War of words as Microsoft targets Google in ad campaign

The gloves are off as computing giants Microsoft and Google try to persuade users that they have the better product and are the more trustworthy company.
The launch of Microsoft’s latest office software comes as it ramps up its accusatory ad campaign against Google. Elaine Thompson / AP Photo
The launch of Microsoft’s latest office software comes as it ramps up its accusatory ad campaign against Google. Elaine Thompson / AP Photo

The struggle between Microsoft, once the mightiest computer-related company in the world, and the internet giant Google has intensified with the former conducting an all-out political-style campaign against the latter.

The launch of Microsoft's new version of its Office 365 and Office 2013 software has coincided with the ramping up of its "Scroogled" ad campaign, which accuses Google of compromising its users' privacy, among other things.

Last summer, Microsoft appointed the prominent US political spin doctor Mark Penn, a former Hillary Clinton adviser, to head up the smear campaign, which is largely focused on accusations that Google has tried to monetise its user base without paying due concern to safeguarding individuals' private data.

The computing giant's marketing war to win the hearts and minds of software users is now set to spread beyond its home US market to regions such as the Middle East. Microsoft is hosting a series of five events in the Arabian Gulf region this year aimed at promoting new software services, kicking off with last week's "Open Door Kuwait" event.

As software becomes more streamlined, there is little to distinguish one company's offering from another and the big information technology players such as Microsoft are preparing increasingly aggressive marketing campaigns.

"Vendors have slugged it out over features and functions, cost of ownership, and ease-of-use," says Richard Edwards, a principal analyst at the research firm Ovum. "With these measures now more or less equal, vendors are playing the fear, uncertainty, and doubt game by questioning the trustworthiness of a competitor."

In addition to the attacks by Microsoft, Google is also facing political pressure to modify its privacy policies from the European Union (EU). According to the EU commissioner for justice, Viviane Reding, Google could face a fine next year of as much as US$1 billion (Dh3.67bn), 2 per cent of its annual turnover.

While Microsoft has been nicknamed "the evil empire" by its critics and Google's corporate motto is "don't be evil", the two companies are increasingly finding themselves competing in the same markets.

Although Microsoft has been competing relatively unsuccessfully with Google in the search market, it is Google's encroachment into the software space with its free, web-based productivity offerings that has enraged the Microsoft chief executive officer, Steve Ballmer.

Traditionally, Microsoft's Office software has accounted for roughly half of the company's profits. There is now a growing industry view that Microsoft has been guilty of resting on its laurels.

"Microsoft is the entrenched vendor with leadership in professional email (Exchange) and office productivity, and Google is challenging with mostly free or very low-cost services," says Rob Enderle, the principal analyst at Enderle Group, a Silicon Valley research firm.

"Microsoft's vulnerability lies in the fact that it has been unchallenged for a long time and managed these key assets as cash cows, underinvesting in them and not reminding people of the value they were paying for."

Mr Enderle says that users saw the Microsoft Office charges almost as a tax, not as a payment for value. Google has managed to position itself as a way to eliminate this tax, and Microsoft has also been slow to improve other services, such as its Hotmail email service.

He adds that Microsoft's email service, Hotmail, was left to languish," allowing Google to migrate users to its Gmail service. Microsoft is now trying to make up lost ground by gradually moving roughly 30O million existing Hotmail users to its new improved webmail service Outlook.com.

The battle between the two IT giants is now set to rage across the internet as software services are increasingly hosted on the vendors' remote computer banks, a process referred to as "cloud computing". According to John Rymer, an analyst at international research organisation Forrester: "The future of Microsoft's platforms is on mobile devices and in cloud-computing services, not confined to PC desktops."

This means that the traditional battleground for the PC and laptop markets is now largely historic as new slimmed-down devices such as smartphones and computer tablets replace traditional desktop PC and laptop computers.

"There is intense rivalry and a huge amount of turmoil in many sectors of the IT and telecoms markets," says Chris Jones, a principal analyst at the research company Canalys. "The old guard - Intel, Microsoft, Nokia, BlackBerry, HP, Dell, etc. - is under pressure and the companies are being challenged from all angles. They will do what they feel is necessary to fight back."

In Microsoft and Google's case, this is likely to mean employing political cage-fighting tactics to win the hearts and minds of users in regions, such as the Middle East.

business@thenational.ae

Published: February 24, 2013 04:00 AM

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