Last week I attended “The Online Opportunity” at Microsoft’s headquarters here in London. The main attraction was that Steve Ballmer, CEO, was giving a talk about his company’s take on the brave new world of Software as a Service and doing business online in general. Microsoft Startup Zone has a video recording of Ballmer’s and all the other talks.

Ballmer reiterated MS’s “use Suse or be afraid” position on Linux, i.e. that companies should use Novell’s Linux distribution to avoid being sued by Microsoft for patent infringement (Novell is a Microsoft partner).

He also discussed the drawbacks of the “free with ads” business model and noted that Microsoft had never had much luck in monetising Hotmail. He stated that Google was having the same problems even though “they read your mail and we don’t” (a comment that surfaced on Slashdot today).

Although his performance wasn’t as energetic as on some previous occasions, Microsoft’s man in the bridge came across as sensible, pragmatic and knowledgeable.

For more comments on the event, check out the coverage by Simon Willison and Jeremy Keith.

When Bill Gross founded his famous Idealab incubator in 1996, taking an idea and turning it into a functioning business was a venture that would require funds of at least $1 million a pop.

Today, developing an application like Walletproof costs significantly less than a million dollars. This changes the game.

In Return of the startup factory, Business 2.0’s Michael V. Copeland writes about the contrast between the good old days of the bubble and the new high turnover incubators, such as Paul Graham’s Y-Combinator.

The idea is not dissimilar to that of the VC model: No one has a clue as to what business ideas will become successful, just as the Hollywood studios don’t know what movies will become blockbusters. The incubator bets on a fairly large range of ideas and gives each company a small amount of seed capital for an equity stake.

With open source software, cheap bandwidth and distributed teams that don’t need office space, the cost of failure will be minuscule compared to the return if the incubator manages to bet on and support an idea that becomes a blockbuster.

Now, the high turnover incubator has come to London in the form of Seedcamp.

Seedcamp is run by two VCs, Saul Klein from Index ventures (who also runs the OpenCoffee) and Reshma Sohoni from 3i.