Microsoft Case Summary

Vaporware is the term we use for a product that is pre-announced even though it is nowhere near completion. Microsoft is one good example of how firms pre-announce products to stifle competition and to stay in the news. In 1991, when most of us had no idea that Microsoft was planning to launch an advanced version of its old operating system Windows 3.1, the company came out with an announcement that took most rivals and users by surprise. Microsoft announced that it was working on a new operating system called Chicago whose beta version would be launched somewhere in 1992 while the final version would appear in December 1993. 1992 came and went without any news of Chicago coming into the market and this was a major setback for users who had been eagerly awaiting the release of this new operating system. It was only later that people learned that even the specs of the product, which had to be completed by Oct 1991, had yet to be given final touches by the end of 1992. Since the specs took so long to be finalized, Microsoft rescheduled the release date and this time, announced that shipping of the product would begin by the end of 1994. However to cut a long story short, no beta or final version of Chicago appeared in 1994 and by this time, users had almost given up hope of ever seeing the product and thus Chicago became a vaporware. The year 1995 finally saw the release of Chicago but it had been renamed as Windows 1995. Many believe that Microsoft deliberately pre-announced the product so it could crush its competitors' hopes of making use of Microsoft's absence from the market. MS knew that IBM was working on its new operating system, which could significantly reduce the sales of Chicago if it were released after OS 2.2 and for this reason it kept pre-announcing the product. Some are of the view that what Microsoft did was similar to what IBM used to do in its heydays. When IBM was at its peak, it would adopt this strategy of pre-announcing since it enjoyed a favorable position in the market and knew customers would wait for its product instead of jumping at a new rival product. Microsoft followed the same strategy because now it enjoys an enviable position in the market and can easily dictate the rules.