August 2nd, 2007
Selling ads on Works because no one will buy it
Are there people out there who really do pay full retail price for Microsoft Works? I find that very hard to believe — even at the pocket-money price tag of $39.95. Works is the low-end business software suite that gets bundled with new PCs. The manufacturers buy it at an OEM price of no more than a few dollars — an average of $2, to be precise, according to an internal Microsoft document that CNET reporters saw last year. The price is so low because Works has no real value.
So I’m wondering why on earth anyone would pay to fund it with advertising? Unless of course that advertising had some knowledge of what the user’s doing, which raises all kinds of privacy concerns. Not so much ’software plus services’ as ’software plus spyware’. It’s one thing to serve contextual ads to someone while they’re searching the Web or reading their email on a hosted service, quite another to do it right there on their own private desktop.
I don’t think Microsoft would risk the storm of protest such a move might stir up. Instead, I imagine it’ll stick to selling ads to companies that want to reach the home user and small business market that Works supposedly serves — and, as fellow ZDNet blogger Mary Jo Foley reported yesterday, a pilot is just about to begin. It may seem odd that anyone would be interested in paying good money for ads without any real evidence of achieving a return. Yet there are plenty enough banks, telecoms providers, office supplies merchants and travel companies — not to mention software vendors — that have dollars to burn on making ineffective marketing pitches to SMBs. I’m sure Microsoft will be able hoover that money off the table with a persuasive tale about how many SMB prospects they can reach via Works.
The unfortunate truth is that most people who own a Works license have never opened the software (except perhaps to uninstall it or as a cheap upgrade path to MS Office). They got it for free with their PC, or as a special offer with something else. Maybe there are a few users out there who succumbed to an impulse and actually bought it. How lucrative a market can this ragtag assortment of freeloaders and bargain-hunters be?
To my mind, Works is a discredited product of no inherent value, whose devalued name Microsoft wants to drag further through the mud by selling advertising of no value. I suspect that once advertisers discover the poor quality of the exposure Works gives them, the product will become little more than a laughing-stock.
The idea is barely less hare-brained than the notion of offering Works as a hosted service, which to Microsoft’s credit is an idea that Mary Jo floats every so often but no one within the company to date has given any credence to. You can’t just take a conventional licensed software product and start hosting it — not even using desktop virtualization software (for my take on that idea, see what I wrote about Appstream: ASP throwback or SaaS saviour?). It simply doesn’t scale cost-effectively.
If you’re going to offer a product as a Web-hosted service — especially if it’s got to compete head-for-head against Google Docs & Spreadsheets — then it has to be re-engineered from the ground up for that purpose. That’s not a job for the faint-hearted — one-time Office rival WordPerfect was brought to its knees by an effort in the late 1990s by its owner Corel to re-engineer it as a browser-based application. Nothing about Works justifies sinking that much investment into it. If it already commands no value in the market as a perpetual license, how would Microsoft ever recoup the enormous cost of re-engineering it for Web delivery?
Phil Wainewright is a commentator and strategist on emerging software industry trends. See his full profile and disclosure of his industry affiliations.
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