If you use an iPhone, you’re more likely to use Safari than someone who doesn’t use an iPhone. Google Chrome users are more likely to use Gmail than people who don’t use Chrome. And Microsoft Office users are more likely to use Skype than people who don’t use Office.
But overall, Apple and Google are doing a better job of connecting their respective products, with usage of one more naturally leading to usage of another.
That’s the key takeaway from this Microsoft chart, which was shown by the company’s top marketing executive, Chris Capossela, during a presentation this week at the Microsoft Convergence conference in Atlanta.
The relative size of the circles indicates the number of users during the window of time that Microsoft conducted the study. The lines indicate when users of one product are more likely to use another.
“It’s just a little snapshot in time. It’s not the end-all, be-all. I don’t want to reorganize everything around this. But it’s an interesting piece of data,” Capossela said to the crowd, according to a Microsoft transcript. “It shows you that we’ve got a lot of big businesses at Microsoft. Windows is big, IE is big, Office is big, et cetera. But it also shows you that we don’t have nearly the connectivity between our products that Google has engineered and that Apple has engineered.”
This is giving Apple and Google a marketing advantage, he explained.
“If you look at what Apple advertises on TV, at least in the U.S., it’s all iPhone and iPad. And yet you see all the lines that connect their ecosystem,” he said. They can focus their marketing dollars on a very small number of things, be very disciplined, but because they’ve engineered their things to work together, one product naturally leads to the next product without any marketing at all; very efficient marketing to build your marketing into your products.”
Microsoft is aiming to adopt this approach “in a big way,” Capossela said.
He pointed to several early examples, including the ability to click the Surface Pro 3 pen to open OneNote; the integration of Bing into Microsoft’s Cortana digital assistant; and plans to integrate Skype more tightly into Outlook.com.
Referring to the chart, he explained, “The beautiful thing about having lots of lines is that you don’t have to market all of your products. You only market the locomotives. And then when someone uses your locomotive, it pulls along the cabooses.”
Capossela’s speech made national headlines for his comments about the future of Internet Explorer, which upon closer examination were essentially what Microsoft had said in the past. (The company will roll out a new primary browser for Windows 10, code-named “Project Spartan,” under a new name, but continue to offer Internet Explorer, as well.)
But for people seeking to understand where Microsoft is headed under CEO Satya Nadella and his leadership team, Caposella’s talk was valuable for its insights into the company’s competitive mindset.
Another key component of Microsoft’s plan, Capossela explained, is its new freemium strategy. This is a common practice in the tech industry but radical in the context of Microsoft’s history: giving away a product to a large number of customers, broadening the base of users but making money from a smaller percentage of them.
That’s one of the drivers of the news this week that Microsoft is planning to offer Windows 7 and Windows 8 users free upgrades to Windows 10 even if their existing Windows copies aren’t considered “genuine.” (Although that offer to Windows pirates comes with some caveats, according to follow-up reports.)
Another example of Microsoft using the freemium model is the decision to make Office available for free on iOS and Android devices, with Microsoft betting that its business will be better off, ultimately, if more people are using Office, whether or not they’re paying.
“We weren’t making any money on Office on the iPhone or on Android phones, and we’ve had over 40 million downloads of the Office apps on those devices,” Capossela said. “And if you think about the Office business, we do roughly 70, 75 million copies of Office a year. And all of a sudden in less than a year we have 40 million more downloads on phones that weren’t running Office. Amazing. … That’s just a total mindbender in terms of opening up your mind to a different business model that your marketing can really help you advance.”