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About those TV ads knocking Vista: Are they unjustified?

Are Apple's TV ads lampooning the amount of money Microsoft is spending on its Vista ad campaign the proverbial pot calling the kettle black?

The ads, particularly one entitled "Bean Counter," features the now-familiar John Hodgman as PC Guy telling Justin Long's Mac Guy that Microsoft would rather spend millions of dollars on an advertising campaign about Windows Vista than spend the money to fix the oft-criticized operating system.

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Two other bloggers have noted that while the Apple ad knocks Microsoft for spending too little to "fix Vista," Apple itself spends about the same percentage of its revenue on advertising and far less on research and development than its long-time rival.

They're right, of course. In Microsoft's fiscal year 2008 (which ended June 30), it spent just under 1.986 percent of its revenue on advertising but 13.5 percent on R&D.

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Apple, in its 2007 fiscal year, the most recent for which we have complete data, spent 1.945 percent of its revenue on advertising and a mere 3.25 percent on R&D.

It would seem just looking at the numbers that Apple has unfairly maligned Microsoft. But let's think about this for a minute.

Microsoft launched its $300 million campaign not to introduce Vista – that happened 21 months ago – but to shore up the embattled Windows brand.

After more than a year of bad publicity apparently Microsoft felt compelled to respond.

And not all the negativity came from Apple ads, either. Most of the complaints have come from Vista users and Windows-oriented publications. Apple's ads simply have exploited this existing dissatisfaction.

But let's get back to those numbers, shall we?

Apple does spend proportionately about the same on advertising as Microsoft does, but it doesn't need to waste money on ads to repair an image tarnished by routinely frustrating software.

The point of Apple's TV spots is that Microsoft should be devoting more resources to making Vista better for users rather than making ads to boost their self-esteem. If Microsoft had spent more of its vast piles of cash all along on making Windows a trim, responsive, trouble-free and user-friendly operating system, it wouldn't have this problem. (And Macs would not be gaining market share.)

That brings us to the question of R&D spending. Microsoft outspends Apple by every measure. In raw dollars, Microsoft outspent Apple $7.121 billion to $782 million in 2007 -- a ratio of more that 9 to 1. As a percentage of revenue, Microsoft outspends Apple by about 4 to 1, 13.5 percent to 3.41 percent.

Contrary to what Apple implies in its ads, Microsoft literally spends billions on the development of products like Vista and Office.

Sad, isn't it?

Apple spends far, far less money on R&D, but look at what it has delivered over the past few years: Mac OS X Leopard, Intel-based Macs, the iPod Touch and iPhone, the innovative MacBook manufacturing technology unveiled just two weeks ago.

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More to the point, Apple regularly delivers products and services, such as the iTunes Store and the iPhone, that shake up entire industries. When was the last time Microsoft did that?

What does Microsoft have to show for its billions invested in R&D? Vista? Office 2007? Hardly groundbreaking. The Zune? A decent MP3 player, but it's had minimal impact on its market.

And so it goes with Microsoft's product line. Almost in defiance of the prodigious amounts of money the company invests, Redmond's creations rarely have the capacity to excite. Even the celebrated Xbox is little more than another game console.

Admittedly Apple's ads bend reality a bit to poke a Microsoft sore spot. But Apple's ads aim for a truth that isn't told in the numbers.

Call it artistic license.

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