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How Microsoft blundered with the SkyDrive brand

Gregg Keizer | Aug. 5, 2013
Unbelievable that Microsoft did not see this coming, says expert, citing past Metro fiasco.

The broad reliance on SkyDrive means that Microsoft will incur significant costs to rebrand the service, requiring new URLs, new code in existing products and revamped apps for smartphones and tablets.

"We're talking serious money here," said LaMotte, who is familiar with rebranding costs from his time consulting with startups.

And then there's the money already spent on marketing SkyDrive as a brand, and pushing it as a name that customers recognize and associate with online storage. "This was a colossal waste of money for any marketing they did on SkyDrive," said Patrick Moorhead, principal analyst with Moor Insights & Strategy. "They might has well have flushed it down the toilet."

Due diligence?
What puzzled the experts was how Microsoft ended up here.

They unanimously agreed that Microsoft's legal team would have checked for possible infringing trademarks when it decided on SkyDrive as a name for the online storage service.

"Microsoft has an extensive and very good legal team, so it's highly unlikely that they didn't do due diligence," said Eric Priest, a professor of intellectual property law at the University of Oregon. Microsoft's lawyers would have run extensive and international searches, perhaps even hired an outside firm specializing in that task, to locate possible problems.

That leaves out a simple oversight, but puts the spotlight on a grievous error of judgment: After recognizing that Sky was a risk, Microsoft proceeded anyway, confident in the legal team's analysis that it was unlikely the U.K. communications company would prevail if a dispute went to court.

Christine Farley, professor of law at American University, said that made sense. "I'm sure [Microsoft] was aware of these marks, but the fact is, you really cannot choose a descriptive term or trademark that is clear worldwide."

But Microsoft blundered when it took that risk because, in the end, it lost in court.

"They could have avoided this at the front end by buying the mark," said LaMotte, referring to a deal, even a preemptive one, that Microsoft could have made years ago with Sky.

Microsoft's options
So what is Microsoft to do?

The joint statement notwithstanding, some bet that Microsoft would hand Sky a basket of money to retain the SkyDrive name.

"They could take that money [they'll spend on rebranding] and give it to Sky," Moorhead said. When asked about the joint statement, which said Microsoft was going to transition to a new brand, he scoffed. "You aren't going to lead with the notion that you'll pay for it," he said. Instead, Microsoft would say that it was planning on rebranding to gain what leverage it could for future negotiations.

LaMotte also thought it possible Microsoft would pay Sky rather than go through the hassle and expense of coming up with a new name for the service. "They may decide it will save them in the end to pay a sizable fee to Sky, or reach some kind of annual licensing agreement," said LaMotte.


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