Ballmer: Advertising Is the Future
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Microsoft CEO Steve Ballmer wants to grab the worldwide advertising opportunity by the horns. It's one big steer to bring to the ground. |
Ballmer laid out Microsoft's advertising opportunities during the company's annual shareholders meeting this morning.
He spoke about the blurring lines between media, software and advertising. "It's a huge opportunity," he said. Ballmer observed that the online advertising market would surge from $40 billion today to about $80 billion in 2010.
"There's a much larger advertising [opportunity] as well, $600 billion worldwide," Ballmer said, referring to broadcast, print and other advertising channels. Ballmer predicted a dramatic "shift to digital advertising," for which software would play a pivotal role.
He made a valid observation. Many advertisers and content providers are seeking to reach consumers in more places and by more interactive means. Software will be the major mechanism for delivering new advertising solutions in more targeted and interactive ways. Simple example: Advertising placed in online or console games.
"Our goal is to be a powerhouse in digital advertising," Ballmer said. He spoke about delivering "breakthrough, next-generation advertising solutions."
Clearly, Microsoft has big plans for its aQuantive acquisition. As I explained last month, Microsoft is organizationally three businesses: desktop and server platforms, consumer electronics and advertising and search. But the strategy is much broader, as Microsoft seeks to develop more operating system platforms for more devices.
By no means is Microsoft abandoning its core. Rather, the company is expanding the core into providing the plumbing for the future delivery of advertising, media and interactive content.
Microsoft's CEO donned his Chairman Bill Gates hat during opening remarks. He spoke about "changes" and future technology, in a way similar to Gates. The two men must share the same speech writer.
For Gates, this was his last shareholders meeting in his current role. Gates is due to retire—the transition from monopolist to philanthropist—on June 30, 2008. "When we meet a year from now, I will be a part-time chairman by then," Gates said during his opening remarks.
Gates spoke about future investments and made absolutely clear that SharePoint, with "over 100 million customers," would anchor Microsoft's server applications portfolio. He likened SharePoint to Office, asserting that SharePoint would similarly take a "central position as a key tool."
Gates described Web-based access to information as "a major trend." In a surprising public declaration, Gates said that all Microsoft's software would eventually be available in the data center and the cloud—meaning online.
It's the right idea and done for different reasons than Web platform companies like Google. Microsoft has two-fold objectives: Keeping computational and informational relevancy on the desktop (or server) and meeting enterprise demands for increased mobile computing. Simply too much information leaves the confines of businesses by way of laptops or smart phones. Microsoft will offer ways for businesses to pull information back to servers while making it available in the cloud.
During his opening remarks, Ballmer gave a quick laundry list of the company's recent earnings successes and spoke about the future, particularly the holiday season, with Zune and Windows Home Server. He boasted about today's new Zune launch and noted that Microsoft would sell Zunes "direct to consumers" through the Zune Originals Web site.
Partners should expect more of this kind of direct selling, as Microsoft adjusts its business model for delivery of more end-to-end solutions. It's out of character for Microsoft to risk channel conflict, but the company is doing just that. While Zune will be widely available through retailers, engraved models will be sold direct by Microsoft. Hosted services is another example of the trend, where partners and Microsoft will deliver hosted versions of CRM, messaging and other products.
During his opening remarks, Ballmer also spoke about Microsoft success in emerging markets and those with typically high piracy rates. Ballmer said that revenue in Russia soared from $200 million three years ago to more than $1 billion today. He attributed some of the growth to "stronger anti-piracy measures."
During the Q&A, one shareholder raised concerns about piracy in China. "We're focused on the piracy problem in China and many other countries," Brad Smith, Microsoft's general counsel, responded. He noted that the government of China is seeing benefits to reducing piracy, such as the creation of new jobs.
Ballmer said that the Chinese government is committed to fighting piracy. "They're not even sure how to do it," he exclaimed. Microsoft will try to help the Chinese government find a way, he emphasized.
Smith also fielded a question about Microsoft's stunning defeat before a European appeals court and eventual submission to the authority of the European Competition Commission.
He observed that the appellate ruling gives "rules of the road for the entire technology industry." As I observed in September, the appellate ruling gives the European Commission broad authority far exceeding regulating Microsoft.
This is an important observation, and I hope Microsoft's executive staff listens to its shareholders: Two proposals voted on during the meeting and most of the shareholder questions focused on ethical issues. There was a lot less concern about financial accountability and more concern about Microsoft being a moral leader in areas of privacy or dealings with countries like China.
It's not what I expected.
Comments (7)
Nobody on the Yahoo/Microsoft board can even come close to arguing the VCSY patents, where are all the Microsoft tech genius' hiding these days?
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_M/threadview?m=tm&bn=12004&tid=1314784&mid=1314902&tof=4&rt=1&frt=2&off=1&p=alXPc9fAWscsxtGdQX8tDAol3TdVM7SHMgFwb_25ldHUn7b1evyXpQI-
If there are many work arounds that make the VCSY patent of little value, just show me one. AJAX? Gears? CLR? Why are they all inferior to Apollo? Why haven't they taken the effort to replicate Apollo? Adobe doesn't have a patent on Apollo, so what's stopping them?
You know what the risk is hawcreek? The reader is risking that you're right. They're taking a risk you turn out to be right and VCSY disappears.
What happens if the VCSY patents are precisely what stand in the way of these companies?
What happens if patent 521 is the basis for Apollo?
What happens if patent 744 is the basis for IBM's secret SaaS ecology they spoke of recently?
What happens to the VCSY stock price if either of those things is revealed?
I'll tell you what happens. You KNOW what happens. VCSY stock becomes hot and the reader's risk turns into a loss for them.
So tell the reader some more how certain you are that your scenario will turn out... FOR SURE! Absolutely! No doubt!
You can count on it, reader, that hawcreek will be shown to be absolutely right and you will not have lost your only chance to gain a shot at a paradigm shifting company.
LOL What's the risk reward ration again hawcreek? The readers want to know. They want you to state it clearly.
Posted by I-Man | November 13, 2007 4:10 PM
"Gates is due to retire—the transition from monopolist to philanthropist"
And what is that suppose to mean? Bill Gates is not a monopolist, Microsoft's core businesses are very vulnerable. You can say Microsoft is an aggressively competitive Company, but they are certainly not a monopoly.
If Microsoft is a monopoly then so is Oracle in databases and ERP, so is IBM in Services, so is Google in search and advertising.
Posted by Andre Da Costa | November 13, 2007 6:19 PM
"Ballmer: Advertising Is the Future"
Of all the dead head ideas comming from Ballmer, wasn't this the idea back in 2000 around the dot-com bull ?. As I remember with the free internet access and you had to click on the ads over and over again to stay online. Advertising doesn't last, once ad clicks ( or things forced on you ) don't make money they ( ad owners ) pull out. Maybe Ballmer is thinking making Windows7 an ad cash cow ?. Big difference between billions spent on advertising, and that advertising making billions. Talk is cheap, and so is this half baked idea. Advertising is just a trash business in my opinion, a future of personal info collection with maybe unremovable cookies and auto-load ads ?.
Posted by NoThanks | November 13, 2007 8:04 PM
The education process continues. If it was simple VCSY would already be on the Nasdaq instead of two cents a share, when would you prefer to learn now or later when you're kicking yourself?
much more on the url:
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_M/threadview?m=ts&bn=12004&tid=1315003&mid=1315003&tof=2&rt=1&frt=1&off=1
1up: Marvel MMO In Jeopardy
By Chris Kohler November 13, 2007 | 6:32:53 PMCategories: Online Gaming
Marvel Universe Online's development has "hit serious development troubles," 1up reported today.
1up's anonymous inside source says that the MMO game, in development for Windows Vista and Xbox 360 in partnership with Microsoft, is either "dead" or in "serious trouble."
Cryptic Studios, developer of the game, recently sold its rights to the City of Heroes MMO that it created to publisher NCSoft. In the announcement, the company touted its upcoming original projects, but made no mention of the Marvel game.
In 2004, Marvel sued Cryptic over allegations that City of Heroes infringed on Marvel's world-famous pantheon of superhero characters.
Is Marvel Universe Online Dead? [1up]
(Portuno's response)
Geeee... that's a shame. Sounds like it would have been a real spiffy cross-platform game.
Want to have some input from me?
Remember the guy that invented 6826744? Aubrey McAuley? Well, the way he invented the cross platform massive affiliation operating system that 744 is was by being involved with computer graphics and hive and parallel processing long ago when he was publishing comic books.
heh heh heh
Somebody said Microsoft could simply "do business as usual" if they decide to fight the 6826744 patent infringement case all the way to the trial in 2009.
heh heh heh
You know how those comic book villains always end up talking too much and the hero manages to get out of their grasp and eventually destroy the villain? Well, I think the villain in this pulp fiction story ended up talking too much.
Now we're going to see what "business as usual" means for Microsoft.
Posted by I-Man | November 13, 2007 11:51 PM
Andre da Costa said: Bill Gates is not a monopolist, Microsoft's core businesses are very vulnerable. You can say Microsoft is an aggressively competitive Company, but they are certainly not a monopoly.
Micro$oft not a monopoly? Take your head out of the sand! What do you think the antitrust and EU cases were all about?
Micro$oft continues to "succeed" because of its monopolistic tactics. Bill Gates never gave a hoot about playing fair or even legal. He tried to get away with whatever he could. Now that he and his company are seen as morally reprehensible, he wants to buy his way back into decency.
Well, maybe some people will forget the dastardly deeds done by Micro$oft under Bill and Ballmer. But some of us will make sure that the forgetting will take a while. There's justice to be found, and not everyone will fall asleep.
In the meantime, decent people will fight Micro$oft's anti-Linux FUD and its lies.
Posted by Maddog | November 14, 2007 4:55 AM
I'm not really in favor of insulting Microsoft. It's not very witty to replace the s'es with dollar signs. That's just name-calling. ^.^;
In this case, though, I think Maddog's right, for two reasons.
First, Google is not a monopoly in the same sense that Microsoft is. Microsoft has over ninety percent of the market share in the home desktop OS business. Google's market share is not nearly so high in advertising.
Second, it's not an inherently bad thing for one company to have so much market share. It could just mean they do a good job. Or it could mean there's a network effect -- like with eBay, Google, and Amazon.
The beef most watchers have with Microsoft is not that they're big, but that they got there through illicit means -- deals like the Netscape one, where they promised to work with them and then turned around and released Internet Explorer. Microsoft regularly backstabs its partners, violates patents and breaks the law -- they recently got called out for making a $400,000 bribe to get Nigerian schoolkids to use Windows.
Microsoft pays out billions of dollars in legal fees, settlements and government fines every year. And it's powerful enough that, for them, this is simply a cost of doing business. That is what makes them a "bad" monopoly: The fact that they compete not by making a better product (how many people historically liked Windows?), but that they "compete" by destroying their competition, by any means necessary.
They also use vendor lock-in, such as with their weird file formats, to try to make it so that you have no choice but to use the latest versions of Windows and Microsoft Office. Fortunately, products such as Linux, Mac OS X and OpenOffice.org are remarkably good at interoperating with Windows and opening its files and documents, with or without Microsoft's help. Otherwise, there would be no choice.
Posted by Jared Spurbeck | November 15, 2007 3:06 PM
I think Andre de Costa's head is not in the sand but somewhere else! The Bush administration's injustice department gave Billion $ Bill a slap on his limp wrist. There is no doubt what-so-ever that Micro$oft is MONOPOLISTIC, anti-competive, un-innovative and now a dinosour.
* * * * PEACE, LOVE, and LINUX * * * *
Posted by Woody | November 24, 2007 1:21 PM