Apple-Microsoft Ad Wars Heat Up Again

by: Erick Schonfeld October 20, 2008 | about stocks: AAPL / MSFT    

Erick Schonfeld

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The advertising war between Apple (AAPL) and Microsoft (MSFT) continues. Apple’s latest TV spots mock Microsoft’s $350 million ad campaign for Windows Vista, suggesting that some of that money would be better spent fixing Vista. The ad is funny (see above), but it does seem petty and elitist. After all, the new Microsoft ads got much better once they dumped Jerry Seinfeld as a spokesperson and went with the everyman “I’m a PC” rallying cry (which itself was a response to Apple’s long-running campaign mocking PCs).

It is also hypocritical. Apple’s advertising budget is also pretty massive. I mean, I see more Apple commercials on TV than ads for Barack Obama. Apple is on track to spend more than $3.5 billion on SG&A (selling, general, and administrative expenses) for its fiscal year that ended September 30. How much of that was spent on advertising? I don’t know, but 10 percent doesn’t seem unreasonable.

The second ad, which makes fun of Microsoft’s new naming conventions for Windows is below. It’s not as funny.

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This article has 22 comments:

  •  
    Oct 20 12:12 PM
    Absolutely great, I love these ads.

    I hope Steve Ballmer and friends keep providing us with all that raw material for comedy. Great.
    Reply | Link to Comment
  •  
    Oct 20 12:16 PM
    Thats not funny!

    You smug Mac heads will learn your lesson when the next revision of V...., I mean Windows, comes out.
    Reply | Link to Comment
  •  
    Oct 20 12:22 PM
    I think all of Apple's commercials are funny and great. Apple does a wonderful job of getting the point across that Vista is a stink bomb. M$ is slowly learning that when all it does is follow and not lead that it's hard to play catch up. Don't get me wrong, both companies do things well and both could improve, but when people realize that they don't have to keep drinking the Kool-aid (M$) just because it's there and they have another choice (Apple) then we will see what the future really looks like...
    Reply | Link to Comment
  •  
    Oct 20 12:33 PM
    Still, Microsoft's SG&A is 5 over times Apple's. So Apple is spending less than 20% of MS but with much better effect. I don't know how much goes toward ads but 10% does seem unreasonable. Microsoft's $350 million budget for their new round of ads represents about 2%. I seriously doubt Apple is spending $350 million (10% of their SG&A) on advertising. Since 2% represents an increase in Microsoft's new ad push, my guess is Apple spends about $50 million which is still a lot of money.
    Reply | Link to Comment
  •  
    Oct 20 12:33 PM
    It's not hypocritical because Apple has nothing to fix with its OS, Vista is a mess... can't polish a turd Microsoft!!!!!!
    Reply | Link to Comment
  •  
    Oct 20 12:34 PM
    The real difference between Apple and Microsoft's approach to advertising is the product. Apple didn't start advertising the Mac vs. PC commercials until it had a solid product. Notice that the commercials were out there during the OS 9 years or even OS X 10.0, 10.1 or 10.2. Microsoft, however, has a poor product, Vista, that they are heavily promoting. Apple doesn't promote something for which they have little conviction and/or confidence; read, Apple TV. Microsoft will promote anything they offer even when it is far from the best product on the market.
    Reply | Link to Comment
  •  
    Oct 20 12:38 PM
    To illustrate the effectiveness of Apple's advertising, consider that Apple's ads are generally serve to differentiate it from other PC manufacturers. So you should really compare against ad budgets of Dell, hp, Toshiba, Sony, Lenovo, Acer, etc. in addition to Microsoft's. In that light, Apple advertising is tremendously successful.
    Reply | Link to Comment
  •  
    Oct 20 12:41 PM
    Apple should not worry about Vista ads. Those vista ads helps mac indirectly anyway. Vista's failure was one of the reason for people to turn to mac!



    - Slick Deals 4 U
    www.slickdeals4u.com
    Reply | Link to Comment
  •  
    Oct 20 01:13 PM
    It is easy to complain about the market leader, and rejoice for the "underdog." All I hear about Vista is opinions and vague problems. I'm a frequent Vista x64 user (and sw developer) and I don't have the problems or opinions that the majority of you seem to have (I didn't start using Vista till SP1 came out, maybe that's the difference). BTW, Windows XP had initial adoption problems too.

    I don't use OS/X, but I like it. I own an iPod, and think its great. Apple's products are slick and innovative, but I hope that Apple will finally ease up on their MASSIVE restrictions on: price control, hardware, iTunes, online store, need to run everything by Steve Jobs, etc...

    Apple seems to have gotten to most of you. You think Microsoft's marketing are laughable because they are trying to change your opinion? You've already bought into Apple's marketing. Which is worse?

    Both the Microsoft and Apple ads are funny and interesting... but don't form your world view on them, or on your friend's opinions either (which are probably based on the ads too). Although it seemed like a dumb "experiment" to me, since you're so susceptible to advertizing, maybe you'd be happier with Mojave.
    Reply | Link to Comment
  •  
    Oct 20 01:38 PM
    No doubt, Apple has a great product. Due in large part to the tight HW/SW integration they enjoy which is something of a pandoras box for MS. This is something PC makers need to understand! MS understands this all too well! That said, those of us that object to overpaying for hardware and don't require the level of hand holding that apple "provides" and will remain PC users with lot's of choices for operating systems. We can all get along can't we :-)
    Reply | Link to Comment
  •  
    Oct 20 01:49 PM
    I love both the Apple's and MSFT's ad's. Its most entertaining the actual competition more so than anything. It's essentially gossip girl for the computer kids.
    Reply | Link to Comment
  •  
    Oct 20 02:48 PM
    Back in the days of DOS, I was doing database app work with Paradox for DOS ... then switched to MS Access under Windows 95/98. My argument FOR PCs then had to do with cpu power and multitasking. My argument AGAINST PCs had to do an unstabie operating system. Then OS X was introduced and a friend encouraged me to switch to Apple ... Oh happy day! Maybe given enough time and money, MS might get their OS code bug free... I wish them well.
    Reply | Link to Comment
  •  
    Oct 20 04:17 PM
    I think the latest ads are the best, most dead-on commercial that Apple has done so far. They properly lampoon Ballmer's position: "there is nothing wrong with Vista, and we'll prove it with $500 million of advertising." And let us not forget, as Peter021 properly points out, that Apple is not Microsoft's direct competitor. Apple makes virtually no money off its OSX sales. Apple sells hardware. Microsoft sells software and operating systems. By responding to Apple's ads as it does, Microsoft only acknowledges Apple's superior advantage: a seemless blend of hardware AND software. Microsoft cannot offer that as a product. They are off-message and they are toast.

    What better way to acknowledge this than the annoying TV commercial from FinallyFast.com, a utility to "speed up PCs that have slowed down." The first two machines they show in the ad? An iMac and a G4 iBook! Later on we see the iMac's white keyboard, then we finally see a "fixed and now faster PC" on the iMac's screen. Redmond, we have a problem: www.youtube.com/watch?...
    Reply | Link to Comment
  •  
    Oct 20 05:08 PM
    I yearn for the ad days of touting ones strong points instead of attack ads.

    Current Apple ads are worse than McCain attack ads. And they have the same affect, making Mac users feel better about themselves and turning the others away.

    I'm glad to see mac users feel better about themselves, for me, the ads are a huge turn off.
    Reply | Link to Comment
  •  
    Oct 20 06:16 PM
    "You think Microsoft's marketing are laughable because they are trying to change your opinion?"


    Don't be ridiculous. ALL commercials try to change one's opinion. That's their job.

    MS commercials have just gone about it very poorly. Take the Mojave Experiment. "See?! Vista doesn't suck as much as you thought it did!" Laughable.

    Then there's Seinfeld. Gotta love the Seinfeld. A show about "nothing" was great. Better was marketing it as a show about nothing. But a COMMERCIAL about nothing? Please. The objective of a commercial is far different then that of a commercial, especially given it's time frame. That campaign augered in with the first airing. Less Laughable, and downright sad.

    The "I'm a PC" wasn't good, but it wasn't bad, at least until the "I AM NOT A STEREOTYPE. I'M A HUMAN BEING!" part. That's taking the defensive, which is too little, too late. Not even laughable, just overtly sad

    What is needed is a slick offensive and they just can't come up with that yet.

    The Apple "Get a Mac" campaign could take a lot stronger offensive, but has not. A good thing for many reasons. While I would prefer ads based solely on merits, the underdog (see Obama's stuff) has to attack the entrenched perspective. Apple is nearing a point where they don't have to do so.

    Conversely, MS is at a point where they *must* do so, and that's largely the fault of their handling of Vista.

    I am a really happy Apple/Mac user. But I know that Jobs and Co. have had their share of OS problems and updates. Ballmer needs to acquire a lot of finesse, savvy, and good sense of timing.

    Or at least acquire enough to get a decent ad agency.
    Reply | Link to Comment
  •  
    Oct 21 03:04 AM
    @prodgeek: If you make your choice of computer (or any product) based primarily on ads and commercials, I feel truly sorry for you.
    Reply | Link to Comment
  •  
    Oct 21 07:56 AM
    the change of the naming ad is brilliant .. those guys should win an award for that ..
    it's a bit too easy to pkoe fun at MS these days but still the ad is too funny
    Reply | Link to Comment
  •  
    Oct 21 10:03 AM
    the ads do what they're supposed to do...make people wonder whether they might be better off with a Mac. i guess the article author doesn't use one or he wouldn't be so hostile about Apple's ads. Here's the point. Ok, so people do and can get by using Vista...but they don't have to. There's a better operation system out there and it's in a Mac. The OS IS the point!
    The ads aren't meant just to be funny...they make a point...and it's not elitist to say you have the best product...when you do.
    Reply | Link to Comment
  •  
    Oct 21 03:04 PM
    Microsoft made another stupid mistake following Apple into this. They should have just kept ignoring the I'm a Mac ads. The I'm a PC ads are just stupid, because there is no comparison product in them, because PCs can't compare to Macs.

    PCs are just derivative RIP-OFF of Mac. That is all. It was never anything new or improved, instead, dumbed down, cheapened.
    Reply | Link to Comment
  •  
    Oct 21 03:06 PM
    These are among the best two commercials ever made. The I'm a PC ad is like it's from a wounded dog, licking it's chops, whining in a corner. You're a PC. Congratulations.
    Reply | Link to Comment
  •  
    Oct 23 03:46 PM
    Lots of very angry Apple users out there - reminds me of angry Obama Democrats. Difference in AAPL and MSFT is this - AAPL is largely a retail, one time sale business; MSFT is a recurring revenue, license driven business. MSFT is going to grow every year for the foreseeable future, and none of AAPL's modest consumer gains over the PC will affect that. MSFT is cheap at 9x forward P/E, AAPL is expensive at 14x forward P/E. Because of the weak consumer and AAPL's higher relative price point, AAPL's earnings are at much greater risk compared with MSFT. Both companies trade at approx. 0.9x PEG ratio, which implies both may be cheap right now. Again, though, much more execution risk and consumer exposure for AAPL. Good luck, and stop being so angry.
    Reply | Link to Comment
  •  
    Nov 07 03:09 AM
    Year I gotta say that apple seems a little hypocritical. Obviously there are far more ads about Apple than any other company out there and come on, why cant they just sell a product with out having to discredit another product!! You wanna know why, its just cos Apple products are really not as great as the freaks discribe them to be. I maybe the only person but I am never ever buying apple especially after using it for a year. And yes, those commercials used to be funny but now they are actually are little annoying. They are like the Head-On commercials. And its funny cos many people dont seem to differentiate between who the market leader is from the rest. Obviously, there is a reason why since day one, there hasnt been a single ad from Apple that has not mentioned Windows. Sad huh. Oh and Apple lovers, in a couple years, apple will become regular like everything else out there.
    Reply | Link to Comment
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