It was so Microsoft. Only Microsoft could spend $200 million dollars on a product launch and make it appear, well, almost understated, even while the Windows XP logo flashed across every billboard in Times Square. Only billionaire Bill Gates could slouch across the stage in his signature just-folks attire — blue button-down shirt and baggy gray slacks — and spend minutes talking up Mayor Rudolph W. Giuliani without even mentioning the product he was there to introduce. Only Gates, in a staged skit, could stroll through Times Square and spend as much time talking to an unidentified, tattooed biker as to superstar Dick Clark. (Hired for the occasion, Clark joked that Gates put the “square” back in Times Square).

The event was Microsoft's much-ballyhooed Windows XP kickoff in October 2001 at the Marriott Marquis in New York City. That is, in New York City post 9/11. It was a different world, Gates acknowledged up on that stage, but — and he finally said it — it was still a Microsoft world.

Meticulous Planning

The XP event was positioned to be the kickoff to end all kickoffs, one that would outdo even the company's most legendary — the 1995 introduction of Windows 95. That launch, at Microsoft's Redmond, Wash., headquarters, was a carnival-style affair, complete with big-top, amusement park games — even a Ferris wheel. CEO Steve Ballmer went so far as to refer to it in following years as a moment in Microsoft's history when “the stars were aligned.”

For about nine months before October 25, the man behind the Times Square event was John Frederiksen, Windows marketing manager, who was in charge of a stable of 55 product managers — including one group responsible for generating product buzz. At the same time, Mich Mathews, Microsoft's marketing head, and her group had been beating the drums about the new operating system. (“XP” is short for “experience.”)

They had convinced some of the company's major corporate customers to sign up for XP before the launch: 150,000 desktops had been deployed, another million-plus had commitments from enterprise customers, and hundreds of companies were evaluating the system. The reviews had been stellar: Commentators generally praised XP's markedly improved stability and upgraded features.

The marketing staff also worked with the McCann-Erickson ad agency on a campaign featuring punchy ads with the tagline, “Prepare to fly,” backed by Madonna's song “Ray of Light.”

The cost for all the hype: an estimated $500 million for the worldwide marketing and launch, including $300 million kicked in by Intel and other major partners.

In-house, Microsoft was busy pumping up its employees. A countdown clock was installed in Redmond, and sales contests were initiated among regional reps to see who could create the best product demo. Excitement about the product was high, and the competition among districts became intense.

Early in August, Microsoft contacted key officials in Manhattan for logistical support and security coordination. At the Marriott Marquis, the marketing, sales, and public relations departments worked with the company to organize the launch. Christine Nicholas, president of NYC & Co., the city's official tourism marketing organization, and her staff helped to secure locations — special licensing of facilities was required — and established contact with the mayor's office and the chief of police, Alan Hoehl. Special permits were needed for everything, right down to those allowing Microsoft representatives to demonstrate XP's music and video capabilities to passers-by.

Then came September 11.

What Next?

In the weeks after the World Trade Center tragedy, the company faced dilemmas. With Manhattan reeling from the shock, Microsoft wondered if the city could handle the barrage of events it had planned, which included its traditional free concert. Did New York officials really want hordes of attendees (more than 1,500 invitees, including industry experts, media, techies, and customers) buzzing around Broadway? What level of security would be needed? Could the company pull it off without appearing insensitive to the trauma around it?

“At one point, we were concerned if it was even appropriate to launch a product,” Mathews told one reporter. Gates wasn't sure either. He called Mayor Rudy Giuliani several weeks after the disaster to discuss whether the company should still come. The answer was clear: NYC needed Microsoft as much as Microsoft needed the city.

So the planners decided to move ahead, adding an appearance by Gov. George Pataki. To lighten up the product demonstration that followed, Regis Philbin sat Gates down for a quick round of “Who Wants to Be a Millionaire” with XP-related questions.

That was followed by a blue-chip panel of top industry leaders — including Michael Dell, head of Dell Computer; Intel CEO Craig Barrett; Gateway CEO Ted Waitt; and leaders of Staples, Sony, Compaq, Hewlett-Packard, and Toshiba — who spent an hour discussing the state of the PC industry. Next, for spiritual lift, the company brought in a Harlem gospel choir, which sang “America the Beautiful.”

Then came the Rudy-and-Bill act, with Giuliani quick to express gratitude to Gates for sticking to his commitment to roll out XP in New York City. “I thank you and all of the other business leaders that are here for this launch of this new product, which really couldn't come at a better time for the city of New York,” he said, as he addressed the crowd in the packed theater.

After what amounted to information overload, Sting's hourlong concert came as a real relief. Although there was no charge for the event, security demanded that, this time, it not be an open-door free-for-all. The producers handed out tickets, and attendees — some 5,000 — were required to show them to enter Bryant Park, three blocks from the Marriott Marquis. Huge video screens allowed spectators and strollers outside to have access to the show, which was simultaneously webcast on www.msnbc.com.

Sting's appearance was actually a result of the September 11 events, according to Jeff Salmon, president of dick clark communications in Burbank, Calif., which produced the concert. “A concert that Sting was to do in Italy was postponed due to the September 11 incident, and Sting felt a need to do something. He was looking for an opportunity, and so was Microsoft. So they got together.”

Discussions had begun weeks prior to September 11, but things fell together very quickly. “Coordinating that effort was just unbelievable, because everybody got involved in this event at a very high level to make sure it was done to perfection. We made sure every single person in the city who needed to know what we were doing knew — and approved it.”

After the concert, several smaller-scale gatherings were organized by Eventage Event Production, New York, including a reception for 250 of the business elite at the Supper Club, where decision-makers from large corporations could rub shoulders with Gates while being treated to a more intimate presentation of XP's offerings.

Eight Years in the Making

For Microsoft, a company that is not exactly known for soft-pedaling its merchandise, XP was billed from the start as much more than just another product. To Gates and the associates who labored on the new system — including Jim Allchin, head of the Windows group, who spent more than eight years developing the software — it was seen as no less than the key to lifting the nation out of recession.

“Although our economy is going through tough times, the technology industry will keep making the investments and innovations that will re-energize our economy,” Gates had predicted, much to the chagrin of industry experts.

In the end, it may not have been the right moment to make such sweeping statements.

Sales of the operating system plunged in its second and third weeks on the market, in part because of the economic slowdown and in part because of the company's decision to allow sales of PCs preloaded with XP a month before individual copies of the software were available in stores. While it is common for sales to drop after an introduction, XP's fall was far steeper than usual, according to Steve Koenig, who is senior analyst at NPD Intellect.

PC industry leaders have remained guarded. “We're not counting on a whole bunch of people saying, ‘Oh, XP's here. I'm going to run out and buy a PC,’” Gateway CEO Ted Waitt told Fortune magazine. As costly and time-consuming as its development was and despite this perfectly planned kickoff, the latest Microsoft product is unlikely to lift the PC market out of the doldrums anytime soon.




Margery Stein is a freelance writer who lives in New York City. She is a frequent contributor to CMI.

XP LAUNCH AT A GLANCE

Location: Times Square, New York City

Date: October 25, 2001

Number of attendees: 1,500 invited guests; 5,000 attendees at a free Sting concert accompanying the launch

Planning time: 9 months

Cost: The total marketing and launch costs are estimated at $500 million, including $300 million kicked in by Intel and Microsoft's other major partners.