)

Choosing an operating system for your Web server is one thing, but when it comes to your personal computer, Microsoft definitely wants you using their OS.

Love it or hate it, Microsoft Windows has become an integral part of the computing lives of millions of people worldwide, with nearly 62% of the world’s computers running some version of the operating system (OS). From personal PCs to Web hosting servers, Microsoft’s dominance of the global computing scene is due in no small part to its now-legendary campaigns celebrating the launch of each new version of Windows.

Beginning with the launch of Windows 95, the company has shown a commitment to spectacle that rivals (or perhaps, as some critics grumble, exceeds) its commitment to software. Yet even amid increasingly harsh criticisms about rushed production, security flaws and compatibility issues, Windows has continued to expand its market share—and its marketing budget. Launched back in 1992, Windows 3 managed to transform personal computing for millions of people (to the tune of $1.1 trillion over the first two years of sales), but its paltry $8 million marketing campaign probably wouldn’t cover appearance fees for even one of the company’s celeb-packed adverts for Windows Phone 8—a product with a potentially ephemeral lifespan—in 2012.

With Windows 8, Microsoft officially broke the billion-dollar marketing barrier (and nearly broke the $2 billion barrier), combining its software launch with the debut of new hardware (its Surface tablet). Hailed as the biggest product launch in the history of the computer industry, Windows 8 premiered after an estimated 1.24 billion hours of public beta testing. The company subsequently raked in $16 billion in revenue over the next six months, but with launch marketing consuming 11.2% of those dollars, the law of diminishing returns seems to have reared its misshapen head.

Regardless of its missteps along the way, Microsoft’s intention to continue its domination of the personal computing marketplace is clear. But with the rise of mobile computing and the increasing importance of smartphones and tablets, the company that trotted out the Rolling Stones to “start us up” back in 1995 will need more than spectacle to see that intention through.

Billionaire Budgets Microsoft

Billionaire Budgets: Microsoft’s Most Extravagant Software Launches

Launched in 1975, Microsoft became the world’s largest personal computer software company based on sales in 1988. As the company grew its product line, it often introduced its new products with celebrations of epic proportions…but also saw less than favorable product reviews. Imagine if they put all that money into building a better product rather than elaborate launch parties.

1992: Microsoft launched its first TV campaign for Windows 3.0 and 3.1

The campaign was targeted to computer users who didn’t necessarily read computer magazines and was designed to let potential new users know how easy personal computing could be with Windows.

Results

The two versions sold 10 million copies in their first two years, making it the most widely used Windows operating system yet.

With the full version of 3.0 priced at $149.95 and the 3.1 upgrade at $79.95, gross revenues for the first two years were roughly $1.1 trillion (taking the average of the 2 prices x 10 million).

Windows 3.0 sold 4 million copies in its first year for total revenues of $598 million.

Total Campaign Spend: $8 million; 1.3% of first-year reviews

What Customers Said…

“It was miraculous in its day,” said Ed Bott on ZDNet.com.

After years of using DOS and a variety of task-switching programs, computer whizzes of the day were thrilled to have a GUI and a real memory manager.

The introduction set the stage for the rise of the Internet as global computing, multimedia, and communication platform for the masses.

  • While the Internet already existed, it took a Windows 3.0 application, Netscape Navigator, to give people their first convenient opportunity to explore the Internet.

There also wasn’t much competition at the time…

1995: Windows 95 was launched

The first grand celebration of the Microsoft name.

Campaign elements included:

  • $3 million to use “Start Me Up” by the Rolling Stones as the soundtrack for the advertising campaign. The first TV commercial for which the band licensed their music.
  • Empire State Building lit up in Windows colors.
  • Toronto’s CN Tower was draped with a 300 foot banner ad.
  • Midnight queues outside PC shops.
  • More than 40 Windows 95 parties around the globe with live satellite feeds broadcasting the unveiling to the world.
  • The Microsoft campus was transformed into a carnival for the event, emceed by TV host Jay Leno and featuring a Windows 95 vehicle made by French automaker Citroen.
  • A front page banner on an entire edition of the Times of London.
    • Microsoft reportedly paid the paper $500,000 to give away 1.5 million copies (3x the paper’s normal circulation).
      It was the first time in the paper’s then 307-year history that it was given away for free.

To some, the arrival of Windows 95 heralded a brave new world of personal computing; to others, it was the beginning of a long period of stagnation for the PC platform.

Results

Selling at $89 apiece, Microsoft reportedly sold 1 million copies of Windows 95 within four days and a record 7 million copies within five weeks.

A year later, it had sold 40 million copies for total revenues of approximately $3.6 billion.

In 1996, Microsoft saw revenues of $8.67 billion and a net income of $2.2 billion.

Total Campaign Spend: $200 million; 5.6% of first-year revenues

What Customers Said…

According to RoughlyDrafted.com, Windows 95 wasn’t anything close to the product vision called Cairo Microsoft had promised back in 1991.

Instead, it was just the latest version of MS-DOS running an improved version of the existing Windows graphical shell.

The Washington Post observed, “customers expecting Windows 95 to be a great technological leap forward may be disappointed. IBM and Apple Computer Inc. already have operating systems on the market that sport the features.”

At the time, it was common to see bumper stickers saying “Windows 95 = Macintosh ’89. “

2001: Microsoft launched Windows XP

Windows XP was released with a redesigned look and feel centered on usability and a unified Help and Support services center.

Campaign elements included:

  • Madonna’s 1998 Grammy-winning hit “Ray of Light” featured as the theme song for the four-month campaign.
  • A lavish extravaganza including a performance by musician Sting in New York’s Bryant Park.
  • New York Mayor Rudolph Giuliani, Former New York City Mayor Ed Koch, television personality Regis Philbin, Starbucks Chairman Howard Schultz, and Intel Chief Executive Craig Barrett took part in the launch.

Results

Within the first three days of launch, 300,000 boxed copies of Windows XP were reportedly sold through U.S. retail channels alone.

Just over two months after launch, sales reached 17 million copies sold for total revenues of approximately $2.5 billion at $199 for the Pro version and $99 for the Home edition.

Total Campaign Spend: $200 million; 7.8% of first two months of sales

It was estimated that Microsoft, chipmaker Intel, and PC makers spent a combined total of more than $1 billion on marketing for Windows XP.

What Customers Said…

Between 2001 and 2008, Windows products became extremely susceptible to bugs, or viruses.

According to InfoWorld.com, errors buried in millions of lines of code caused several colossal security meltdowns even for large corporations.

Entire industries sprang up to protect Windows users from previously unknown flaws, while malware authors have matured their practices from juvenile pranks to moneymaking criminal enterprises.

2005: Windows XP ‘renewal’ campaign was launched

Microsoft launched the 15-month “Start Something” campaign with hopes to renew the Windows XP brand.

It aimed to “celebrate the countless possibilities for Windows to bring what people are passionate about to life using the hundreds of thousands of software applications and devices that work with Microsoft® Windows XP.”

Running in 11 countries, the campaign included web, print, and TV advertising; retail store presence; online activities; and more.

2006-2007: Microsoft launched Windows Vista with “Wow” campaign

The campaign was launched across 20 countries.

Campaign elements included:

  • A series of commercials highlighting “wow moments” such as a child discovering a snowfall, the fall of the Berlin Wall, and Woodstock.
  • Another commercial featuring basketball star Lebron James.
  • A human billboard with 16 dancers forming the Vista and Microsoft Office icons.
  • An invitation-only party in Times Square hosted by Microsoft Chairman Bill Gates.
  • A slew of retail promotions in more than 30 markets around the country, including Xbox giveaways and school PC-lab makeover sweepstakes.
  • An online consumer-participation promotion themed “Show us your wow,” with the winner receiving a trip around the world.
  • Sponsored webisodes at Clearification.com featuring Daily Show comedian Demitri Martin.
  • An alternate-reality game called “Vanishing Point” that moved between online and offline.

Results

20 million copies of Windows Vista were sold one month after launch at $399 for Vista Ultimate and $239 for Home Premium Vista for total revenues of roughly $6.4 billion.

Total Campaign Spend: $500 million; 7.8% of first-month sales

What Customers Said…

Vista became a legendary flop.

Vista’s technical problems included drivers that didn’t work well, weak security features, and sluggish performance.

According to Technologizer.com, despite almost favorable and even enthusiastic initial reviews, negative reaction to Vista among consumers and businesses prevented it from ever truly superseding Windows XP in the way it was supposed to do.

2012: Microsoft launched Windows 8

The biggest product launch in the history of the industry.

Campaign elements included:

  • A five-hour event at New York’s Pier 57 including a performance by act Far East Movement.
  • A pop up store in the centre of Times Square in New York where users tried out the new Surface tablet for the first time.
  • A recreated New York skyline.
  • The company also opened a new store in Times Square in New York for the launch.

The software went on sale in 37 languages and 140 worldwide markets around the world.

Results

More than 100 million copies of Windows 8 were sold in the first six months of launch at $119.99 for the Windows 8 Upgrade and $199.99 for the Pro Upgrade for total revenues of roughly $16 billion.

Total Campaign Spend: $1.5-$1.8 billion; 11.2% of first six months of sales

What Customers Are Saying…

Windows 8 has faced a great wave of negative feedback, cited as a fractured experience on Wired.com.

“In its attempt to balance the demands of good design and those of its conservative user base, the OS winds up being an uncomfortable mix of playfulness and stodginess, the mullet of computer operating systems.”

One of the biggest complaints: No Start button.

  • Windows users responded with confusion and even anger to this disruption in their long-established workflows.
  • People took to YouTube to post reaction videos of attempts to use Windows 8 without the Start button.

Sources

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