Microsoft splashes out to stave off competition

Microsoft has launched a $200m (£137m) advertising campaign in the US to promote its enterprise software.

Microsoft has launched a $200m (£137m) advertising campaign in the US to promote its enterprise software.

Matthew Burgess

The campaign, which will be available to the company's UK subsidiary should it choose to use it, will initially feature TV adverts and then magazine and billboard adverts from February.

While Microsoft dominates the operating system market, its business software is less compelling and competes with products from Oracle, IBM and Sun Microsystems.

The company is also venturing into the leisure industry with its Xbox 128-bit games console, leading to concerns about a lack of strategic focus.

Martin Hingley, European systems group vice president for analyst IDC, commented: "We've been seeing a slowdown in the desktop PC industry recently, so it makes sense for Microsoft to diversify into other areas."

He added, "Margins on enterprise products tend to be higher - people don't mind paying a little more as long as the product works well and has a good level of support. Microsoft has always been a sales-orientated company, and with a number of large companies, such as Intel, Compaq and IBM spending money on big ad campaigns and gaining share as a result, it is not surprising to see Microsoft doing the same thing."

Gartner research director Alex Rayner said that Microsoft's direction was not yet clear. He added: "We need to wait and see how they position themselves in the enterprise market: as a platform provider competing with Oracle, as an applications vendor competing with SAP, or as a combination of the two. Whichever way, it's evidence that they feel like they're losing ground somewhere "

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