THE BLOG
08/06/2013 09:15 am ET Updated Oct 06, 2013

How Google and Apple Are Changing the Way Microsoft Sells

Last month, Microsoft announced a massive reorganization to try to compete with its two biggest rivals, Apple and Google. Earlier this year, Microsoft, traditionally focused on business customers, focused its Office 365 launch on a consumer market - much like their top competitors are doing. This is a monumental shift in their marketing, but also in their research and development.

For decades, the general public was accustomed to being presented with "prototypes" of innovations that could be coming down the pike. An article in Gizmodo by Joel Johnson a few years ago describes it well. The writer points to the 1934 World's Fair in Chicago where visitors could escape the worries of hard times by touring the Homes of Tomorrow filled with labor-saving appliances or fantasizing about the latest in automobile appearance and technology. The juxtaposition of SciFi with innovation worked. After all, what kid from the 80s isn't still secretly waiting for the "hoverboard" from Back to the Future?

Often, the final product would be less exciting and aesthetically pleasing than the prototypes, but people would have some anticipatory knowledge of what was coming so they would be prepared to buy. This model worked well for hardware and software companies, such as Microsoft, because their primary customer base - businesses - needed time to prepare for the coming technological innovations.

And then came Steve Jobs.

Apple flipped the model on its head, instead going to great lengths to keep their R&D ultra secret. Instead of showcasing prototypes, Jobs decided to showcase technology that leapfrogged ahead of their competition - "the future" - and was ready to buy right then and there.

Consumers had no 'futuristic' concept introduced years earlier as a reference point... However, Apple's disruptive technology created a public frenzy. People felt left out if they did not purchase the new hot product as soon as it was available. This integrated focus on marketing and R&D shifted both the timeline and the audience. Instead of marketing to businesses, Apple brought their products, in real time, directly to consumers.

This selling technique hit a new milestone when Google introduced their Chromecast streaming-TV dongle last week. The device sold out within hours, according to a US News report. Amazon.com and Best Buy also listed the device as "temporarily out of stock," and Computerworld reports that profiteers are now selling the dongle on eBay for up to $300, or 8 times its original $35 selling price.

The consumer-driven, instant gratification model is working well enough that Microsoft followed it for its February release of Microsoft Office 365. Businesses everywhere were caught by surprise, but consumers bought right in. The new Office suite provides real-time shared editing in the cloud while streamlining the usage agreements with a subscription service. All of this was kept top secret until its launch - and it seems to have worked. Microsoft reports over 1 million subscribers to Home Premium, the consumer version of the cloud service.

It will be interesting to see how Microsoft handles their apparent shift in market focus from businesses to consumers. The lion's share of Microsoft's revenue has consistently come from large-scale businesses. Google and Apple never had this enterprise legacy to lose. It's a remarkable leap of faith, but if it pays off, they may well leap over their competition.