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April 18, 2006

Ray Ozzie – Microsoft’s “new brain”

Posted by David Hunter at 10:34 PM ET.

Despite the title, Fortune’s David Kirkpatrick pens an interesting profile on Ray Ozzie and his role at Microsoft. I’d take it with a grain of salt since I expect a lot of the “inside details” have been passed through Microsoft’s PR filter, but it gives a flavor of the man and the issues as Microsoft perceives them which are forcing the new push for ad-supported online services. A small sample:

Ozzie remembers “vigorous disagreement” over business models based on advertising revenue, vs. those based on transaction fees or traditional licensing.

“It’s clear that in the consumer realm, online advertising is this new economic engine,” says Ozzie. “It’s not as obvious how that engine is applied in the enterprise market.”

But the companywide excitement about the potential of online advertising is palpable. MSN’s Blake Irving calculates that annual worldwide advertising spending amounts to about half-a-trillion dollars, vs. total software industry revenue of about $120 billion.

“Only 3.6 percent of that half-a-trillion today is being spent online,” he says with relish, “even though 20 percent of all media viewership – including instant messaging, et cetera – is online now. So just assume that 3.6 percent grows to match the media opportunity. We want to be part of as much of that 20 points as we can.”

Doing all that is even more ambitious than it sounds. For one thing, it is hugely expensive. Software was once a low-capital-cost industry, but not anymore: To deliver a Web-based product line, Microsoft must build a global network of server farms that will cost “staggering” amounts of money, says Ozzie.

Much more by following the link.

Filed under Advertising, Executives, Financial, General Business, Microsoft, Online Services, Public Relations, Ray Ozzie, Windows Live

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2 Responses to “Ray Ozzie – Microsoft’s “new brain””

  1. Microsoft readying online storage offering? -- Microsoft News Tracker Says:

    [...] Mary Jo Foley spotted an interesting reference in the Ray Ozzie profile in Fortune mentioned yesterday: Microsoft is planning to use its server farms to offer anyone huge amounts of online storage of digital data. It even has a name for that future service: Live Drive. With Live Drive, all your information – movies, music, tax information, a high-definition videoconference you had with your grandmother, whatever – could be accessible from anywhere, on any device. [...]

  2. Google pulling away in Internet ad share -- Microsoft News Tracker Says:

    [...] The Fortune profile of Ray Ozzie mentioned on Tuesday reported veritable drooling in the Microsoft executive suite over the potential rewards from Internet advertising. But how are things going today? Maya Roney at Forbes reports the current state of play in Google Maintains Lead In Search, Ad Growth: Global advertising could grow 35% in the first quarter of 2006, with search advertising growth continuing to outpace branded and Google continuing to lead in market share gains, according to a recent Merrill Lynch report. … The analysts expect Google to increase its advertising share in the first quarter to 30%, up from 28% in the fourth quarter of 2005. Yahoo!, Time Warner AOL and Microsoft MSN will likely lose advertising share as the first quarter is not a strong branded quarter, they said. [...]

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