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Friday, March 27, 2009, 01:00 pm PT (04:00 pm ET)

Microsoft's anti-Mac pricing campaign takes to the web

In a new series of web ads, Microsoft portrays two slot machines, one ringing up a Mac with bits of garbage, and the other presenting a cheaper generic PC along with the Zune, Xbox 360, and other things buyers could get with the money they'd save with the PC.

The banner ads are part of Microsoft's new ad campaign promoting cheap hardware, which includes new TV spots contrasting Macs with generic PCs entirely on price. There's not much mention of why the generic PCs are so much cheaper than the Macs they are contrasted with, nor any mention of software expenses.

Microsoft hardware?

Microsoft's new focus on cheap hardware prices is particularly interesting given the fact that the company has been unable to profitably market its own hardware devices outside of its Microsoft-branded keyboards and mice that it bundles with many new PCs as part of its Windows software licensing.

The company has spent billions on the Xbox 360, which is even now only barely clearing a hardware profit before considering the hardware repairs that have plagued the game console. With the Zune, Microsoft has been completely unable to create any impact within the market for MP3 players dominated by Apple's iPod.

Selling software with hardware, and vice versa

Microsoft is a software-centric company. It has long sold its software using cheap hardware. However, Microsoft's software isn't cheap. Retail upgrades for Windows are nearly twice as expensive as Mac OS X, and infinitely more expensive than Linux, which can be obtained for free.

While the need for software compatibility with Windows has long rendered Microsoft's operating system monopoly untouchable, the emergence of new computers that rely more on the web and email have broken that hold. Ubuntu markets a low cost distribution of Linux to PC makers exploiting that new market.

Microsoft Ad


Apple has added sophisticated music, photo, and movie editing software to its web and email offerings, positioning the company's Macs as not just a suitable alternative to Windows PCs, but also more useful and valuable option right out of the box. That pits Apple's business model of selling hardware with cheap software directly opposite to Microsoft's business of selling its software on cheap hardware.

Microsoft Ad


What happened to "Total Cost of Ownership"?

Macs not only bundle in free software missing on the PC side, but also offer personalized support in Apple's retail stores, which is free to those who don't mind standing around waiting for an available genius, and very cheap to users who want a regular One-on-One membership that allows them to visit the stores for virtually unlimited advice and training sessions.

If Microsoft portrayed the software and support expenses of generic Windows PCs into its slot machine graphics, the results would be less flattering.

Microsoft Ad