Microsoft's Real Hurdle: Market Saturation

[Damion Chaplin]

Yesterday, we reported (http://www.digitalmediathoughts.com/forums/posting.php?mode=editpost&p=62984) on how Microsoft was trying to shed the underdog title and steal some marketshare from Apple and their iPod/iTunes combo. I realized on the way to work this morning that what Microsoft and partners are missing (as usual) is a serious marketing strategy. My commute this morning was a continuous assault by all things iPod. It wasn't just the ubiquitous white earphones, it was the advertising. Take a look at this picture sequence. These were taken in order as I walked off the train and walked the one block to my place of work:

http://www.digitalmediathoughts.com/images/ipodmarketing 002.jpg
Just a 3rd party accessory, but it's great advertising for Apple
<!>
http://www.digitalmediathoughts.com/images/ipodmarketing 003.jpg
http://www.digitalmediathoughts.com/images/ipodmarketing 007.jpg
Ads blanketing both sides of the platform. Next stop: iPod Station.

http://www.digitalmediathoughts.com/images/ipodmarketing 011.jpg

http://www.digitalmediathoughts.com/images/ipodmarketing 013.jpg
How many ads can you count in this picture?

http://www.digitalmediathoughts.com/images/ipodmarketing 016.jpg
The Apple Store. Note the small iPod ads to the left of the store.

http://www.digitalmediathoughts.com/images/ipodmarketing 020.jpg
iPod: the official MP3 player of San Francisco.

In my humble opinion, Microsoft, MTV and iRiver and other hardware partners like them will never have a chance of taking any market share until they start flooding the streets with ad campaigns like this. This particular iPod ad campaign has been going on the exact same way for years now. It works. I must have seen the iPod name 30 times in the 40 minutes it took to get to work. Microsoft, are you reading this? If you hope to make this program successful, you'd better snap to it! It's not just about seamless hardware/software integration (though that's certainly important), it's about customer mind-set too.

[Jeremy Charette]

Is there anyone who doesn't know what Coca-Cola is? Do you think Coke needs to tell people about the same product is has made for the last century? Probably not.

They have a $1.6 Billion USD annual advertising budget.

Marketing is powerful. And I agree, Microsoft needs to step it up.

[Jason Dunn]

8O Wow. You live in an iPod world!

I don't see as much aggressive advertising here, but I see the Mac/iPod ads on TV fairly often, and they're the only company advertising digital audio players.

The sad truth is that most of the companies making digital audio players that compete with the iPod are more like computer companies than consumer electronics companies. They can make cool gadgets, but they don't understand how to market them, brand them, or basically do anything but build them. And if they DO advertise them, it's not in a big enough way, or in a way that connects with people. I mean, really, is there only one creative ad agency in the world, and they only work for Apple? :roll:

It's a classic monopoly situation right? Apple has the monopoly right now, they make gobs of money from it, which then allows them to advertise the hell out of their stuff and further consolodate the monopoly. But they achieve it fair and square (more or less), so I have no pity for Creative, iRiver, or any of these other companies that can't seem to get their act together.

I see some glimmers or hope with the Microsoft/iRiver connection, but so much more needs to happen...

[Damion Chaplin]

8O Wow. You live in an iPod world!

Well, to be fair, they are advertising in the train station directly below their Apple Store, so it kinda makes sense, but Market Street is covered from end to end.

It's also interesting to note that the previous station is plastered in Windows Mobile ads. iPod ads in the shopping district and WM ads in the financial disctrict...

[kiwi]

In Toronto, there was a station all fitted out with Bose Speaker advertisements a few months back. It was at a major station and got A LOT of coverage. Many more commuters are ipod users than 18mths ago, though I dont know if they fit into the category of people willing to drop $CA399+taxes on a set of speakers.

b

[Neil Enns]

Meh, Microsoft has been here before and fought this same issue (and won). Jason surely knows the days when Palm was king. Heck, people even still *call* the devices Palm Pilots. But now Palm devices run Windows Mobile software, WM has much (much) larger marketshare worldwide, etc.

Neil

[Damion Chaplin]

Heck, people even still *call* the devices Palm Pilots. But now Palm devices run Windows Mobile software, WM has much (much) larger marketshare worldwide, etc.

And yet people still call them Palm Pilots. Why? 'Cause Palm (3COM, USR) got there first and advertised the heck out of it. Thus people who use a PPC still call it a Palm Pilot. It's even worse with the WM Treo out now. Now it's a PocketPC and a Palm. Microsoft blanketed a whole train station with WM ads and still people look at me funny when I say 'PocketPC'. People these days know 3 gadgets: The iPod, The Cell Phone, The Palm Pilot. Anything that was invented [read:advertised] later is automatically given the label of the very thing it was meant to compete with. People go to CompUSA to buy a Palm, not a PocketPC.

For example, it's been decades and people still say 'Coke' when they really mean 'Pepsi' or 'soda'. "What kind of Coke?" "The grape kind". :wink:

[Neil Enns]

Yes, but who cares what people call it? As long as they buy *my* product, they can call it anything they want :)

Neil

[Damion Chaplin]

Good point. :)

But...

How are they going to buy my product when they've never heard of it? Why would they buy an iRiver product when all of the ads are telling them to buy an iPod? And all their friends and family bought an iPod for just that reason: the ads tell them to and because they don't know any different...

People don't go to CompUSA because they want an MP3 player. They want an iPod. They've never heard of URGE or iRiver. Sure I don't mind people calling my MP3 player an iPod. It's when they go to buy the item and they don't even know what the product is called that I lose the sale...

So, in short, Microsoft and company had better start working on branding schemes or all their fancy hardware and software will be forgotten when it comes time to actually buy an MP3 player.

In my opinion, of course. :wink:

[Janak Parekh]

How are they going to buy my product when they've never heard of it? Why would they by an iRiver product when all of the ads are telling them to buy an iPod?
Exactly. Actually, I'd like to know how many Windows Mobile devices ship in a year, compared to iPods. You've got two different ecosystems there: the carrier-driven vs. the consumer electronics ecosystem. Microsoft (and Nokia) have figured out the former pretty well, but MS has a long ways to go in the latter (aside from the Xbox).

And, Jason, don't forget that New York is the second Apple land after San Francisco, and after the opening of the 5th Avenue Apple Store, that pecking order might be reversed. It is rare that I don't see at least 5 people using iPods on every commute between home and work. In fact, probably once a week I see 5 people using iPods sitting virtually next to each other on the subway. That is powerful branding, and I'm not convinced the OEM model works to accomplish it (unlike, say, the Xbox, which is a powerful brand indeed.) Here, "iPod == music player".

--janak

[Damion Chaplin]

...and I'm not convinced the OEM model works to accomplish it

Now we've come to the heart of the matter, I think. :D

Can MS et al actually pull off a successful ad campaign using the OEM model instead of Microsoft themselves launching a product, as they did with the XBox? That remains to be seen. If MS were pushing their own operating system, like they do with WM, they might have pulled it off. Ads for WM show PPCs of all makes and models, and it works, more or less. Leaving it up to the manufacturers to pawn their own product is not a fantastic idea if you're trying to compete with Apple. I think if anyone there can pull it off, it's MTV. No, they don't play music anymore, but they still have a HUGE audience and they could do it if they sunk the effort into it. I just hope before they dived into this, someone at MTV asked "So, exactly how many of our watchers already own iPods?" :wink: