Microsoft sells Windows 7 desktop to advertisers

Pilot program with Ferrari, Pepsi, Porsche, and others helps squeeze every dollar out of OS, says analyst

Microsoft today announced that it would sell Windows 7 desktop real estate to advertisers and launched a pilot program that includes Coke, Infiniti, and Porsche.

Using Windows 7 themes -- collections of backgrounds, borders and audio elements -- advertisers will be able to brand the desktop, Microsoft said.

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Microsoft pitched the pilot as a way for international advertisers to connect to consumers. "The new Windows Theme Experience and Windows Personalization Gallery in Windows 7 allow consumers to customize their technology to reflect the things in life they are most passionate about," said Darren Huston, corporate vice president of the company's consumer and online group, in a statement Friday. "These are great examples of Microsoft innovation and technology coming together to enable top global brands to reach audiences in new and interesting ways."

The desktop space selling is a first for Microsoft, although in the past it has let companies customize the Internet Explorer (IE) browser.

Microsoft main rival in the operating system space, Apple, does not sell desktop space to advertisers.

Several companies are participating in the pilot program, which will run through October 2010, including luxury automobile makers like Ferrari, Infiniti, and Porsche; soft drink sellers Coke and Pepsi; and Italian motorcycle maker Ducati. Microsoft's joined in with themes for some of its own brands, such as Bing, Xbox and Zune.

Twentieth Century Fox, another pilot participant, is promoting Avatar , the James Cameron-directed movie slated for a Dec. 16 release, in a desktop theme.

Advertisers will also be allowed to create desktop gadget and add-ons to drive Windows 7 users to their own Web sites.

One analyst downplayed the desktop-space selling. "This is interesting, but it will come down to execution," said Allan Krans, of Technology Business Research. "If the themes are innovative enough, neat enough, I can see some people using them. But I can't imagine it's going to have a huge impact in terms of revenue. I don't think a sizable portion of users will bother."

When asked whether the program would trigger a backlash, Krans replied, "I can't see a huge backlash, unless they really push this on, say, netbooks, to offset some of the lower pricing for Windows."

Most netbooks come with Windows 7 Starter, a stripped-down version available only to computer makers. Although Microsoft doesn't disclose its price list for OEM copies of Windows, analysts assume that the company is charging much less for Starter than for Home Premium as part of its campaign to scrub the eight-year-old Windows XP from the market.

"This points out one thing," Krans added. "They're seeking every way to add all incremental income," he said, referring to Microsoft's bottom line, which has been hammered for the last several quarters by the decline in PC sales worldwide and the increase in netbook sales, which lowers the company's profit margin as the percentage of higher-priced "premium" editions falls. During the quarter that ended Sept. 30, for example, Microsoft's revenue was down 14 percent , while revenue from sales of Windows to OEMs was off 6 percent compared to the same period the year before.

"Every little bit helps," Krans said.

The themes can be downloaded from the Personalization Gallery on Microsoft's Web site. The company made a point to stress that the themes were "opt-in," and thus would not appear automatically when a user launches Windows 7.

This story, "Microsoft sells Windows 7 desktop to advertisers" was originally published by Computerworld .

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