Microsoft Escalates Competition With Apple

After months of staying relatively silent on the issue, Microsoft has decided to trumpet what it perceives as its growing strength in the Mac versus PC match-up.

This represents something of a switch for Microsoft, which stayed notably subdued in 2008 as Apple pounded away with its own “Get A Mac” ad campaign, starring comedian John Hodgman as the stodgy human version of a PC and actor Justin Long as a hipster Mac.

Microsoft’s retaliatory campaign, however, came on the heels of a global economic meltdown, and emphasised the relative inexpensiveness of PCs—something that audiences seemed to respond to in positive way. Those ads, at least according to Kevin Turner, Microsoft’s chief operating officer, also drew an irate response from Apple.

“Two weeks ago we got a call from the Apple legal department saying, ‘Hey’—this is a true story—saying, ‘Hey, you need to stop running those ads, we lowered our prices,'” Turner said in a 15 July speech at the Worldwide Partner Conference in New Orleans. “They took like $100 off or something.”

Turner added, “It was the greatest single phone call in the history that I’ve ever taken in business. I did cartwheels down the hallway. At first I said, ‘Is this a joke? Who are you?'”

Turner framed the 22 Oct release of Windows 7 as “an incredible opportunity for us to fight back.”

He said, “It feels really good to be on the offensive here. We’re doing stuff and we’re in the game and continuing to take some of these hard market-share opportunities head-on and compete because it’s a test of will.”

Part of that competition will revolve around new Microsoft retail stores due to open in fall of 2009, some of which will be located in close geographical proximity to Apple stores. The Microsoft retail stores may closely resemble the Retail Experience Center that opened in Redmond, Wash., in 2008, which offered products such as the Zune in a Best Buy-style box store format.

Turner’s comments echoed those of Microsoft CEO Steve Ballmer, delivered a day earlier at WPC.

“All of our research shows that our ‘I’m a PC’ ads—that talk dramatically about the price of Macintoshes—work quite effectively,” Ballmer said during a Q&A session immediately following his July 14 keynote speech. “We’ve gained market share quite effectively against Apple over the past six to nine months.”

Microsoft could indeed have the ability to build some marketplace momentum heading into the second half of 2009, particularly with regard to competing against Apple hardware and software.

“Windows 7 is going to reduce the experience gap between the two OSes significantly, and Apple has already fired its best bullets,” Roger Kay, an analyst with Endpoint Technologies Associates, wrote in an e-mail to eWEEK. “Also, the PC hardware OEMs have learned from Apple on the design front, diminishing the hardware gap as well.

“I would say the winds are shifting in Microsoft’s favour,” Kay added.

Within the U.S. PC market, Apple’s share has declined from 9 percent in the third quarter of 2008 to 7.4 percent in the first quarter of 2009, according to a research note from Gartner. However, Apple’s bottom line continues to be substantially buoyed by iPhone and iPod sales; on April 22, Apple announced its best-ever results for a non-holiday fiscal quarter, having shipped 2.2 million Macs on top of 11.01 million iPods and 3.7 million iPhones.

In June, Apple reported selling more than 1 million iPhone 3GS smartphones in the first three days.

On the PC front, however, Microsoft is aiming to solidify or even gain market share with the release of Windows 7 on 22 Oct. Both consumers and business volume purchasers will be targeted for massive price cuts and promotional offers as Microsoft attempts to push the operating system worldwide as fast as possible.