Microsoft Execs Proud Of Their Apple Counterpunch

Microsoft executives this week methodically downplayed the threats Apple poses to Microsoft's business.

At Microsoft's Financial Analysts Meeting, CEO Steve Ballmer attributed Apple's recent PC market share gains as "a rounding error" and described Apple's sales rate of 10 million PCs annually as "a limited opportunity." On a global scale, Apple's market share gains "cost us nothing," Ballmer declared.

But this was essentially the same garden variety trash talk one usually hears at these types of events. It was far more interesting to hear Microsoft discuss its efforts to fight back against Apple in the "Laptop Hunters" advertising campaign.

Two years ago, when Apple was beating up on Microsoft with its "Get A Mac" campaign, investors began pressuring Microsoft to respond, Ballmer said. Microsoft subsequently launched a $300 million blitz led by advertising industry stalwarts Crispin Porter + Bogusky, and that has helped to counteract Apple's messages, Ballmer said.

Ballmer cited recent independent survey data that shows perceptions of value among 18- to 24-year-olds shifting steadily away from Apple and toward Microsoft. "I think so far [the advertising] has proven to be quite effective," Ballmer told analysts.

But fighting Apple's advertisements hasn't been cheap. Ballmer said Microsoft in its recently concluded fiscal year "spent a bunch of money" on Windows advertising and marketing, and he told analysts that Microsoft will continue investing heavily in Windows marketing. This is a departure for Microsoft and represents a new element of the Windows P&L cost structure, Ballmer said.

In a separate speech, Microsoft COO Kevin Turner also took shots at Apple and said Microsoft has made significant progress in communicating its message that Windows PCs offer customers better bang for their buck than Macs, which is the main focus of the Laptop Hunters series.

Turner described the type of fence-sitting customer that Microsoft's Apple-directed messaging has the best chance of swaying. "They are thinking about buying an Apple laptop, how they are going to get ripped off and pay too much, quite candidly," Turner said.

Turner mentioned Apple's new 13-inch MacBook Pro, which is priced starting at $1,199, and said a $649 PC gives customers more RAM, a bigger hard drive and larger screen size. "What a great opportunity for us to get the facts out on our value proposition," Turner said.

Ballmer also took aim at the notion that Apple's complete control over software and hardware offers it competitive advantages over Windows PCs. When Windows 7 PCs start hitting shelves this fall they'll usher in new partner-devised PC designs that will help change that conventional wisdom, Ballmer predicted.

"So it is possible to get great hardware innovation, even when hardware and software comes from separate companies," Ballmer said.

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