The announcement by Microsoft CEO Steve Ballmer, that up to 25% of revenue generated by the company will come from advertising over the next 4 to 10 years, says that the company is going focus on growth in the media sector.
What needs to be asked, is how the company will attain that growth. When you consider the huge amount of money 25% of revenue would be for Microsoft (MSFT), it's a tremendous sum.
Ballmer's comment that he believes all advertising will be digital within 10 years, shows what he's thinking: he's looking to the Internet, cell phones and in-game advertising.
With the cell phone advertising area being very slow to take off, he's essentially saying it's going to be the Internet directly and in-game advertising that will be the main contributors to that 25% of generated revenue.
There's no question this will be the focus of Microsoft for years ahead, as their acquisition of aQuantive proves. They do have to change in order to make this a reality though.
Microsoft thrived of course when they ousted their chief competitor Apple (AAPL) years ago, but it also made them so strong that they didn't have to be creative or disruptive for a long time, as no one challenged them anymore.
I think this shows in their struggles in almost every new endeavor they've attempted in the past years. While the XBOX has proven to be a great product, not much else has worked for them.
Now they're in a competitive atmosphere in almost every category they attempt to battle in. This is new for Microsoft, in contrast to the years they breezed through by only adding incremental changes to Windows.
The media industry, across all platforms, is even more competitive than the any other industry Microsoft has competed in.
What Microsoft has to prove is if they have the will and swagger to attack the media and advertising world in a way they haven't had to compete for years.
It remains to be seen and proven if they can transfer from the company they are today, to a lean, mean, fighting machine. That's what they'll have to become if they want to make an impact in this industry. If they willing to do what it takes remains to be seen.
» Microsoft and Three Things They Need to do to become Competitive Again from ManagersRealm
How do you manage a company from being a one-time market leader, crushing their competition, to a company that has become a follower and only reacts to other companies' new products in the marketplace? That's the problem Steve Ballmer fac... [Read More]
Tracked on: October 3, 2007 8:08 PM | Permalink to Trackback