[LINK] Tesco takes on might of Microsoft

brd at iimetro.com.au brd at iimetro.com.au
Thu Oct 5 18:42:47 AEST 2006

Tesco takes on might of Microsoft
Supermarket launches own-brand software at £20 a throw...
By Andy McCue
Published: Wednesday 4 October 2006

Tesco is set to go head-to-head with the likes of Microsoft and Symantec la
this month, when it starts selling its own-brand consumer office and antivi
PC software both in-store and online at less than £20 a go.

The new Tesco-branded software line is part of the supermarket giant's plan
s to
grow its non-food business to the size of its groceries empire, and with bu
half-year profits of £1.1bn announced this week the company's dominance o
f the
UK retail market looks set to continue, with more than £1 in every £8 s
pent in
UK stores being at Tesco.

The software range will cover six products - an office suite, two security 
antivirus packages, a personal finance tool, a CD/DVD-burning app and a pho
editing tool. The products have been developed for Tesco by Formjet
innovations, using technology licensed from Ability, Filestream, Panda Soft
and Software Dialog.

Tesco buyer Daniel Cook said the company's own-brand software is "bringing
choice and value to a market that has offered little of either for too long

Tesco is also pitching its £20 Office suite directly against Microsoft Of
which currently sells for about £300, and not the more basic Works packag
e that
comes bundled with most new Windows PCs.

George O'Reilly, director at Formjet's white-labelling division, told
silicon.com office PC software doesn't need to be as expensive as Microsoft

He said: "The Tesco office package functionality is massive with things lik
mail merger, macros, grammar check and thesaurus. It's a huge feature set. 
kept out stuff people just don't need like voice recognition."

Customers will also be able to access technology and customer support via a
TescoSoftware.com website.

O'Reilly said that while the products will initially be sold individually
off-the-shelf, Tesco is looking at bundling it with the computer hardware i
also sells in the future.

Microsoft's response to the Tesco announcement was typically bullish. A
spokeswoman told silicon.com: "Microsoft welcomes competition in all its
markets, because it drives innovation and keeps prices competitive - both o
which benefit our customers and our reseller channel."

A Symantec spokeswoman said the company welcomes "healthy competition" in t
antivirus software market.

But what of Tesco's chances of success against the might of Redmond? David
Mitchell, analyst at Ovum said that marketing and not price, quality or eas
e of
use is the key reason why some software products gain dominance over others

He said: "It is the power of the marketing machine in Microsoft that has br
it to its current position in the market. It is a testament to the confiden
ce of
the Tesco marketing organisation that they are entering this market in this

Mitchell acknowledged Tesco has a track record of breaking into markets tha
t are
supposedly staid and impenetrable but he warned its latest software venture
could turn out to be a "damp squib" if the company fails to take into accou
the disruption in the software industry with trends such as software as a

He said: "Partnering with a category minnow demonstrates one of two things.
Either that Tesco is confident that its marketing engine is robust enough t
develop their brand and the business behind it, or that it has not properly
understood the dynamics of the market it is entering."


Bernard Robertson-Dunn
Sydney Australia
brd at iimetro.com.au

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