The ads are coming, the ads are coming

The ads are coming, the ads are coming

Summary: Many in ZDNet Talkbacks seem to think that ad-supported Microsoft software is an unparalled bad idea. I beg to differ.

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TOPICS: Microsoft
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A lot of people reacted to the suggestion that Microsoft may offer free or low cost versions of its software supported by ad revenue as if Microsoft had offered to sell software that shoots daggers into your eyes (Aaaaargh...goddamn you, Clippy!!!). Yes, ads can suck. However, as anyone who has clicked a context-sensitive link in Google knows, sometimes they don't suck quite so much. Perhaps I'm just expressing my typical contrarian nature, but I think the idea is a good one, and has a lot to recommend it.

I do note the objections posed in yesterday's blog post by Phil Wainewright. Making ads useful, and thus likely to get noticed, will take work. However, if they do get it right, it could turn into a great way for Microsoft to offer its software to new segments of the marketplace - namely, people who don't want (or can't afford) to pay for Microsoft software.

Do note that the proposal came, as the original article suggested, from a Microsoft ThinkWeek proposal. Thinkweek proposals are a bi-annual event at Microsoft where employees submit ideas for upper management to read. As such, they don't represent plans so much as intellectual twigs for upper management to chew. As you might divine, this hyper-opinionated Microsoft employee made a Thinkweek proposal, too. This one, however, is not mine.

Anyway, the following are reasons why ad-based versions of Windows and Office make sense:

1. Retaking the "low cost high ground:" Windows historically has cost less than its competition. Windows NT was cheaper than the Unices with which it competed. Windows machines were cheaper than Apple machines.

Clearly, however, that dynamic has changed with the arrival of free, as in cost, open source software.  It's fair to point out that most don't download Linux source code and roll their own operating system, thus undermining the notion that Linux is "free" from a practical standpoint (which makes RedHat executives sleep well at night).  Likewise, there are arguments to be made in terms of the maintenance costs of open source products (my opinion, of course). This does not change the fact that open source software can be - and very often is - free as in cost.

Microsoft could help to erase that advantage by offering free versions of its software from which revenue is derived through advertisements. This could easily get annoying and become a real bother to people. However, people have gotten used to ads all over web pages, and provided Microsoft thinks carefully about placement as well as the nature of the ads, they might even be considered beneficial. Google's context-sensitive ads ARE useful.  If Microsoft could manage something comparable, consumers would benefit.

Do note, however, that anyone could still get an ad-free version of the product by paying for it. That's an option to those who find the ads too distracting, such as businesses or regular consumers who just prefer less noise on their desktop.

Might this still leave an advantage to open source, a product that is (theoretically) free as in cost as well as free of ads? Perhaps...but its worth remembering that open source competition has been around for awhile, and people STILL opt to pay for Microsoft products. How much of a dent has OpenOffice made in Microsoft Office's market share? Microsoft will still have to work hard to push the state of the art forward in order to keep ahead of open source competition (and yes, they do move it forward, however much the "everything Microsoft does stinks" contingent protests otherwise). Still, it lowers the barrier to entry considerably for Microsoft products.

2. Neutralizes piracy: Piracy exists for a simple reason: people want a product, and they don't want to pay for it (or at least, don't want to pay full price). By offering an ad-supported version of their leading products, Microsoft would give these people what they want AND make money from them....without those individuals ever having to pay a cent.

Pirated software constitutes a massive industry, particularly in places like China, where the majority of software, according to current statistics, is pirated. Giving away free ad-supported versions of Microsoft software turns pirates into paying customers by making "eyeballs" (read: an ad-viewing public) the thing that pays indirectly for use. 

3. The developing world: Microsoft faces a conundrum when trying to sell software to both rich markets and the developing world. It makes sense to charge less in the developing world, just as it makes sense to charge less for generic "Food Club" brand cheese than for Sargento cheese, even though the cheese likely comes from the same block. To prevent bleed-over from product sold at a lower price, however, Microsoft has to find a way to make the product less appealing in richer markets. The solution thus far has been to make limited capability versions of their software which are sold at lower price.

It would be much easier, however, if Microsoft could offer a free version from which they still earn revenue, however indirectly. This way, Microsoft could offer the same products globally, and no one would feel slighted by having to pay more for the same piece of software.

4. More revenue through targeted marketing: The holy grail of marketing is to target an audience with the sort of ads that most appeal to them. Sending a bunch of male programmers advertisements for breast enlargement isn't terribly useful. Sending a bunch of male programmers advertisements for a four hour extended version of "Star Trek: The Wrath of Khan" is useful.

In other words, Microsoft could require customers of their free version to provide certain details about themselves. Yes, I know, some in the Talkbacks will declare they'd sooner eat pot roast prepared by Idi Amin than give Microsoft their personal information, but I don't think that's the case with most readers, or most of Microsoft's customers....particularly if they get access to Microsoft Office for free.

This could be important in high-revenue products such as Office. Office isn't cheap, and Microsoft will want a way to recoup some of that lost revenue. Creating targeted marketing opportunities might be one way to enable that, particularly when it's recognized that the up-front cost gets averaged over 3-4 years (lot easier to recoup $100 per year per user than $400).

All in all, I think it's an idea worth considering. There are many issues, among them the fact that many don't access the internet on a regular basis.  This makes it harder to update ads with any frequency, which is less of a problem in the West, but a clear and present issue in the developing world. On the other hand, ad-aware free versions of software are better than a pirated version, even if the ad capability is not fully functional due to infrequent (or non-existent) internet usage.

To the naysayers, however, maintain some perspective.  People need to remember that this would mean many of Microsoft's products would be available for free (or at least, a lot cheaper than they are now).  I have trouble seeing why that would be considered a bad thing in anyone's book.

Since this is a post that talks heavily about Microsoft's future plans, and since people get confused by the fact I'm a Microsoft employee, I'll reiterate that these are MY OPINIONS, NOT MICROSOFT'S.  I am not Microsoft.

Topic: Microsoft

John Carroll

About John Carroll

John Carroll has delivered his opinion on ZDNet since the last millennium. Since May 2008, he is no longer a Microsoft employee. He is currently working at a unified messaging-related startup.

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Talkback

74 comments
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  • "KHAAAAN!"

    In regards to piracy, I would say you are incorrect. If you look at Kazaa, people went and stripped its' free version of ads and also all limitations imposed by the software.

    I think most people just consider Ad revenue ephemeral. Frankly, I'm still confused why Google's share price is so bloody high. Just smacks of dotcom bubble, but oh well. I don't own any.

    Frankly, my eyes are worth diddly to an advertiser because they are far more likely to offend me off their product than to encourage me onto it. I suppose I project that personality to other people and do not really see advertisers putting up with that. My particular personality is probably rarer than I think though.

    As far as office. Honestly, I use blog posters. All I really want is a way to jot down somethings [b]spell check[/b] and recording to be available everywhere is a nice bonus. For me, a website with a form object opens tons faster than any word processor I've run into lately besides my old standby, Notepad. Wish Notepad came with a spellchecker.
    Zinoron
    • Word abuse.

      I'm a firm believer in literary diversity. As such I shall avoid frankly and honestly. Make commitment to end word abuse!
      Zinoron
    • Ricardo Montalban

      I was trying to mention my favorite scene in the blog, which was when Kirk screams "Khan" (a scene you obviously remember) and Ricardo Montalban purrs something about being "buried alive." Sheer brilliance. Unfortunately, it was completely off topic and confusing (not that that ever stopped me before), so I took it out.

      [i]If you look at Kazaa, people went and stripped its' free version of ads and also all limitations imposed by the software.[/i]

      That is an issue with binary code, and Microsoft will have to consider the potential that someone will take their free version and strip the ad capability out. That would be impossible (or pretty close) with .NET assemblies, though, as they are signed and alterations just won't run. Of course, never say never, but I'm sure Microsoft (if they decide to do this) will consider it.

      [i]For me, a website with a form object opens tons faster than any word processor I've run into lately besides my old standby, Notepad. Wish Notepad came with a spellchecker.[/i]

      This is embarassing to admit, but I write all my blogs posts...in notepad. I don't know why. It may have something to do with HTML tags and the tendency of Word to "fix" things I don't want it to.
      John Carroll
      • ... who shot his scenes weeks before...

        ... everyone else showed up. Remarkable how much detestation he was able to summon on command.

        My favorite scene is his, when his ship is about to blow up in order to reach Kirk with a final explosion, and he quotes Ahab about smiting from hell:

        Towards thee I roll, thou all-destroying but unconquering whale; to the last I grapple with thee; from hell's heart I stab at thee; for hate's sake I spit my last breath at thee.

        I would like to think that I bring the same sense of determination to the tasks which I undertake.

        I don't think that Scott McNealy (whose mnemonic for me is Scut Farkas) and Larry Ellison have quite what it takes.
        Anton Philidor
      • Bwah ha ha!

        Notepad....and you wonder why we doubt it when we read 'Word for Office is the best!' when even a MS shill aborts Word for Notepad...way to funny~
        nomorems
    • Don't be so sure

      [i]Frankly, my eyes are worth diddly to an advertiser because they are far more likely to offend me off their product than to encourage me onto it.[/i]

      Your opinion of advertising is, alas, distorted by lifelong exposure to [b]bad[/b] advertising.

      In a fairly long professional career, I can cite any number of industry periodicals which I subscribed to [i]purely[/i] for the ads. Economics is all about informed decision making, and ads (at their best) inform decision making.

      It's that "at their best" and the means used to get there that complicate matters. As usual, the Devil is in the details.
      Yagotta B. Kidding
    • Spell Check

      I believe you need a grammar checker too...
      MarkieMark
      • Thanks for the jab.

        I never denied the potential need. Though [i]good[/i] grammar checkers are a bit wanting for English. Perhaps for the same reason I'm so bad at it. I do make an effort, as surprising as that may seem. Perhaps your time may be better spent not stating the obvious? There are, of course, far more aggregeous offenders to the language than I, on these boards, you might do better to critique.
        Zinoron
    • Give me back my ship!!!

      There are ads all over it!
      Reverend MacFellow
    • Not as rare as you think

      I, as many of my friends are the same way, if we need something then we search. Ads do nothing more than P!$$ me off exponentially. The damn things are everywhere you look and listen. The constant bombardment of ads is so annoying that like many I no longer listen to the radio or watch regular TV, just to get away from the ads. Magazines, newspapers they are all over.

      I have seen one of the other Linux Users on this forum express the same sentiment. All I have to say is this is getting stupid. It's as though we no longer watch programs but ads. Enough is enough!
      Linux Advocate
    • This guy is the Dan Quale of bloggers, you can ignore him.

      Don't bother posting comments.
      DonnieBoy
    • old standby

      http://www.analogstereo.com/chrysler_pt_cruiser_owners_manual.htm
      us_forums
  • Chewing twigs.

    This was a memorable line:
    ... they don't represent plans so much as intellectual twigs for upper management to chew.

    Much of your analysis of this tender shoot is based on the idea that Microsoft should have cost-variable versions of its software, including Windows and Office.

    Microsoft already has cost-variable versions of Windows and Office. The low-cost Windows is called Starter Edition. The low-cost Office is called Student (and Teacher) Edition.
    There are, I believe, a minimum of seven versions of Vista on the way.

    What more do you want?

    Okay, free.
    But ads are not a reliable revenue source. It's a competitive market and varies considerably with the economy.

    Aere you sure that you want to make any significant portion of your employer's revenue reliant on such an untrustworthy source?
    Anton Philidor
    • How untrustworthy would it be?

      Web sites make huge dollars (in sum, not in size) from ads. Microsoft has a HUGE market base looking at its products. Are ads unreliable in the television world?

      I agree, Microsoft should tread carefully, but I think it's a possibility, particularly given that pirates ALREADY aren't paying Microsoft anything. a free version at least would monetize that untapped market.

      [i]This was a memorable line: ... they don't represent plans so much as intellectual twigs for upper management to chew.[/i]

      Makes you imagine Microsoft management as a bunch of koala bars hanging around eucalyptus trees.
      John Carroll
      • Re: How untrustworthy would it be?

        [i]I think it's a possibility, particularly given that pirates ALREADY aren't paying Microsoft anything. a free version at least would monetize that untapped market.[/i]

        Huh? If the pirates are using Windows now, why would they switch to the ad-supported version?

        If they [u]can[/u] pirate Windows they [u]will[/u] pirate Windows, starter/ad edition availability notwithstanding.


        :)
        none none
        • Maybe...

          ...or maybe not. If given a choice between a supported version that is less likely to carry malware inserted into the installer by the people who break security restrictions over a hacked version of software, I bet most would opt for the legal version. It just offers fewer hassles.
          John Carroll
          • Maybe not.

            Much piracy occurs in areas where internet connections are unreliable, and often so expensive as to be even more out of reach than legitimate copies of the software.

            Remember that the MIT prof. for his $100 pc imagined internet connections as some kind of bush telegraph system.
            And Steve Ballmer, asked to comment on said prof's use of Linux, wandered to the point that the internet connection problem was bigger than the hardware problem.

            So the poverty-stricken software pirate is unlikely to use an internet based version of a major application.
            Anton Philidor
          • Malware..

            I have yet to see a cracked/pirated version of Windows or Office that has malware in it. I can guarantee that it would be all over the newsgroups if it happened. All these groups do is remove product activation.
            Patrick Jones
          • I agree with John...

            I think that the problem is that everyone is thinking all or nothing.

            MS won't convert ALL pirates to their ad-supported OS for the reasons that people said (if they can the will), but they will definitely convert some (for the reasons John says here). Also, having a legitimate version of Windows tends to clear consciences. I'm not saying everyone thinks this way, but I'm willing to bet that there are people who pirate ONLY because they can't afford it.

            And MS is putting up all these walls to people getting support and software from them if they don't have a legitimate version of Windows. I know that they are pretty weak walls, but they're still there, and they would be nonexistent on a legitimate ad-supported version of Windows.

            So I think that if MS were to do something like this and do it right, they could definitely convert SOME of the pirating crowd to this idea of free, legitimate, ad-supported software. And as long as they convert some, they've monetized that market.
            mastercko
        • monetize that untapped market

          http://www.analogstereo.com/peugeot_807_owners_manual.htm
          us_forums