Microsoft chase Google in the long term

CEO of MSFT, Steve Ballmer, stated in an interview at a Churchill Club Event in Silicon Valley that although his company resides in third place in the search race, it would continue to devote 5 to 10 percent of all operating cash flow to try and push forward to raise their command of the market share.

My questions are: what are they doing with that cash allocation, and will it be enough to get anywhere close to where Google and Yahoo are within the time that is available? Google and Yahoo have been at this game for years, and although Microsoft have made improvements to MSN search and Live Search, such as the overhaul Live Search received back in October 2007, they are still currently far behind the leaders.

MSFT remains diligent in their drive to meet Google in the future of search share, as well as in the mobile space. Basically, they want a total monopoly because they`ve been spoiled by their dominance in the operating system and office suite product market.

Google already has, and will continue to, squash Microsoft along with the rest of the market in search, as they boast around 63 percent of market share for search worldwide (against MSFT`s 8.3 percent), 77 percent of search ad share (including contextual) in the US and 90 percent of the European search ad market. Ballmer claims MSFT is the only company that is capable of competing with Google as the advertising consumer base flocks online to find products.

Ballmer also thinks that they will cut forward and lead in the mobile sector, as “The smartphone market today is a lot like the PC market in 1983”. Microsoft also continue to budget significantly for acquisitions, aiming at maintaining their rhythm of buying about 20 companies every year, and will keep about 9 billion dollars a year available to devote to internal research and development.

With the Google/Yahoo search ad space deal going on, it will be even harder for MSFT to gain an advantage in this field. They are putting much faith in the acquisition side of development, claiming they are partially integrating Powerset, a recently acquired semantics engine, into their search. Ballmer calls the strategy Microsoft is taking a “five year long term task”, reassuring shareholders that they will eventually begin to perform in this area.

I think they will need more than cash flow to secure a rise in search share over the next few years. I think they will need tremendous devotion to improving the user experience that Google and Yahoo have adhered to since the beginning. It is this devotion to relevance that has got Google the number one spot, and MSFT will need to switch their focus to making life easier for their users, with better products, better coverage, and better prices.

Prevyn Jeftha Says:
October 10th, 2008 at 12:44 pm

Microsoft, Microsoft, where for art thou Microsoft? I know where: they are just not good enough. They should just use their market share and grow it in their sector, i.e. software. But no, they want to dominate EVERYTHING. This will not happen. It’s plain as day that Microsoft cannot hold a candle to Google’s searching power. The sooner they realise this, the sooner the can concentrate on exploiting the us laymen who pay hard earned money for the bug-riddled software we all need and want. Pffft!