Text 16908, 139 rader
Skriven 2007-03-26 18:11:34 av mike (1:379/45)
Ärende: Where Is Microsoft Search?
==================================
From: mike <mike@barkto.com>


http://www.businessweek.com/magazine/content/07_14/b4028045.htm

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Its stumbles on the Web could open the door for rivals to come after its core
business



Time has always seemed to be Microsoft Corp.'s (MSFT ) ally. In the company
lore, the software giant takes three cracks at a market before establishing
supremacy. The Windows operating system stumbled for years before achieving
domination; so did Microsoft's server software.

But when it comes to developing a viable Internet strategy, Microsoft may be
running out of time. It has long trailed Web leaders Google Inc. (GOOG ) and
Yahoo! Inc. (YHOO ), in the use of its search engine and in search-ad sales.
Now it's losing ground. In February, 2005, Microsoft's MSN Search accounted for
nearly 14% of all Web searches, compared with a 46% share for search leader
Google, according to research firm Nielsen//NetRatings. Just two years later,
Microsoft's rebranded Windows Live Search has a 9.6% share, compared with
Google's nearly 56%. That amounts to nearly 300 million lost searches per
month. The sense that Microsoft is slipping was reinforced with a recent
shuffling of top executives.

Microsoft's search problems present it with a huge quandary. The company's
revenue from online advertising is relatively small--just $836 million in the
first six months of the fiscal year ending in June, vs.
$5.9 billion in sales of the Windows PC operating system. But the Web is
increasingly the place where computing gets done. Everything from e-mail to
customer-relationship management applications is moving from programs on a PC
to services on the Net. Meanwhile search advertising is exploding: Piper
Jaffray & Co. (PJC ) says it should hit $44.5 billion by 2011, up from $15.8
billion in 2006.

If Microsoft can't keep pace, it risks seeing its Windows and Office software
franchises erode as Google and others launch Web-based rivals. "It behooves
Microsoft to be there," says Charles Di Bona, an analyst with Sanford C.
Bernstein & Co. (AB ). "If they don't get there, it gives others a platform
from which to attack Microsoft's core business."

Just as troubling, Microsoft's search problem reflects its approach to new
markets in general. It spends little time focusing on tiny, emerging niches
that generate little, if any, sales. But those are precisely the markets that
can quickly blossom on the Net into meaningful businesses. "Bill [Gates] and
Steve [Ballmer] and the leadership don't understand the value of small things,"
says Robert Scoble, a former Microsoftie whose blog recently took the company
to task for its Web missteps. "That cripples their entire Internet strategy
from the start."

Microsoft has already squandered much of the time it spent developing the
search business. Until February, 2005, it licensed search technology from two
companies, Overture and Inktomi. Then it launched a homegrown search engine,
saying at the time that it would win over Web searchers with results that were
more relevant than Google's. Last fall, Microsoft Chief Executive Steven A.
Ballmer told BusinessWeek editors and reporters: "I think in the next three
years, people will say, 'Hey, these guys are really a major player in online
consumer and advertising.'"

There are a number of reasons that hasn't happened yet. First, Google has
performed near flawlessly. Early on, Google used its simple Web site to cement
the impression that to search is to "Google." And because more people search
there, Google has more data with which to target relevant ads. The result: By
some estimates, Google nets at least 50% higher revenue per search than No.2
Yahoo and other search sites--allowing Google to keep investing more in
improvements. For instance, on Mar. 21 it revealed a new program to give
advertisers the opportunity to pay only when someone responds to an ad--by
purchasing a product, filling out a form, or some other action--rather than
merely when they click on it. That may be more attractive to advertisers who
want concrete results.

Meanwhile, Microsoft has managed to confuse searchers. It elbowed into the
search business on the back of its MSN franchise, a modestly successful online
services business known mostly for its dial-up Internet access operation. Then
Microsoft muddled its message in November, 2005, when it launched the "Live"
initiative designed to turbocharge Web services, including search, with
programs running on PCs. But Microsoft continued to use the MSN prefix on some
Web sites, such as its portal and shopping page, while using Windows Live for
its e-mail and search services. "You've got people who know Microsoft really
well who don't know what Live means," says Danny Sullivan, editor-in-chief of
searchengineland.com, which covers the business.

For its part, Microsoft says Windows Live services are those users can
personalize, while MSN ones are preprogrammed content. Concedes Microsoft
spokesman Adam Sohn: "We could have been a little crisper." Steve Berkowitz,
who was hired last May to rev up the Web business as senior vice-president for
Microsoft's Online Services Group, declined to comment.

EXECUTIVE SHUFFLE
With product challenges comes the inevitable Microsoft executive shuffle. Blake
Irving, vice-president of the Windows Live Platform group, sent out an e-mail
to his colleagues on Mar. 5 announcing plans to leave the company later this
year to travel the world. Three days later, Christopher Payne, vice-president
of Windows Live Search, who spearheaded search development efforts, announced
he would be leaving to launch his own company.

Then on Mar. 21, Microsoft created a job at the same level as Berkowitz' to
oversee the search and Web ad business. The idea is to increase the urgency of
search by moving it up in the organizational structure. Satya Nadella, a
vice-president who just six months ago took over the company's small-business
software unit, will run the combined group, reporting directly to Kevin
Johnson, president of Microsoft's platform and services division.

There's plenty of pressure to make this fix stick. Last May, Microsoft launched
adCenter, a technology that takes demographic data (gender, age, Zip Code) of
Web surfers who sign up for various MSN and Windows Live services and lays it
over their search queries. That lets advertisers tailor ads to specific types
of customers and should allow Microsoft to charge more. But the strategy packs
a punch only if Microsoft boosts its share of search.

Microsoft could still do that. It is betting search will move beyond the
all-purpose Web site where users plug in a query for any bit of information.
That's not a bad idea; many analysts believe the search world will fragment
into vertical sites that focus on niches. The eye-popping success of YouTube
Inc., now owned by Google, is one example. More than just a place to show off
your creations, YouTube has become a place to search for videos. Microsoft
announced plans in February to buy Medstory Inc., a health-care search engine
for consumers. And on Mar. 14 it said it would buy Tellme Networks Inc. for
what one analyst estimated to be more than $1 billion. Tellme should give
Microsoft a leg up in the emerging market for voice-activated search over a
mobile phone.

Microsoft is also trying to nudge its massive customer base over to its search
engine. On Mar. 13 it struck a deal with PC maker Lenovo Group (LNVGY ) to
preload machines with the Windows Live toolbar, which leads users into its
search engine. Microsoft also launched a "trial program" where it offers some
large businesses service and training credits--from
$2 to $10 per computer--to get employees to use Windows Live Search.

Sure, that amounts to buying business. But with all it has at stake in search,
Microsoft will take it any way it can.
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 /m

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