It has been an interesting couple of week over at Microsoft, and even a more interesting week of reading Robert Scoble’s blog.
Before the Gates/Ozzie memos were leaked out, I wrote a comment on Robert Scoble’s blog about how I felt Robert was speaking too early about the Microsoft ship turning. IMHO I thought Robert was getting ahead of MS marketing and CXO executives and expressed caution to him. It now seems Robert had just a little more information at his disposal, and I feel I should have listened just a little more before speaking. Lesson learned….
I am thinking however that the MS announcement, the movement to services, and monetization of advertising is getting all mixed up making a few people’s head spin. I may be wrong but this is my take on it.
MS is worried by just how much money Google is making with it’s advertising model, and the return that it is making for Google’s shareholders. MS knows just how much money it takes to stay healthy in the IT world, and Google is right now very, very healthy. In addition, MS does not have a similar revenue stream that can even hold a candle to Google’s revenue stream. I believe Gate’s has seen this as a major flaw in MS, and wants/understands that without diverting some of this revenue to MS, MS will simply continue to fall behind in market share in this area.
Advertising has emerged as a powerful new means by which to directly and indirectly fund the creation and delivery of software and services along with subscriptions and license fees. Services designed to scale to tens or hundreds of millions will dramatically change the nature and cost of solutions deliverable to enterprises or small businesses. – Bill Gates “Internet Software Services” Memo
If there is one thing Bill Gates understands, is the power that market share can provide you. Google currently has market share for understanding how to generate revenue from an Internet service that is provided free of charge – and he does not want to fall too far behind.
The challenge MS now has is how to invent their service type offering that will create a revenue stream that will produce/divert the same volume and/or value than Google’s offering.
Notice however that MS also has perception that it also has to change. Google started a service that it has always given away for free. By accident or design, they have stumbled upon how to generate revenue from the remnants of that service (see previous post).
MS started by charging a licensing fee, and has continued that model until very recently. The public at large simply expects this behavior to continue. Deviation from this behavior will/has breed mis-trust, and suspicion as to why MS has changed their behavior.
Robert is combating this perception (correctly) by telling MS that it must be completely open in it’s communications, dealings, and just about everything it does. This is a good start, but Google has simply start from a different starting line.
If/When MS can change this perception, it still has the major problem of creating their own service that is unique and different than that of Google’s. What this service will look like, and how they will generate revenue from it will be interesting. In both cases, MS has their work cut out for them.
In that regard, I would like to help. MS has a very good opportunity to move an idea forward that I’ve been working on for at least 10 years. I started this blog in hopes that I could generate/participate in a discussion regarding it. My idea however does not just involve the Internet. It involves brick-and-mortar merchants and the failing of marketing/advertising to gain the attention/trust of consumers. While most of the discussion currently on the web is exclusively to on-line activity, this activity only amounts to a small percentage of the overall market.
I believe great strides can be made in merging these two worlds, as merchants in general are looking for ways to spend their marketing/advertising dollar more effectively. Bill Gates is correct in his statement:
More than any other company, we have the vision, assets, experience, and aspirations to deliver experiences and solutions across the entire range of digital work style & digital lifestyle scenarios, and to do so at scale, reaching users, developers and businesses across all markets
I wonder if MS will give this crazy canuck a chance in explaining what I think this new service might look like? Are you interested Microsoft?