Because Google is now an 800-pound gorilla, it’s hard to remember just how slight its prospects were at birth a decade ago. If Yahoo hadn’t made Google the default search engine on the Yahoo site in 2000–giving Google both broad exposure and a big endorsement–it’s easy to imagine that few people would ever have heard of Larry Page and Sergey Brin. Now, the Wall Street Journal reports that Microsoft had its own version of Google technology being developed around the same time that Page and Brin were starting their company–but killed it for fear that the technology would cannibalize other revenue streams. Imagine how little chance Google would have had in a competition with Microsoft in the late 1990s, when Google was just a handful of people and a few million dollars of venture capital.
Microsoft’s announcement that it will offer 0% financing on many software purchases of as much as $1 million is the sort of creative approach that healthy companies can take to win market share during the economic crisis.
Flush with cash, Microsoft can afford to offer financing at a time when other sources of credit have just about dried up for many businesses. In fact, the financing will cost Microsoft little. Once Microsoft has paid the huge costs for developing software, producing additional copies costs almost nothing, so even if the vast majority of customers defaulted on their 0% financing Microsoft would still come out ahead.
A recent post at Dan Ariely’s Predictably Irrational Blog about Microsoft’s Mojave Experiment reminds us of a cynical moment during our research for Billion-Dollar Lessons when we concluded that, too often, marketing is when companies lie to their customers, and market research is when companies lie to themselves.