Microsoft's Consumer-Corporate Schism

CNN says that Microsoft's consumer brand is dying. No doubt the Microsoft brand doesn't have the consumer appeal it did in the mid-1990s, but is down the only direction it can go?Given a list of technology names, most tech-savvy people could determine their audience without too much trouble. Google, Apple, and Facebook are consumer; IBM, Oracle, and SAP are corporate. Yet Microsoft is planted into both camps, thanks to its past. The last decade has seen the consumer side fade somewhat, and the company has been making efforts to claw its way back into the public's view. In some cases, as with the XBox, it's been effective. In many others like the Zune and Kin, it's gone nowhere.

Windows, of course, lives in both worlds as well. As Microsoft's quarterly results showed, Windows 7 is doing quite well. They're selling a lot of it, but if you talk to consumers it's unlikely they'll be as passionate about -- or even as cognizant of -- the Windows brand as Apple users are in their world. PC users are making their buying decisions around Dell, HP, or Acer; Windows comes along for the ride.

Microsoft's success in corporate America is one reason for their difficulty in courting consumers. It's difficult to serve both masters, particularly with products like Windows and Office. Corporate America wants long-term roadmaps, stability, predictability, plus compatibility with decades-old programs and data. Consumers are enticed by shiny things, excitement, the latest and greatest stuff; they don't have the burdens of legacy technologies. Where Microsoft has been able to compartmentalize products and focus on the enterprise, they've been very successful. However, they have only enjoyed isolated success with consumer products, like Xbox. Their consumer-focused online business continues to bleed money.

So why does Microsoft continue to plug away at the consumer world? Because the company knows it could lose the enterprise long-term if it loses with consumers now. It's similar to the strategy drug companies have taken with their advertising for prescription drugs, bypassing the doctors that must prescribe them. Several major technologies, including the PC itself, made their way into the enterprise via the back door, with individuals buying them with their own money or departmental budgets. Driving enterprise demand via consumer advertising requires positive brand recognition, and that's not something Microsoft should surrender lightly.