Friday, December 09, 2005

Free money

So just when you think Microsoft has lost some of that competitive zest, Bill Gates surprises you with something like this.

"Google's business model is not based on free software," Gates said. "Their business model is based on advertisements from which they make a lot of money. But they don't share these advertising revenues with the end users who help them get the revenue... Google keeps all of the money with itself"

Bill followed that up saying Microsoft would potentially give free software or even cash to users... Nice! Now giving away free (if beta) software is at the heart of Google (Urchin, Base, Desktop, etc) but cash is a different thing altogether. It's hard to beat free, unless you actually go beyond free and give money away. MS is back like Jack from The Shining. If anyone knows how to take a loss in order to gain share (Explorer, Windows CE, Media Center and Xbox to name a few) its Microsoft. Incenting users to add content, register or search on MSN at the very least has the potential to undercut the margins in search advertising while at best may turn users' loyalties between comparable search services.

So in a time when Google and its vaunted engineering can do no wrong, here's one for all MBA, ex-consultant marketing managers out there. Sometimes aggressive marketing can make a difference.

Meanwhile, Yahoo just acquired When you add Flickr, Answers, Shoposphere and other social networking/tagging/ community-generated content sites from Yahoo, they're clearly taking better advantage of their massive registered user base. Hate to say it, but its ridiculously simple to participate across these various services as a Yahoo member, driving more targeted user-content, viral usage and an increased sense of community. Integrate search and ads to these properties, and Yahoo is building an effective foil for Google's strength in search as well...


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