Microsoft was founded in 1975, when Bill Gates left Harvard at age 19
to work with high school friend Paul Allen on a version of the BASIC
programming language. After moving the company from Albuquerque, New
Mexico, to Seattle in 1979, Gates and Allen began writing operating
system software. What happened to the company since its founding is a
well-known and often-told story. Key strategies that enabled Microsoft
to achieve such remarkable growth in the competition-laden computer
industry include product innovation, brand extension, heavy
advertising, competitive toughness, and product expansion.
In 2005, Microsoft shook up the marketplace ? and the marketing
industry ? again with its non-traditional launch for the Xbox 360.
Read Microsoft's Xbox 360
spin(http://news.com.com/Commentary+Microsofts+Xbox+360+spin/2030-1069_3-5706144.html)
and address the following questions:
1.	What are the key elements of Microsoft's marketing strategy for the Xbox 360? 
2.	What are the similarities and differences compared to past product
rollouts within Microsoft and compared to the rest of the industry?
3.	Could Microsoft be considered one of the best and worst examples of
marketing success in America during the 1980s and 1990s? Discuss.
4.	Do any of the Microsoft strategies contradict future issues that
Microsoft and other technology-oriented firms should prepare to deal
with in coming years?

The key elements of Microsoft's marketing strategy for the Xbox 360
revolve around a direct to the consumer approach.  Unveiling the new
hardware to consumers on a primetime MTV special was a radical
departure from past practices, where game console manufacturers
debuted new hardware to industry insiders at the Electronic
Entertainment Expo.  Instead of relying on industry analysts to act as
evangelists for the new console until shortly before its launch,
Microsoft has opted to attempt to freeze the market by making
consumers aware of its offering even though it will be at least six
months before it is available.

The direct to the consumer approach is very different from past
industry practices.  Furthermore, by leading the industry into the
next generation of consoles instead of being a laggard, Microsoft is
seeking to compress the console product lifecycle and put pressure on
its competitors to innovate more rapidly.  Since Sony is currently the
category leader, but also has the oldest hardware in the marketplace,
Microsoft's strategy is especially geared toward beating Sony to the
next generation of consoles.  Microsoft has a much lower share of the
market and is much more interested in succeeding in the next
generation consoles than it is in the current one, so hurting its own
sales of the original Xbox is of little importance if it can
significantly decrease sales of PlayStation 2 and attract new
customers before the launch of PlayStation 3.

Microsoft was a very successful marketer in the 1980s and 1990s in
many respects because it was able to convince corporations that its
less technically capable and less innovative products than those
produced by others, such as Apple and UNIX, were nonetheless the best
choice for businesses operating personal computers.  Microsoft also
successfully convinced businesses to frequently upgrade software even
in the absence of major innovations.  On the other hand, more recently
the company has fallen into disfavor as its anti-competitive practices
became widely known and companies and consumers have become more aware
of its shortfalls.

To combat the impression that it is not an innovative company,
Microsoft is seeking to use the Xbox 360 as a means of changing the
public's impression of the company.  Whereas historically Microsoft
has let other companies develop new markets, such as Internet
browsers, graphic user interfaces, and gaming consoles, and then
entered late, the company is now seeking to lead the gaming console
industry.  The company also needs to diversify beyond PC sales into
gaming and other markets to regain its historically rapid growth.  Its
next-generation operating system has been significantly delayed, and
PC sales are growing very slowly.  Furthermore, consumers and
businesses are increasingly resisting upgrading its products every
couple of years.

Although gaming is a rapidly growing market, Microsoft's ultimate goal
is to provide the hardware and software "brains" for delivery of all
types of entertainment through consumer electronics.  Producing a
console with many capabilities that is viewed as being highly
innovative is critical to gaining consumers' trust so that they will
rely on Microsoft for more than just gaming and PC operations.  In
this regard, Microsoft's strategies fit well with the future issues it
is likely to encounter of continuing slow growth in PC sales and a
need to increase its growth through both gaming and receiving a
greater share of consumers' home entertainment expenditures.

Sincerely,

Wonko

Some additional articles that may interest you:

"Gaming's Clash of the Titans" by Cliff Edwards, Business Week (May
24, 2005)http://www.businessweek.com/technology/content/may2005/tc20050524_0153_tc024.htm

The May 23, 2005 issue of Time magazine has significant coverage of
Xbox 360 (subscription required to read articles in their entirety)
http://www.time.com/time/magazine/0,9263,7601050523,00.html

Cuddlesbum --

Actually Microsoft was entirely a LANGUAGES company, producing Basic,
Cobol, Fortran and Macro Assembler for the personal computer until the
purchase of 86-DOS from Seattle Computing in 1980.   This is what was
licensed to IBM as MS-DOS with the introduction of the IBM Personal
Computer in 1981.  (It was 1982 before Multiplan, a spreadsheet that
was the company's first application, was introduced.)

The closest that Microsoft had come to the operating system business
before the IBM introduction was a license arrangement for Unix in 1980
-- but the product was never brought to market.

A good source for timelines and strategy is Cusumano & Selby's book,
"Microsoft Secrets."

Best regards,

Omnivorous-GA