TV ads part of Windows charm offensive

Microsoft's new Windows advertising campaign is one piece in a major overhaul of how the company makes, markets and sells its most important product to consumers, a top executive said Friday.

The first commercial, featuring Bill Gates and comedian Jerry Seinfeld but no computers or software, launched a $300 million campaign Thursday, the largest consumer-ad push in company history.

While the ads are the most visible feature, the company has spent the past 18 months researching and rebuilding all aspects of its consumer Windows business, said Bill Veghte, senior vice president of Microsoft's online services and Windows business group.

"It was something that I felt very strongly we needed to do," said Veghte, who took on the role about the same time the effort started.

In a significant investment beyond the ad campaign, Microsoft has changed the way it works with PC manufacturers to build computers that perform better.

It's also experimenting with new retail concepts, including Microsoft "Gurus" the company is comparing to Nordstrom's personal shoppers, and updating its online presence to provide more specific guidance and help for consumers.

This investment might at first seem excessive for a monopoly business that is cruising, despite a resurgent and taunting Apple.

Windows generated $16.9 billion in sales in the past fiscal year and still managed to grow in the low double-digits.

The operating-system software also produces one of the largest profit margins — more than 77 percent — in the history of business.

But some cracks are starting to show, particularly when it comes to consumer perception of the latest Windows version, Vista.

"There's been a lot of negative publicity around Vista and that's probably hurt the Windows brand," said Sid Parakh, an analyst at McAdams Wright Ragen. "I think they're trying to earn back some of that credibility that the brand had."

Veghte put it another way: "Windows has become so ubiquitous that sometimes some of the magic and some of the opportunity that Windows affords fades into the background a bit."

Restoring that "magic" and exposing consumers to new features of Windows on PCs, mobile devices and the Internet is key for the long-term success of the business, Veghte said.

Veghte said the initial ad was meant to restart a conversation with consumers. The online reaction, be it jeers or shrugged shoulders, has at least grabbed attention. Subsequent ads in the series will focus more on Windows itself, he said.

Veghte said the effort is not meant to be a direct response to Apple's attack ads, which have arguably done more to define Vista in the public mind than has Microsoft. It doesn't appear Microsoft will attack Apple directly.

"Certainly in some geographies Apple is telling a very loud story," Veghte said. "But at the core, it's about the fact that we needed to tell our story and capture that emotion and that magic that for years and years people have associated with Windows."

Some of Microsoft's other efforts, particularly on the sales front, look like pages taken from Apple's playbook.

Microsoft is stopping short of launching its own retail stores, but the company is rolling out "store-within-a-store concepts" at Circuit City and Best Buy. More than 150 so-called "Microsoft Gurus" will staff some of the stores. Apple employs "Geniuses" at its retail stores to answer questions and help customers.

Apart from the sales and marketing efforts, Microsoft is trying to improve the end product. It's a task made more complicated by the broad industry of PC manufacturers that have as much to do with a computer's performance as Microsoft does.

Veghte said Microsoft worked closely with PC makers to test 277 machines for performance, reliability, security, compatibility and battery life. They picked a smaller set of systems to refine and tune over the past eight months.

Analyst Parakh sees those additional facets as critical.

"Just doing a marketing campaign doesn't help," Parakh said. "You have to back it up with products that actually do what they should."

Veghte said success for the broad effort will be creating "active preference and excitement [among consumers] around what Windows can do."

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com