Christmas is around the corner, but for Samsung, Apple, and Microsoft, it is also a time for marketing. Analysts believe that the three companies will lead the $5 billion advertising blitz that will culminate until Christmas this year.
Microsoft had initiated the battle to win customers’ hearts and wallets this weekend by setting aside a massive $1.5 billion to $1.8 billion budget for the launch of its new Windows 8 operating system. The amount sets the record as the biggest advertising expenditure for the company. Analyst Robert Enderle said the amount “is on a scale you don’t see outside presidential elections”.
Microsoft has always been a big believer in advertizing but more and more younger and vibrant digital companies are joining the fray like Google, which used to rely on using traditional media and word of mouth to promote its products.
Amazon’s Chief Jeffrey Bezos once picked advertizing apart by saying is as the price you pay for having an unremarkable product”. He clearly had a change of heart now as his company is also now using advertizing to sell its e-readers and tablets. Amazon’s budget for advertizing has doubled from $593 million in 2009 to$1.4 billion in 2011.
With its acquisition of Motorola Mobility, Google has also increased its advertizing campaign budget from $1.4 billion to $2.1 billion last year.
Based on annual reports from other companies like Apple, Google, Nokia, Samsung, and Sony, advertizing expenditures totals to about $15 billion as per the most recent fiscal year. Samsung’s $2.7 billion budget included promoting its handsets and televisions while a big part of Sony’s $4.5 billion is marked for Hollywood film marketing.
Although promotional budgets for some companies have grown to over 50 percent, this year’s total spending for advertizing will even be bigger.
Analyst Benedict Evans says: “One and a half billion for Windows 8 sounds like a lot of money, but in the context of these companies it seems reasonable and appropriate. Microsoft need to communicate a fundamental change in their platform that is hugely strategically important to them in terms of driving their business into mobile.”
Microsoft has recognized that its PC days may be over. The software company is now trying to reposition itself by joining the mobile industry party. The release of Windows 8 is a testament where the company is headed. The new operating system is the most radical redesign of the traditional Windows operating system. It was released on October 12 together with the new Surface tablet. October 29 will see the release of Windows RT, the smartphone OS equivalent, and to be followed by the release of phones running it from Nokia, HTC, and others.
Microsoft’s grandiose promotional spending also helps its partners like HTC and Nokia. By abandoning its own operating system since October 2011, Nokia has received a $250 million “platform support” money from Microsoft to promote its handsets. The amount is understood to be more than Nokia will have to pay Microsoft for royalties for using its operating system. HTC is also benefiting from Microsoft in a similar manner. Sticking together with Microsoft gives all parties a marketing competitive power to fight against the might of Samsung and Apple.
Samsung and Apple occupy the top two spots in the lucrative smartphone market. The South Korean tech company is investing heavily in selling its Galaxy SIII phone, which will now also come in a “mini” size and a 4G compatible version.
Apple is also spending big on promoting its products. It has since then doubled its $500 million budget in 2009 to $933 million in 2011. The coming Christmas promo blizzard is also expected to generate massive amount of promo cash from the American company as it promotes its new iPhone 5, a new iPad, and its rumored iPad mini.
“It’s as big a quarter as we’ve ever seen. The level of commitment each of these players is willing to put behind a mobile launch shows how valuable it could be if they get it right,” says mobile research specialist CCS Insight Shaun Collins.