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TV Ads Part of Windows Charm Offensive
By: iStockAnalyst   Saturday, September 06, 2008 1:56 PM
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(Source: The Seattle Times)trackingBy Benjamin J. Romano, Seattle Times

Sep. 6--Microsoft's new Windows advertising campaign is one piece in a major overhaul of how the company makes, markets and sells its most important product to consumers, a top executive said Friday.

The first commercial, featuring Bill Gates and comedian Jerry Seinfeld but no computers or software, launched a $300 million campaign Thursday, the largest consumer-ad push in company history.

While the ads are the most visible feature, the company has spent the past 18 months researching and rebuilding all aspects of its consumer Windows business, said Bill Veghte, senior vice president of Microsoft's online services and Windows business group.

"It was something that I felt very strongly we needed to do," said Veghte, who took on the role about the same time the effort started.

In a significant investment beyond the ad campaign, Microsoft has changed the way it works with PC manufacturers to build computers that perform better.

It's also experimenting with new retail concepts, including Microsoft "Gurus" the company is comparing to Nordstrom's personal shoppers, and updating its online presence to provide more specific guidance and help for consumers.

This investment might at first seem excessive for a monopoly business that is cruising, despite a resurgent and taunting Apple.

Windows generated $16.9 billion in sales in the past fiscal year and still managed to grow in the low double-digits.

The operating-system software also produces one of the largest profit margins -- more than 77 percent -- in the history of business.

But some cracks are starting to show, particularly when it comes to consumer perception of the latest Windows version, Vista.

"There's been a lot of negative publicity around Vista and that's probably hurt the Windows brand," said Sid Parakh, an analyst at McAdams Wright Ragen. "I think they're trying to earn back some of that credibility that the brand had."

Veghte put it another way: "Windows has become so ubiquitous that sometimes some of the magic and some of the opportunity that Windows affords fades into the background a bit."

Restoring that "magic" and exposing consumers to new features of Windows on PCs, mobile devices and the Internet is key for the long-term success of the business, Veghte said.

Veghte said the initial ad was meant to restart a conversation with consumers. The online reaction, be it jeers or shrugged shoulders, has at least grabbed attention. Subsequent ads in the series will focus more on Windows itself, he said.

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