I can see it now: I'm in the middle of a PowerPoint presentation to a potential client. Just as I get to the part where I am explaining the true value of my proposal, up pops an advertisement for a feminine hygiene product. You laugh now, but this could become a reality if Microsoft moves into an advertising-supported software delivery model.
Recent rumblings at Microsoft show the company is looking at alternatives to the traditional method of selling software -- that is, by licensing use of individual products. In the now famous "Ray Ozzie memo", Microsoft's CTO says that the business model "in the form of advertising-supported services and software" is both challenging and promising to his company's business. He stresses the word promising.
Ozzie wrote, "This model has the potential to fundamentally impact how we and other developers build, deliver and monetize innovations." He calls it a key tenet that Microsoft must embrace.
Great -- it's not as if our society suffers from a dearth of advertising now. We have ads on television, on the radio, in newspapers and magazines, on just about every commercial Web site. You can't even check the weather on the Internet without having ads for nasal sprays pop up over radar images of rain clouds. The last thing I want is software brought to me courtesy of advertisers.
The ad-supported sales model is just one way Microsoft and other companies are looking to deliver their products and services over the Internet. There's also the traditional transaction model (buying the package) as well as a subscription pay-as-you-use-it model. All three methods are in use today. Until now, Microsoft hasn't been a big proponent of the advertising model, but the company can't help but feel it is missing out on something that Google has perfected.
Microsoft also feels the pinch of shrinking revenue on some of its software titles. In an internal paper written by MSN employees, the workers cite a 7 percent drop in sales of packaged software including Works, Money, Encarta and digital imaging software in 2004, with the trend continuing in 2005. It's possible that Microsoft could someday offer such consumer applications for free -- as long as we don't mind car ads zooming across the screen from time to time. And if this turns out to be a profitable move for Microsoft, could Word, Excel and PowerPoint be far behind? What about Exchange and other enterprise applications?
Web-based advertising is a bit scary to me. Companies such as WebTrends, Claria, Google and even Microsoft now have technology that provides audience intelligence and advanced targeting capabilities. I used to like the anonymity of the Web; now I feel like Big Brother is watching every move and is ready to sell me a product that I'm likely to want or need based on an ever-evolving profile of me. That's why I steer clear of Amazon these days: I hate logging on to check on a book to find that Amazon is already suggesting what it thinks I would want to read.
I also would be offended if Microsoft or any other software or service provider shared my personal information with advertisers to further pinpoint the promotions coming to me. The MSN internal paper clearly spells out the proposed strategy: "High-cost services (many of which are currently paid) will be funded by an exchange of user information that will allow better targeted advertisements." This is too high a price to pay for "free" access to software.
I suppose increased targeted advertising on the Web is inevitable, though. Internet users want good content and applications, but we don't want to pay for them. But someone has to pay -- why not companies anxious to sell something to the ideal demographic?
The recently announced Windows Live and Office Live suites of software and services will be an initial test of the ad-supported business model for Microsoft. These services are targeted to consumers and small businesses that typically don't want to pay the high licensing fees of commercial software packages. Ironically, I am in that small business demographic.
Microsoft says it will explore all the possibilities for selling software, and as Microsoft goes, so goes the rest of the software development industry. As for me, no ads, please. I will pay whatever it takes to use my preferred software without annoying and intrusive messages trying to sell me something.