Microsoft's Ads Effective Against Apple, Says Ballmer

Microsoft CEO Steve Ballmer suggested that the "I'm a PC" ads, which highlight the low cost of Windows PCs at the expense of Macs, have led to renewed market-share gains over Apple. As consumers look for cheaper computing power in the midst of a global recession, mini-notebooks, known popularly as "netbooks," have experienced an increase in their market share relative to higher-end PCs.

Microsoft CEO Steve Ballmer thinks that his company's recent ad campaigns, which have focused on the low cost of Windows PCs relative to Macs, have been key in gaining market share over Apple.

"We're going to continue to tell the story of the Windows PC," Ballmer said during a Q&A session following his July 14 keynote speech at the Worldwide Partner Conference. "All of our research shows that our 'I'm a PC' ads - that talk dramatically about the price of Macintoshes - work quite effectively."

"We've gained market share quite effectively against Apple over the past six to nine months," Ballmer added.

Apple's share of the U.S. PC market has declined from 9 percent in the third quarter of 2008 to 7.4 percent in the first of quarter of 2009, according to a research note by Gartner. Another research note from NPD Group suggested that, in February 2009, U.S. retail Windows PC unit sales had increased by 22 percent year-over-year, versus a 16.7 percent Mac sales decline during the same period.

It may all boil down to price. NPD Group states that the U.S. retail average selling price for a Mac in February 2009 was $1,500, versus $555 for a Windows PC. In a cash-strapped environment, consumers have gravitated toward what they see as the best bargains in computing power - hence both the rise of cheap mini-notebooks, known popularly as "netbooks," and the effectiveness of Microsoft's "I'm a PC" ads, which focus on the cost of PCs versus Apple devices.

Microsoft has claimed that Windows is being run on 96 percent of netbooks; however, that figure does not take into account anyone purchasing a system pre-installed with Windows and then wiping the drive in favor of installing Linux or another open-source system.

Even the recession and resurging PC sales have failed to drag down Apple's bottom line, which has been heavily supported by iPhone and iPod sales. On April 22, Apple announced its best results ever for a non-holiday fiscal quarter, having shipped 2.2 million Macs, 11.01 million iPods and 3.7 million iPhone shipments. Two months later, in June, Apple reported it had sold more than 1 million iPhone 3GS smartphones during the device's first three days of release, adding to the 40 million iPhone OS devices already in circulation.

Microsoft is hoping it can solidify its market share with the release of its new operating system, Windows 7, slated for release to consumers on Oct. 22. Both business volume purchasers and consumers will be the target of massive price cuts and promotional offers as Microsoft attempts to aggressively disseminate the OS worldwide.

The company's previous operating system, Vista, earned negative perceptions among both consumers and the enterprise, retarding its adoption as people either retained Windows XP on their devices or explored alternate operating systems such as Apple's.