OS/2 Shareware BBS: 14 Text/14-Text.zip/OS2PRS.ZIP/OS2PRS.TXT

Text File | 1992-03-31 | 6KB | 121 lines

COMPANY NEWS (sm) provided by Dow Jones/News Retrieval
Copyright (c)192  Dow Jones & Company

 3/27/92 IBM Is Offering Workers Prizes To Hawk OS/2

  By Paul B. Carroll
  International Business Machines Corp.'s sales force is
already bigger than many armies, but as IBM prepares to
start shipping its much-maligned OS/2 operating system, it
has decided it needs reinforcements.
  So IBM is about to launch a program that will attempt to
turn all its 344,000 employees into salesmen for the
personal-computer software, which is in a fight for its
life against Microsoft Corp.'s Windows juggernaut.
  IBM will offer employees incentives ranging from medals
to IBM software or hardware to cash, depending on how much
effort they put into OS/2, The Wall Street Journal
reported. In return, says Lucy Baney, an IBM marketing
executive, the company will ask employees to approach their
neighbors, their dentists, their schoolboards. Armed with
brochures and talking points, the IBMers will sing the
praises of OS/2 as the solution to people's
personal-computing needs.
  IBM is pulling out most of the stops in advertising and
pricing, too, as it prepares for one of the stiffest
marketing battles the personal-computer industry has seen.
IBM must not only overcome Microsoft's considerable
momentum but must also face a Microsoft marketing effort
that, while very different and more low-key, is just as
intense in support of Microsoft's latest version of
Windows. In fact, the situation here is the reverse of the
one IBM normally sees; Microsoft is the entrenched power
and IBM the struggling competitor attempting to dislodge
it.
  "There's a very serious commitment to energize the whole
company behind the product," says Fernand Sarrat, the top
OS/2 marketing executive.
  Although he declines to be specific on IBM's advertising
plans, he says that "there isn't an IBM U.S. ad campaign
that will receive anywhere near the dollars that OS/2 does"
this year. That easily puts OS/2 advertising spending into
the tens of millions of dollars, not counting the money IBM
will spend on extensive international ads.
  Sarrat says the campaign will be informational rather
than the sort of macho advertising that has been rumored in
the trade press; one slogan that was reportedly considered
was "Curtains for Windows." But Sarrat adds: "It's not that
we'll be namby-pamby. That's for damn sure."
  The campaign will really start rolling next month. IBM's
new version of OS/2 will be available to corporate
customers next week, meeting IBM's commitment to deliver it
by the end of March, but it won't be widely available in
retail outlets until the second half of April. So even
though Microsoft has already begun its campaign, in advance
of its April 6 introduction of Windows 3.1, Sarrat says IBM
has decided to wait a bit.
  On pricing, he says that people who have the latest
version of OS/2 will get the new version free. Many users
of Microsoft's Windows and DOS will also get huge discounts
off the list price of $195, but Sarrat declines to be
specific, lest he tip his hand to Microsoft. (Windows 3.1
will have a list price of $150.)
  IBM's pricing plan means it will be taking losses on many
of its initial OS/2 sales. Software securities analysts
have estimated that IBM must pay Microsoft a royalty of
about $20 on each copy of OS/2, because it contains Windows
software. They have said it also costs $30 or more to
produce each copy of OS/2. And those figures don't include
any of IBM's marketing expenses, any of the corporate
overhead that eats up more than 30% of IBM's revenue or any
of the OS/2 development expenses that have totaled hundreds
of millions of dollars.
  "This is a long-term war," Sarrat says.
  Sarrat predicts that IBM will sell millions of copies of
OS/2 this year, even though it has sold something less than
one million copies in the five years since OS/2's
introduction. Sarrat even goes so far as to predict that
within a few years OS/2 will be outselling Windows, which
Rick Sherlund, a securities analyst at Goldman Sachs,
predicts will sell 11 million to 12 million copies in the
fiscal year ending June 30 and 17 million copies the
following year.
  "It won't happen this year or next year," Sarrat says,
"but after next year it's fair game."
  In contrast to IBM, Microsoft will spend most of its
effort "making sure people have a good experience" with its
new version of Windows, says Steve Ballmer, a Microsoft
executive vice president.
  Microsoft will spend plenty of money on advertising,
including its first television campaign. Ballmer says a
published estimate of a $31 million marketing effort "is
probably low even as a U.S. number." Microsoft will also be
aggressive on pricing, offering upgrades to the new version
for $50 initially.
  But Ballmer says most of Microsoft's effort will go into
a huge program to train computer dealers, to offer
workshops to heavy Windows users and to help people get
information on how to use the product. Patty Stonesifer, a
Microsoft vice president in charge of customer support,
says that Microsoft has 500 people available to answer
telephone callers' questions on Windows, up from 70 when
the prior version of Windows came out in May 1990. She says
Microsoft has also invested heavily in an electronic
bulletin board to keep users up to date on problems that
surface with the software and to provide the latest tips on
how to use Windows better.
  "Making Windows easier to use will be a demand generator
in itself," she says.
  Microsoft has also mounted an aggressive public-relations
campaign in recent weeks, having executives do waves of
interviews to address OS/2. The executives have argued, in
particular, that while OS/2 may make sense for IBM's
traditional corporate users, it is too complex and requires
too much memory to attract the broad mass of users who have
been drawn to Windows.
  Still, Ballmer acknowledges that many people in the
computer industry and many users "are rooting for some
healthy competition. People want a healthy, knockdown,
drag-out fight. But we haven't shipped, and IBM hasn't
shipped. In the next few weeks, we'll see what happens."