Commentary/Rajeev Srinivasan

The Art of War by Other Means

I forget who coined the phrase that diplomacy is the continuation of war by other means -- probably von Clausewitz. Today, though, marketeers are the ones who have taken this dictum to heart, applying the strategic and tactical principles of old masters such as Chanakya, Sun-Tzu and von Clausewitz to the unending battles for brand supremacy and competitive advantage. Sustainable competitive advantage is worth big bucks, so this is not fun and games--it's a jungle out there, folks!

As a marketing/sales type myself (in engineer lingo, ``marketing weenie'' or ``sales critter''), I suppose I am committing some sort of treason by exposing our deep, dark secrets. But it is quite entertaining to look at some of these invisible battles for mindshare. The fact of the matter is that there is relatively little difference between the products and services of most firms; on the other hand, brand awareness and loyalty are worth billions of dollars.

Consider the soft-drink business: quite honestly, there is absolutely no difference between Coca-Cola and Pepsi-Cola. Both are sugared coloured water, generally bad for you (a mineral-water-swilling Californian friend of mine swears he once spilled a soft drink on his car, and that it took the paint off!), and yet a) their brands are worth something like $ 10 billion in market valuation, b) they spend perhaps $ 100 million a year in advertising and other promotion.

Another example is the titanic struggle waged world-wide by Proctor & Gamble and Unilever in pushing their ``new and improved'' versions of soap powder, shampoo and other such generic products. Mind-share and brand loyalty are key to success in these markets. Come to think of it, the selling of various religions is also along the same lines: underneath, religions are all soap powder-like generic articles -- very little difference in the essentials, but lots of packaging and promotion -- and, of course, people go around killing to `prove' their brand loyalty.

Similarly, car companies have spent untold billions in advertising, sponsorships, trade shows with scantily-clad lovelies draped all over sleek roadsters, just to create that certain image in people's minds. And it does pay off, as seen by the continuing success of expensive automobile brands such as Mercedes-Benz, Porsche, BMW, Lexus, Rover, etc. A car is basically a box on wheels, yet the sex appeal--the not-so-subliminal message that a person with a fancy car is more attractive to the opposite sex--has become a truism in our minds.

Automobiles were the first technologically advanced products to be marketed like breakfast cereal and soap powder, but the computer industry is catching on, too. Anyone who has been to the gigantic Comdex show in Las Vegas can attest to the glitter that's now rubbing off on the denizens of the Silicon Valley and Seattle. Similarly, I attended the NASSCOM fair in Bangalore recently, and it was also spectacular.

At NASSCOM's Cybercity conference and exhibition, the `suits' mingled with scruffy engineers (although the Indian software type is more presentably outfitted than the average Silicon Valley guy/gal, noted for their unkempt excess body hair, sandals, and shorts). I understand there was a fashion show as well, (to be politically incorrect, is it ``Chips and Chicks''?). Alas, I had to miss it because of pressing business. But the point is, here is the very epitome of the techno-heavy industry, and it too is being influenced by marketing glitz.

The biggest brand in the computer industry is Microsoft, with its ubiquitous ``Windows everywhere'' campaigns. A lot of people have become aware of Microsoft because of the relentless hype machine unleashed by the citizens of Redmond, Washington. For example, the launch of Windows 95 probably wasted more forests's worth of newsprint and oceans's worth of ink than even the sorry saga of Diana, princess of Wales.

Yet, it has paid off -- Microsoft has displaced many well-known brands to become, according to The Economist, one of the world's top ten brands. Considering that the world's #1 brand McDonald's has a brand equity valued at about $ 17 billion, it is well worth Microsoft's efforts to attempt to establish itself as synonymous with computing: it adds many billions to Bill Gates's coffers.

Getting away from all the positioning (``marketing fluff'', my technoid friends sniff), there is serious stuff going on the computer industry. Microsoft and Intel have managed to carve out a lucrative niche for themselves. Opponents of this mighty `Wintel' brand charge them, variously, of monopoly practices, predatory pricing, and just plain anti-competitive activities.

For example, it is alleged that Microsoft has systematically used the weapon of ``overhanging the market'', ie by pre-announcing things that are way off in the future (aka ``vapourware'') to prevent smaller companies from gaining early-mover advantage. (Although, to be fair, Microsoft is by no means alone in indulging in vapourware and its close cousin, ``slideware''). Also, Microsoft is accused of ``bundling'' or forcing customers to buy things they don't need just to get the things they do want. However, US courts have never fully accepted these charges.

Microsoft has used its ``cash cow'', its operating system business (DOS and Windows) to expand into other areas. In military fashion, it identified vulnerable territory, marshalled its forces, and attacked. One example is the area of `office suites', including word processing, spreadsheets and presentations -- i e the applications most people use -- Microsoft Office has 80% marketshare. It may surprise many to know that ten years ago, Microsoft was nowhere in the picture, and Lotus, WordPerfect etc ruled the roost -- they have withered before the Microsoft assault.

In essence, Microsoft has now become too entrenched for a `frontal assault' by its foes, and therefore they are now concentrating on `flanking attacks'. For example, Netscape, IBM, Oracle, Novell and Sun have formed an alliance -- finding all their core markets under attack by Microsoft -- to launch a diversionary manoeuvre using the increasingly popular Internet and the related Java paradigm.

Java is the ``accidental platform'' -- intended originally for computers embedded in appliances, cars, etc., its initial success, surprisingly, was in making Web pages more jazzy; however, it has, in its short existence of about two years, suddenly become an alternative `platform', with the great advantage of portability -- ie it can run on Intel machines, Macs, UNIX machines, mainframes,... whatever. And it also promises to get people off the expensive yearly `upgrade' routine for hardware and software, in addition to being highly secure and immune to viruses and so forth.

Somewhat to everyone's surprise, Microsoft now finds itself vulnerable in its core market -- Java-based, inexpensive Network Computers can replace the ubiquitous PC, at considerably lower cost. And Java Computing is the new network-based computing model that can replace the Windows model. Given the wildly popular acceptance of Java as a computer platform as well as a basis for devices such as SmartCards, fax machines, television set-top boxes, etc, Microsoft finds itself with a serious competitor to its goal of making Windows widespread in the enterprise and in the home.

This is all high drama, and it is most entertaining for all of us on the periphery. The war of words has just gone up a notch, with Microsoft clearly attacking Sun, Netscape and friends by threatening software developers -- if you go with Java, we will essentially disown you. High stakes, because the developers are the true hidden assets of computer companies: if the people who create interesting applications desert you (as Apple found to its discomfiture), your boxes and systems software are of little value.

Returning the favour, Sun has just sued Microsoft, alleging trademark violation, breach of contract, and a variety of other sins. At issue is the allegation that Microsoft has unilaterally extended Java, by putting in Windows-only code into it (thus subverting the multi-platform appeal of Java) in an attempt to stifle its promise as a platform. The new Microsoft Web browser, Internet Explorer 4.0, is the immediate target of the suit. At the moment, Microsoft's lawyers have not responded.

So the battle goes on. The outcome will be quite significant to all the parties involved, and it will either mean that Microsoft/Intel loses its grip on the computer market, or that Sun, Netscape, Oracle, find themselves marginalised. Either way, someone is poised to become ``roadkill on the information highway''. It is war by other means, indeed.

Tell us what you think of this column