An advertising blitz intended to help Microsoft polish the tarnished brand of its Windows Vista operating system began this week with a head-scratcher of a commercial. Manny Gouveia, left, a Windows guru in Orlando, Fla., explaining Vista features to his customers, John and Elaine Savino.
The ad features Jerry Seinfeld flexing some new shoes, Bill Gates adjusting his shorts and no mention of Vista. Microsoft says the ad is meant to get people talking, and that other parts of the marketing campaign will actually get into what its software can do.
But the advertising, which will cost hundreds of millions of dollars over several years, is really just “air cover,” according to Bill Veghte, the Microsoft executive who is responsible for sustaining Windows, probably the most lucrative franchise in history.
For more than a year, Mr. Veghte and his team have been developing ways to transform the experience of buying and using personal computers that run Microsoft software.
Corps of Microsoft engineers, for example, have been dispatched to tweak hardware and software to make Vista PCs faster and less crash-prone. Microsoft has stepped into the world of PC retailers in a way it never has before, offering training and advice — and even paying to put hundreds of “Windows gurus” in stores.
By now, Microsoft insists that most of the frustrating technical problems with Vista, which was introduced in January 2007 after repeated delays, have been resolved — and many industry executives and analysts agree.
Yet Vista’s image problems have opened the door to alternatives to Windows as never before. Windows still commands more than 90 percent of the market for personal computer operating systems. But Apple’s Macintosh operating software — which runs only on Apple machines — is gaining ground, especially in the United States.
Microsoft’s stumbles have also given momentum to the shift of software away from the PC and onto the Web. Web-based programs for e-mail, spreadsheets and other tasks can be run in a browser, undermining the value of the underlying operating system. Indeed, Google’s entry into the browser market this week is an implicit declaration that the browser is increasingly supplanting the PC operating system as a strategic computing gateway.
Microsoft makes much of its living from Windows, and a very good living it is. In the year ended in June, Microsoft’s Windows group generated revenue of nearly $16.9 billion and operating profits of more than $13 billion, a phenomenal 77 percent margin.
To keep that business humming, Microsoft needs to have consumers and corporations upgrade to new versions of Windows — something that has not been so easy with Vista.
“What we’re seeing with Vista is that for the first time some significant portion of consumers and business customers have decided it’s not worth upgrading,” said David B. Yoffie, a professor at the Harvard Business School. “If they don’t, the end of the franchise is at hand.”
The main problem with Vista, Microsoft said, was that given the delays, uncertainty and significant changes in the software, the rest of the industry was not ready when Vista finally arrived. There are one billion worldwide users of the various versions of Windows. Hundred of thousands of hardware devices and software applications run on it, and they need connecting programs, called drivers, to work smoothly with it.
Vista represented a big shift from its predecessor, XP, so it required a lot of new drivers — and Microsoft did a poor job of communicating how much work was needed. Often, Microsoft said, an older driver still worked with Vista, but it slowed down the PC or made it crash unpredictably. Today, 77,000 hardware devices and components are compatible with Vista, more than twice the number when Vista was introduced.
“We are in a very different position with Vista than we were even six months ago,” said Mr. Veghte, senior vice president for Windows strategy and marketing. “And there are a lot of people holding forth with criticism of Windows Vista that have not used Vista, or not recently.”
Just after Vista shipped, Steven A. Ballmer, Microsoft’s chief executive, tapped Mr. Veghte, 41, to move to the Windows business. In his 18 years at Microsoft, Mr. Veghte has had a wide-ranging career in sales, marketing and software development (he holds two patents).
Vista’s troubles were seen within Microsoft’s management ranks, characteristically, as an opportunity. Mike Nash, who had worked with Mr. Veghte before, signed up to join him. “There was so much we could do better,” said Mr. Nash, who is vice president for Windows product management. “Our task was to shake things around and make the Windows business much more sustainable over the years.”
In a meeting in July 2007, Mr. Ballmer signed off on Mr. Veghte’s plan to step up investment in the Windows business. In broad terms, the strategy was to work more closely with PC makers and retailers, and change perceptions of the Windows brand with a multiyear marketing campaign that Mr. Veghte called “a sustained conversation about what Windows is.”
The campaign is meant to move the Windows brand decisively beyond the PC, so the business can thrive even if the PC becomes less important. Microsoft believes that its broad reach gives it the upper hand against rivals like Apple or Google.
“It’s about the PC, phone and the Web, and Microsoft and Windows can connect those for customers in a way no other company or technology can,” Mr. Veghte said.
To set more detailed plans, Mr. Veghte plucked 10 other managers from across the company, and the group set up offices away from headquarters in Redmond, Wash., in an office building in nearby Bellevue, which they called “the Bunker.”
In their opening meeting, Mr. Veghte, according to team members, began by saying three things: Your personal reputations are on the line. We won’t automatically respect what Microsoft has done in the past. And we’ll try to test things quickly, in rolling pilot projects.
In a Seattle warehouse, Microsoft built a “retail experience center” to test ideas about the behavior of shoppers. With retailing now accounting for 40 percent of PC sales worldwide, and growing twice as fast as other sales channels, Microsoft decided it had to get more directly involved instead of just delivering products and promotional subsidies. “We weren’t coming in with the tools and people to help them,” said Bill Brownell, general manager of retail marketing at Microsoft.
Microsoft is sharing its research with retailers. It is also paying for a few hundred Windows experts to talk to shoppers in Best Buy, Circuit City and other stores. These Windows gurus technically work for employment agencies, but Microsoft recruits and trains them.
Manny Gouveia, 30, is a Windows guru in Orlando, Fla. A college graduate and technology enthusiast, Mr. Gouveia went through a seven-day training program at Microsoft and gets regular online training. He also participates in two conference calls a week to share information and tips with Microsoft and other gurus. He works at a Circuit City, where he demonstrates how to use a Vista PC to edit movies, post family photos online and record television shows.
“We’re there to give people a sense of the great experiences they can have with a PC, not just e-mail and Web browsing,” Mr. Gouveia said. “People do come in with the view that Windows Vista is not up to par. But I can turn that perception around in five minutes.”
Mr. Gouveia himself needed some convincing at first. “Before this project, I had never used Vista,” he said. “I had not seen a compelling reason to upgrade.” He has since bought two Vista PCs.
With PC makers, Microsoft started an initiative called Vista Velocity to improve performance. It includes days of specialized testing, close collaboration with Microsoft engineers and fine-tuning of software programs and hardware drivers. On some models, for example, the start-up time for Vista has been reduced by 60 percent.
At Sony, 20 percent of its Vaio consumer models have gone through the Vista Velocity program so far, and the goal is to cover them all, said Mike Abary, senior vice president for marketing in Sony’s Vaio PC business.
The result, Mr. Abary said, has been improved performance that should make for a “more compelling why-to-buy proposition.”
“There has been hesitation in the marketplace,” he said.