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The surprise hit of the PC market is netbooks. Small Windows- and
Linux-based devices provide just enough processing power and functionality in
an affordable package (many cases $200 to $300) that consumers and many mobile
business users are snapping them up faster than any conventional PC notebook or

That’s got many thinking that in a recession price will trump all other
factors, including the legendary coolness of being a Mac user. And that’s
Microsoft’s thinking in a new ad campaign aimed at undercutting Apple’s
perceived quality advantage by attacking its Achilles heel: high price.

In a new ad campaign, Microsoft follows a recent college graduate looking
for a notebook with a 17-inch monitor and comfortable keyboard for under
$1,000. Visiting an Apple store, the woman is dismayed that the Mac that fits
her budget is a small, underpowered 13-inch notebook. She decries that she
would have to double her budget to buy a decent Mac. The obvious choice: a
Windows PC.

Mac enjoyed a vaunted position in the market as being the computer platform
of choice among graphic artists, designers and musicians, but not as a serious
business machine. The wildly successful “I’m a Mac and I’m a PC” ad campaign
that pitted a hapless nerd PC user against a young and hip Mac user helped
personify the Mac as the machine for “cool people.”

Microsoft is betting that the recession will change people’s perceptions and
buying habits.

The argument for price over quality or "coolness" comes back to
the basic premise of a netbook: They’re just good enough to do some things—Web
surfing, e-mail, word processing—and at a reasonable price. But netbooks are
not quite powerful enough for many consumers and small business owners. They
also lack some features to which many users are accustomed—optical drives,
multiple peripheral ports, high-density hard drives.

For slightly more money, users can get decent midrange Windows-based
notebooks that have all the creature features that consumers and business users
want. Hewlett-Packard, Toshiba, Dell and Lenovo have launched new products in
the $500 to $700 price band aiming to capture some of those price-sensitive
consumer and business users.

Microsoft’s new marketing campaign launches in the same week that Apple is
taking hits on the quality and reliability of its products. Rescuecom, a New
York-based solution provider and computer repair service, this week released a
report showing that Acer and Lenovo topped its list of PC reliability and
quality. It was the first time that Apple failed to top the quarterly ranking,
which is based on computer repair work orders.

While analysts predict PC sales to significantly decline in 2009, there are
signs that PC sales are entirely stagnant. Electronics retailer Best Buy
reported that annual sales increased 10 percent in its last fiscal year, buoyed
by new store openings and, surprisingly, PC sales.

This is Microsoft’s third major marketing effort to change the perception of
PCs. Last spring saw the disastrous campaign featuring Bill Gates and Jerry
Seinfeld that was designed to leverage the comedian’s humor about nothing into
a case for PCs (it didn’t work). The campaign was replaced with the "I’m a
PC," a more conventional series of commercials that showed real PC users
in their real-world settings.