Microsoft Innovating or Buying Search market share?
Is Microsoft innovating by creating a new business model for Search or are the recent announcements a new attempt to catch up with Google and Yahoo! in the Search market share?
Microsoft accounted for 8.9 percent of U.S. Internet searches in January 2007, compared with 54 percent for Google, and 23 percent for Yahoo!. It's not just the fact that Microsoft has less than 10% market share of Search, but also the growth of Microsoft's share in Search - which grew only 2.5% in January 2007, compared to a whopping 40.6% growth for Google, and respectable 29% growth for Yahoo.
Microsoft is wary about the uninhibited growth of Google, and now wants to change the game by introducing a new business model for Search. Can Microsoft change the game?
Three Microsoft announcements are significant to that end:
1. Integration of Microsoft search on Lenovo PCs (thereby replacing Google search).
"The deal is exclusive for several years, Microsoft Senior Product Manager Justin Osmer said in an interview. ``We are not in the business to lose money hand over fist, year after year, so these have to make fiscal sense to us,'' Osmer said. ``The Dell example is one where it ballooned to a point where it did not make any sense to play in that sandbox, so we let that one go.''
2. Strategic acquisition of Tellme, and potentially getting phone and mobile search marketshare.
"The purchase gives Microsoft voice-recognition programs it can combine with mobile-phone applications as well as Office word processing and e-mail software. Chief Executive Officer Steve Ballmer says that search on mobile phones will be one of the next battlegrounds between Redmond, Washington-based Microsoft and Internet search market leader Google Inc."
"They're (Tellme) using software as a way to help people get access to the information they need,'' Microsoft's Raikes said. "We think that is a powerful use of software.''
3. Rewards for businesses including "service or training credits" by encouraging employees to conduct search through Microsoft Live.
"As search evolves into more of a productivity tool, and revenue sharing becomes more commonplace across the industry, we are engaging in mutually beneficial partnerships," Microsoft said in the statement. The credits are believed to be in the neighborhood of $2 to $10 per employee per year.
The third announcement is perhaps the most interesting - can Microsoft change end user behavior on how they conduct search, and essentially pay users to search using Microsoft's search engine? This would bring about a sea change in the way Search is conducted today. The current business model is one where marketers pay Search companies to include their product or service information when specific keywords are searched for by end users; now, Microsoft is planning to pay users to conduct search using Microsoft's search engine (albeit, indirectly). Would the IT departments of large companies stipulate their employees to use Microsoft Search since they are getting paid by Microsoft? Would they curb employees from using other Search Engines including Google and Yahoo!?
For now, Microsoft is potentially innovating a new business model for Search. Pay users to Search using Microsoft Live Search. And even buying Tellme to make headway into Phone search. Finally, creating a partnership with Lenovo and replacing Google. Is Microsoft trying to buy its way into the Search market through these announced innovations?
Microsoft accounted for 8.9 percent of U.S. Internet searches in January 2007, compared with 54 percent for Google, and 23 percent for Yahoo!. It's not just the fact that Microsoft has less than 10% market share of Search, but also the growth of Microsoft's share in Search - which grew only 2.5% in January 2007, compared to a whopping 40.6% growth for Google, and respectable 29% growth for Yahoo.
Microsoft is wary about the uninhibited growth of Google, and now wants to change the game by introducing a new business model for Search. Can Microsoft change the game?
Three Microsoft announcements are significant to that end:
1. Integration of Microsoft search on Lenovo PCs (thereby replacing Google search).
"The deal is exclusive for several years, Microsoft Senior Product Manager Justin Osmer said in an interview. ``We are not in the business to lose money hand over fist, year after year, so these have to make fiscal sense to us,'' Osmer said. ``The Dell example is one where it ballooned to a point where it did not make any sense to play in that sandbox, so we let that one go.''
2. Strategic acquisition of Tellme, and potentially getting phone and mobile search marketshare.
"The purchase gives Microsoft voice-recognition programs it can combine with mobile-phone applications as well as Office word processing and e-mail software. Chief Executive Officer Steve Ballmer says that search on mobile phones will be one of the next battlegrounds between Redmond, Washington-based Microsoft and Internet search market leader Google Inc."
"They're (Tellme) using software as a way to help people get access to the information they need,'' Microsoft's Raikes said. "We think that is a powerful use of software.''
3. Rewards for businesses including "service or training credits" by encouraging employees to conduct search through Microsoft Live.
"As search evolves into more of a productivity tool, and revenue sharing becomes more commonplace across the industry, we are engaging in mutually beneficial partnerships," Microsoft said in the statement. The credits are believed to be in the neighborhood of $2 to $10 per employee per year.
The third announcement is perhaps the most interesting - can Microsoft change end user behavior on how they conduct search, and essentially pay users to search using Microsoft's search engine? This would bring about a sea change in the way Search is conducted today. The current business model is one where marketers pay Search companies to include their product or service information when specific keywords are searched for by end users; now, Microsoft is planning to pay users to conduct search using Microsoft's search engine (albeit, indirectly). Would the IT departments of large companies stipulate their employees to use Microsoft Search since they are getting paid by Microsoft? Would they curb employees from using other Search Engines including Google and Yahoo!?
Microsoft Corporation (NASDAQ: MSFT) stock price has stopped a month long slide, and is up 2% since the announced innovations closing at $27.83 today. The investors have reacted favorably to the news, and believe in the potential growth of Microsoft in Search.
For now, Microsoft is potentially innovating a new business model for Search. Pay users to Search using Microsoft Live Search. And even buying Tellme to make headway into Phone search. Finally, creating a partnership with Lenovo and replacing Google. Is Microsoft trying to buy its way into the Search market through these announced innovations?
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