Microsoft’s Ballmer in London: Software To Be Free

Judging from Steve Ballmer’s comments in London yesterday.  Microsoft is coming to terms with the fact that consumer software will soon be free, the Telegraph reports.  No comment on the Facebook stake:

Ballmer says that software delivered as a service, or software plus services as Microsoft likes to call it, will eventually overtake shrink-wrapped software sales.

“It’s not in the next two, three, four years, but in the long run it’ll happen. Some of that money will come through subscription revenues, some will come through transaction revenues and some will come through advertising revenues.”

He says consumers particularly are unlikely to pay for their software, which will largely be funded through advertising. “The average consumer really doesn’t like to pay for things. And anything that can be ad-funded sensibly for the customer and sensibly for the provider will be.

Microsoft generates the vast majority of its revenue and profit from businesses and OEM sales, so giving software away to consumers would be no big deal.  The risk to the company comes from free operating systems and free web-based office and communications suites offered by Google, et al.