Welcome to the Korean edition of In Search of Stupidity: Over 20 Years of High-Tech Marketing Disasters! Korea is a country that knows something about stupidity, having suffered since the 1950’s from the ongoing effects of what may the 19th and 20th centuries stupidest idea, Communism. But we in the US are well aware that Korea is also a first-world country with a first-class, high-tech infrastructure. This accounts for the fact that Koreans are known to be addicted to playing and dominating the rest of the world in massive MUDs (Multiuser Dugeon Domain) games, such as World of Warcraft, Starcraft, and MU. In the US, if your son or daughter looks up from their PC sometime and mutters something about how their shiny World of Warcraft castle has been sacked by rampaging Orcs, evil knights, or pitiless demons, the odds are often quite good it’s a Korean doing the sacking and rampaging!

This means the time is right for a Korean edition of “Stupidity.” As Korea takes its place amongst the world’s high-tech elite, it faces an important choice! Will Korean companies A) repeat the mistakes made by others and suffer repeated financial losses, layoffs, and much angst and personal woe as its software and hardware industries attempt to grow? Or will it be B) Korea gracefully avoids repeating past disasters made by idiots in other countries while it grows to unparalleled high-tech greatness?

Sorry, I’m voting for “A.” Human nature is universal and human stupidity is an incredibly powerful force capable of ignoring history, commonsense, and practical experience (if you doubt this, just spend a minute looking north). But you, lucky reader, are equipped with a valuable antidote to high-tech stupidity. You hold in your hands not just a book, but an institutional memory that will pour foresight and advanced knowledge into your brain. Soon, you will be equipped to avoid the mistakes of the past and will be able to march forward into the future secure in the knowledge that if you do indeed screw up, your mistakes will probably be original ones.

And this, at the very least, will put you one up on the industry’s biggest industry software company, which, with its latest release, managed to repeat positioning mistakes made almost a quarter century ago by MicroPro, which has earned its own inglorious chapter in this tome. I’m speaking, of course, of the launch of Windows Vista. Several months after the release of Vista to businesses (the product was released to consumers in January, 2007) the consensus of the market has been that Vista is a flop. It’s a peculiar type of flop. Financially, Vista is making a great deal of money for Microsoft. No surprise there; after all, the company has an almost complete monopoly in the desktop OS and main business applications markets and the dominant position in the server OS segment. OEMs are in complete thrall to Microsoft; if you don’t offer Windows on your laptop, you’ve got an unsellable silicon brick in your warehouse.

But that said, Vista has failed to meet any of the lofty goals originally set for it. It has failed to excite any segment of the market, including key influencer groups such as the press and the gamers. It is not driving sales of new computers. At retail, the pull figures for Windows out of the channel are dreary and show no signs of changing (we’re researching these numbers and will be reporting on them soon in an upcoming issue of Softletter). The blogs are condescending and even many Microsoft devotees are dismayed by what they see and hear. Legitimate copies of Windows XP (and even 2000!) just became more valuable and knuckles will have to be severely cracked before the hands grasping those precious old boxes relax and allow a fresh copy of Vista to be shoved into a reluctant grasp. The fact is, few people see any need or have any desire to buy Vista.

In all fairness, some of the problems that accompanied the Vista launch are beyond Microsoft’s control. As the Internet has matured as a development and infrastructure platform, the growth of SaaS and advent of hybrid applications has led to an inevitable challenge to Microsoft’s monopolies in OSs and desktop applications. Over the next several years, Microsoft will need to execute the painful chore of chewing off its own two strong revenue arms (but not too quickly) and hope they regenerate into new revenue and profit builders. It’s not a tasty task, and you can’t really blame the company for avoiding it, necessary though it is.

But paradigm shifts aside, the biggest problem crippling the Vista rollout was Microsoft’s complete bungling of the critical task of properly positioning the product. Vista’s marketing identity is a dirty smear in the mind’s eye of the public; today, it’s almost impossible to find anyone (particularly anyone from Microsoft) who can cleanly and quickly describe why Vista is superior to Windows XP. And a confused buyer is a buyer is a buyer that does not buy (or one who buys something they can understand).

Microsoft’s Positioning Sins

During the Vista rollout, Microsoft committed several positioning sins. Redmond’s mistakes begin with the deadly transgression of creating a positioning conflict within its own product lines. It’s a surprising mistake. During the history of the Windows 9.X vs. NT product lines, Microsoft was frequently tormented by customers confused by which product to buy, a mistake highlighted by the firm’s creation of one of high-tech’s dumbest ads, the “two nags racing” piece which you can see preserved on www.insearchofstupidity.com in the Museum of Stupid High-Tech Marketing. While 9.X and NT both existed, Microsoft frequently had to explain why a customer should buy one product over the other when both were called Windows, looked very much the same, did very much the same thing, and cost pretty much the same. But Microsoft was lucky in that during this period its chief jousting opponent was IBM and OS/2.

But with Vista Microsoft pointed the lance at its own foot, kicked its marketing war horse into action, and firmly pinned its toes to the ground. There are no less than six (actually seven, counting the OEM version. Wait, isn’t that eight if you count academic packages? Are we missing some other variants? Probably. Does Windows CE count?) versions of Vista currently available for sale:

• Vista Starter (which you can’t buy unless you live in the Third World, apparently.)
• Vista Home Basic (which, amazingly, does not include the new UI.)
• Vista Home Premium
• Vista Business
• Vista Enterprise
• Vista Ultimate

This plethora of choices leads customers to naturally ask a deadly question: “Which one do I buy?” Before, a consumer only had to compare between Windows XP Home and Professional (Windows Media Edition came along too late in the life cycle of the product to become well-known enough to confuse anyone). To help customers, Microsoft has published a blizzard of collateral, comparison sheets, pricing matrices, etc., etc. Thinking about whether to buy “Vista Home Premium” vs “Vista for Business?” What’s “Super Fetch” worth to you? How about “Volume Shadow Copy.” But it’s good to know the “Business” version includes “Premium Games.” Just what a business person is looking for in their business version of Vista. Why not include applications that have some applicability to business concerns? Maybe Stock analysis and reporting? Specialized business calculators? Something? Anything?

And making things ever more interesting is that the EULAs accompanying each version are different. Want to create a virtual machine on your PC and run Vista Home in it? You can’t! How about Vista Business? You can! Why one and not the other? Who knows.

Moving along down the path of positioning damnation is Microsoft’s failure to attach any powerful or desirable image to Windows Vista as a product line. Try to imagine in your mind what memorable picture or capability is associated with Vista. None comes to mind. The product does have a new interface, but Microsoft made no attempt to build a compelling image of usefulness around the AeroGlass UI. Yes, the icons are bigger and the screen savers are prettier, but so what? Microsoft might have discussed how the new desktop gave users “X-ray vision” like Superman, increasing their day to day productivity while working with Windows, but it didn’t. Vista is supposed to be far more secure than XP, and perhaps Microsoft could have discussed “Fort Knox,” an integrated group of technologies that allowed you to lock up your PC with bank vault tightness, but it didn’t. (Given Microsoft’s past security woes, it may have lacked the stomach for this gambit.)

By contrast, when Apple released Tiger (OS X 1.4) the market and the press were bombarded with information spotlighing “Spotlight,” an integrated search utility baked into the new release. Desktop search was by no means new on either Macs or PCs, but the Mac campaign succeeded in making people aware of its usefulness and, more importantly, gave them a mental picture of why they might want to give Tiger a look. With Leopard (OS X 1.5), the emphasis was on “Time Machine” (integrated backup).

Another key mistake made in launching Vista was to match features to pricing expectations and here Microsoft has also failed, particularly in respect to Windows Ultimate. Ultimate is the kitchen sink of Windows, the one with all the toys and whistles and it’s expensive at $450 for a retail version (and pricey at $270 for the upgrade version). But not to worry! With your purchase of Ultimate you’re promised all sorts of goodies only you, our ultimate customer, can download. And what are these exciting ultimate premiums? Well, to date, they include fun things like Windows Hold ‘Em (a poker game), extra language packs (those squeals of delight are coming from buyers who just unpacked Finnish) for the Windows multi-language user interface, Secure Online Key Backup, and BitLocker Drive Preparation Tool. (The latter two products are included in other, cheaper versions of Windows.) And oh, let’s not forget the new screen saver that let’s you use videos. Alas, it’s in beta and not due to be finished for a while yet. Ultimate customers, are, of course, delighted with all of this.

In its long and storied history, Microsoft has distinguished itself from its competition by its ability to avoid the self-inflicted wound of stupid marketing. With the release of Windows Vista, this has changed. But during the release of Windows Vista, Microsoft has repeated mistakes made by MicroPro (positioning conflict), Borland (positioning conflict, pricing/feature disparity), Novell (positioning conflict), Ashton-Tate (pricing /feature disparity coupled with inept PR) and itself (Windows 9X vs. NT), proving that the company now suffers from the same institutional memory hole that afflicts much of high-tech. The Vista release now serves as a valuable and contemporary object lesson in how not to position and launch a new software product.

Best of luck!