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Monday, October 31, 2005

John Battelle's Searchblog: "Google will sell $6.1 billion in ads, nearly double what it sold last year, according to Anthony note, an analyst at Goldman Sachs. That is more advertising than is sold by any newspaper chain, magazine publisher or television network. By next year, Mr. Noto said, he expects Google to have advertising revenue of $9.5 billion. That would place it fourth among American media companies in total ad sales after Viacom, the News Corporation and the Walt Disney Company, but ahead of giants including NBC Universal and Time Warner....."

In my mind there is just no doubt about it. The software business is increasingly becoming linked with the advertising business. For google, this is clearly the case. ...and why does Microsoft want to compete with google? Because of the 10B it gets from ads.

A few months ago is was really confusing to me where the software industry was going next and who was going to win. Now it seems much clearer. The industry is moving to an ad based business model and Microsoft is clearly in the best position to win. Why Microsoft? Because they are way ahead of the other guys (Apple, Google) in the home. When the next version of the OS comes out, we will begin to see the computer and the television merge. Tivo on steroids. The will give microsoft control over how to display ads on your TV. This, combined with microsoft's dominance in other areas (like xbox, messenger, msn, etc...) will lead to a pretty compelling argument for advertisers. When users search for soft drinks, we will show them a coca-cola in their halo5 game...

My prediction is that 10 years from now Microsoft will generate 25% - 50% of it's revenues from advertising.

I feel a bit sorry for Time Warner, Disney, and Viacom...oh, wait, I am over it.

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