I was reading an article from Internet.com explaining how Microsoft is losing over a billion dollars a year online.
Directions on Microsoft analyst Matt Rosoff said Microsoft’s considerable resources lets it keep pushing forward with MSN despite failures in strategic areas that few other companies could afford. "Microsoft’s consumer online initiatives are fragmented with a lot of different brands," Rosoff told InternetNews.com. "They’re losing a billion dollars a year online. A lot of that has been due to investments, but this is an expensive business for Microsoft to be in. Their current strategy is a shotgun approach to try a lot of things and see what works."
It seems quite incredible that this could be the case but it certainly shows that the advertisers have voted and Google and Yahoo! are where they are spending most of their online money. On the web, the model that is most successful is free content and services with ads to support it all.
This is the exact opposite of many of Microsoft’s current businesses. It seems the software giant has to learn quickly how to change their business model 180 degrees if they plan on taking Google head on.