Innovation and Positioning

This week, Google, Microsoft and IBM announced plans to ‘Spend Big’ on innovation and positioning.

Google Increasing Innovation Spending in 2006

Google has said in a statement that they would be spending a lot more than usual to continue innovating in the market where they face serious competition from big players like Microsoft and Yahoo! This means that their revenue growth will continue to decline amid increasing competition. Google also notified this in its annual form filed late Thursday with the Securities and Exchange Commission.

“Our investments in property and equipment, including information technology infrastructure and land and buildings, will likely be significantly greater in 2006 compared to 2005.”

In 2005 Google spent $838.2 million dollars on capital expenditure compared to just around $319 million in 2004. They also added that their primary revenue source (online advertisement) faces increasing competition from the traditional sources of advertisements like on television and print media.
Posted 3/17/06 - http://www.searchenginejournal.com

Microsoft Plans Marketing Push on IBM

- (Highlights from news articles in the Wall Street Journal, New York Times and USA Today.)

Microsoft announced a $678 million marketing initiative aimed at competing with IBM for corporate spending on information technology.

The $678 million is the largest business-oriented marketing campaign ever for the company. By comparison, Microsoft spent $270 million on a four-month marketing campaign when Windows XP was launched in 2001.

Up to three-quarters of Microsoft’s $54 billion of annual revenue comes from business customers. IBM had $123 billion in revenue last year, mainly from business customers.

The campaigns reflect the challlenge both companies face in convincing their most important customers to continue buying their products and services.

Microsoft’s marketing drive and its strategic assault on IBM comes as it prepares to roll out a series of new products in the second half of this year. The company is positioning the new desktop offerings as a kind of dashboard for managing businesses, especially when linked to other new Microsoft programs for worker communications and collaboration, searching company databases, business intelligence and customer relationship management.