On xbox live i’ve been able to tolerate the ads even though we all pay $50 a year for the service, because it’s a deeply subsidized business model and the service needs to handle connections without a single hiccup. Add to that the fact that I don’t stare at the dashboard for more than a few seconds before hopping into an app or game and things are a little more tolerable. But Windows being ad supported? I think Microsoft is treading really thin ice with this.
The solution to avoiding this is simple. Build an amazingly great product and charge a price that makes the whole endeavour profitable. The last part is easy, the first part Microsoft never really knew how to do.