I was wondering, while doing another piece of research about the Windows Live services, how much the cost of the service must be to Microsoft. At the end of the day, ‘Windows Live’ encompasses a huge amount of services, used by a very large number of people worldwide. This has associated physical costs, in physical storage space of each user’s data, to transfer costs of the bandwidth used to move this data from server to server, from server to user and so on. People every day just rely on freely available web-services such as Windows Live Hotmail (and GMail), WL Messenger, WL Photos, Skydrive, the blog-esque ‘Spaces’ and so on. I threw some numbers around, and worked out very unscientifically, that if each user with a WLID used all the services available to them to their maximum, that’s around 30-40GB of storage per user. Obviously one of the reasons the system works is because the vast majority of users won’t get anywhere near 10% of that. But it could happen. But here’s the thing. It’s all FREE.
There has to be a massive associated cost of running these services, and Microsoft aren’t the only company, although they do have probably the highest running costs due to variety of services offered and number of users. Equally, Google is forking out massive amounts of money to provide similar services for free, and then there are the myriad of similar services from Yahoo, Flickr, Facebook, blogspot/wordpress and so on. There is so much available, so much taken for granted on the internet at the moment that’s just freely available, and it has an associated cost that’s just flat ignored by the end user.
So how and why do these services exist? They have to be a fairly huge drain on resources, and yet web services seem to be at the forefront of pushed technologies, and currently the big thing, but furthermore, the next big thing; ‘Cloud’ services that exist on the web are where the direction of things are headed. How are they funded? One could argue that Microsoft, as a large, profitable company, has a degree of social and community responsibility to ‘give something back’. But I’m also not a Microsoft account, I have no true idea of how much these services cost to run, or how they’re funded. The only obvious source of revenue is advertising. Users will object at obnoxious or large advertising, advertising that detracts from the experience. But if the advertising doesn’t detract or isn’t obvious, it will get ignored, which brings me to the sustainability issue. I’m fairly sure the MTV generation, and the facebook generation have grown up so wholly immersed in advertising, it has no real use any more.
You see adverts every day, I do, on the internet, on the side of buses, on TV, on buildings, on billboards, on taxis, on consumer goods, in the newspaper, on barrage-baloons in the sky. It’s everywhere. And consequently, in terms of actual impact…it might as well be nowhere. I can’t ignore the subconscious effects of advertising being so widely spread that may well trigger and spark impulse buying and drive consumer direction in ways one can’t even realise, but for the vast majority of advertising, it appears to be a money hole. I used a GMail account from when they were invite only as the service first launched in late 2004. I used it pretty exclusively until jumping the Google ship in late 2008 for Windows Live services, enticed heavily by Exchange access provided by MS on my slightly special live account. In that four year period with which I used (and I USED) the service, I clicked on not one advert. I ignored everything, and very much used the GMail service as a completely free service without generating any practical, measurable revenue for Google. I’m convinced I’m not the only user in the world who completely ignored the advertising. And if you plug a GMail account into a desktop client or a phone using IMAP or POP3…where’s the advertising? Then the backend powering is being done by Google, paid for by Google, and they can’t even display any adverts.
I’m fairly sure this is a situation that has to get worse, and further new generations consume and use more and more web services, as more users in general use these services, and as the penetration and drive effect of advertising has less and less grip on people. With this, I have to wonder how sustainable these free services really are. This is as much an advertising issue as it is a business model/funding issue, but regardless, there is a distinct issue around the sustainability of these services.
