Communication Best Practices at Dell, General Electric, Microsoft, and Monsanto

4. Best Practices at the Microsoft Corporation: Benchmarking a World-Class Marketing Communication System

61 4 Best Practices at the Microsoft Corporation: Benchmarking a World-Class Marketing Communication System I personally believe that Microsoft is the most powerful economic force in the United States in the second half of the 20th century. Some of Microsoft’s control over competing, at all levels , is obvious. Much, however, is invisible. Even longtime insiders are just beginning to understand the nature of that power, how Microsoft acquired it, preserves it, and exercises it. (Schmidt, 1996:B1) The Microsoft Corporation is considered by most observers to be one of the most competitive firms in the world. In 2000, Microsoft became the most valued firm in America with $525 billion in stockholder investments. In 1999, Microsoft was selected in polls conducted by the European Financial Times as the most innovative firm in the world and in 1998 by the U.S. Fortune Magazine as second to the General Electric Company as the most admired firm in America (Stewart 1998, 71). Between 1975 and 2001 Microsoft went from a two-person firm with $16,000 in sales to one of the world’s most powerful corporations with 30,000 employees, $25.296 billion in sales, and over $7.346 billion in profits (Fortune 500 2001, F49). In that same time frame, Bill Gates, the CEO of Microsoft, went from being a Harvard dropout to amassing a $87 billion fortune from his 20 percent shares of Microsoft stock. In addition, six Microsoft employees had become billionaires and 2,800 had become millionaires based on their holdings of Microsoft (Hamm, Cortese, and Burrows 1998, G2). Microsoft, it would appear, is a remarkable example of an American success story. In spite of this success, Microsoft’s competitors within the software market see a different Microsoft. They speak of Microsoft’s 62 DONALD P. CUSHMAN AND SARAH SANDERSON KING Table 4.1 Microsoft’s Seven-Year Performance Record: 1995–2001 (in millions of dollars) Microsoft 2001 2000 1999 1998 1997 1996 1995 Sales 25,296 22,956 21,855 14,484 11,360 8,670 5,940 Profits 7,346 9,421 8,746 4,490 3,450 2,200 1,450 Source: Microsoft Corporation, “Financial Facts” (www.Microsoft.com, 2002) “will to dominate” with concern and fear and as a threat to those firms’ very survival. Michael Kapar, CEO of Lotus Development Corporation , argues, “The question of what to do about Microsoft is going to be a central public policy issue for the next 20 years. Policymakers don’t understand the real character of Microsoft yet— the sheer will-to-power that Microsoft has” (Gleick 1995, 39). Lawrence Ellison, CEO of Oracle, another Microsoft competitor asserts that “Bill Gates and Microsoft do not just want to compete in the computer industry. Rather, they seek to dominate every aspect of the market, to eliminate their competition” (Cortese et. al. 1995, 86). Several of Microsoft’s competitors, including IBM, Sun Micro Systems , and Netscape, have banded together and asked the U.S., European Union, and Japanese governments to investigate Microsoft’s marketing practices for using their monopolistic position in PC operating systems to illegally restrain trade in the software industry. By April 2000, the U.S. inquiry into Microsoft’s marketing practices had determined that Microsoft did violate U.S. antitrust laws and began reviewing the most appropriate actions for dealing with these violations (Wilke 2000, Al). By April 2001, the inquiry was under review by a three-man board which was considering setting aside the 2000 ruling as inappropriate given the evidence presented. It will be the purpose of this chapter to benchmark Microsoft’s best practices in marketing in order to understand both the legal and illegal aspects of the company’s strategies and practices. In so doing, we will explore Microsoft’s marketing position and the critical success factors and backbone communication processes of its marketing strategies. We will benchmark the company’s 1998–1999 competition with the Oracle Corporation for control of the database software market, and finally draw some conclusions regarding our inquiry. Let us explore each of these in turn. 63 BEST PRACTICES AT THE MICROSOFT CORPORATION Microsoft’s Market Position If the wolf comes, what happens to the sheep? (Chang, 1999:B1) Each day one billion people throughout the world use personal computers, 880 million of them begin by entering the Microsoft Windows operating system, and 900 million of them select one of Microsoft’s...