What Business Will Microsoft Really Be In Come 2010?

We knew Microsoft's been wanting a piece of the advertising business during the last couple of years, judging from key acquisitions it made and its $6 billion investment in aQuantive just a couple of months ago. But this week, we found out just how big a piece of that market Microsoft wants. Speaking in Paris this week, Microsoft CEO Steve Ballmer predicted that advertising would become 25 percent of the company's business "within a few years."

Now, assuming that "a few years" means the next three or four, and assuming Microsoft continues to grow its revenues at its current pace, Redmond could be generating well over $15 and maybe be approaching $20 billion in ad revenues by 2011. Over the next few years, Ballmer said he expects all media and marketing to go digital.

"Over time, all ad money will go through a digital ad platform," Ballmer told the gathering of European ad agencies and clients. "All media goes digital, all advertising goes digital."

It makes you stop and wonder what business Microsoft will actually be in at the turn of the decade (heck, some people wonder even now what business it's in). While the company derives the vast majority of its current $51 billion in revenues from desktop and server versions of Windows and associated business applications, it's investing more and more heavily in a variety of consumer markets. And as it does so, it takes on a raft of new competitors fighting wars on multiple fronts.

It's hard to imagine Microsoft taking its eye off the business-software ball, given its laser focus there for well over two decades. But when you look at the development disaster that is Windows Vista and the delays with Windows Server 2008 and SQL Server, maybe it already has.

This could be a healthy thing for the business-software market in general if Microsoft continues to aggressively pursue this advertising course. I mean, who needs the Department of Justice or the European Union to slow down Microsoft, when the company can do that very thing on its own?

Posted by Ed Scannell on 10/04/2007 at 1:23 PM


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