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.