The AP Analyzes Microsoft’s Live Search Options
May 9, 2008
ut of the aether, I received Jessica Mintz’s story “With Microsoft Mum, Analysts Mull Next Moves for Live Search”. You can read the story here or here. As I often say, snag it quickly. The wild and wonderful world of the Associated Press’s online system can baffle even a skilled researcher.
I scanned the story, intrigued that “analysts mull” much of anything related to search, text processing, or information retrieval. The sector has a glass ceiling that kicks in at the $350 to $400 million level with most companies in the market trying to make the losses and voracious appetite for investment look like a great business.
Her analysis, which I’m confident is Grade A for the AP arrived as I read the PCWorld story “Microsoft’s Answer to Google Sky to Launch at End of May”.
Microsoft has to do more than play me-too if Microsoft is going to hobble Googzilla. The GOOG isn’t very good at PR, marketing, or sales. At least, Microsoft pays attention. That’s a good thing, I suppose.
Ms. Mintz’s interesting essay is about Micrsooft after Yahoo. I think her point is that without Yahoo, Microsoft has no easy, fast, cheap way to increase its search traffic and, hence, its online ad revenue. She writes:
Some analysts say Microsoft must increase its search traffic to attract advertisers. Others believe Microsoft should concede that market to Google Inc. and find success elsewhere — leapfrogging rivals in areas such as display and mobile advertising. All that is clear is Microsoft must come up with a Plan C soon, after acknowledging that its Plan A of going solo was troubled, forcing it to turn to Plan B of acquiring Yahoo. Part of the problem analysts face predicting Microsoft’s next moves is that the company has already tried the obvious tactics. It built its own search-ad platform from scratch and spent $6 billion to buy a major online advertising company, aQuantive. Microsoft overhauled its search engine technology, and most analysts agree that its results are at least as good as Google’s. It tweaked the design of its Live Search service to become more like Google.
Whoa, Nellie!
The most interesting information for me was Ms. Mintz presents a series of action items. I’m not sure if these are Mr. Ballmer’s or if these have been constructed from the search experts Ms. Mintz interviewed for this story. Set aside provenance for a moment. Let’s look at each action item. For ease of comparison, I put Ms. Mintz’s suggestions in the column “Microsoft Tasks” and my comment in the column labeled “Beyond Search”.
| Microsoft Tasks | Beyond Search Comment |
| Do the basics | Google’s been at the basics since 1998. Time to start I guess |
| Innovate in “quick waves” to force Google to play catch up | “quick” and “Microsoft” are an oxymoron |
| Change the basic experiences of communication and search | Microsoft needs to deliver search that people actually use |
| Gain scale | Good idea. Google’s been building plumbing for a decade. Microsoft’s just started |
I don’t think my research for Google Version 2.0 supports the idea that Microsoft can catch Google with these four actions, individually or collectively. Let me run through my reasoning based on the information available to me.
First, Google delivers a search experience that is increasing its market share. Google’s approach works. Microsoft’s approach hasn’t. What’s astounding to me is that with Internet Explorer’s default search the Live.com service, the canyon in market share is almost unbelievable. IE users are ignoring the default search box and consciously selecting Google. That’s just amazing. One bit of bad news. The market share data are not accurate. Google’s market share is in the 80 percent range. In countries like Denmark, Google’s share is over 90 percent.
Second, Google is not perfect. Its platform, to me, more homogeneous than Microsoft’s or Yahoo’s. Its engineers assemble digital components. Because of the computational horsepower Google has, engineers can fiddle, systems, test, refine, and test again. What works gets used and reused. Earlier today I just looked at 3D undersea maps and the enhanced translation service. Google seems to be in the quick-wave innovation business.
Google search is a manifestation of a system, a team of engineers and scientists working to figure out how to get performance gains from bits and pieces available to anyone. After 10 years of tweaking, Google’s search goes along pretty well. But the system can deliver other applications that may look and behave differently from the search system available to the public.
Third, the notion of changing the “basic experiences of communication and search” means what? It means that Microsoft has to change user behavior. The Xbox did this to some degree. The Zune? No. Vista. Not yet. Live.com. In my opinion, nope.
Finally, gain scale. I have a diagram of Microsoft’s data center architecture in front of me. It has layers. It has hand offs between layers to ensure security. It has peer to peer data replication. It had edge caching. And right now Microsoft is building data centers. The one in San Antonio is going to cost about $650 million.The question I have about Microsoft’s approach the engineering. Scaling an inefficient design just makes the problem bigger. Keep in mind that Google scales more economically because the company uses commodity hardware. I heard Microsoft buys brand name servers from Hewlett-Packard. Now there’s a cost difference, which combined with less Googley engineering means that canyon remains.
Microsoft Live.com search has been unable to keep up with Google’s search. You may disagree because you like endlessly scrolling image results. I don’t like the latency nor the weird behavior of my cursor in an endless page.
Observations
Microsoft has to do more than innovate in “quick waves”. It has to move from where Microsoft is now to where Google won’t be. And, Microsoft can’t sell as many ads as Google if Microsoft can’t convince lots of advertisers to shift to Microsoft. you don’t have traffic. What makes Microsoft’s task so formidable is that Google is increasing its revenue from advertising while Microsoft is trying hard to catch up. Time, if not money, may be running out. Google’s has a race car. Microsoft is still building a lesser vehicle.
I don’t think Google is a search company now. Search is, like advertising, merely an application running on Google’s platform. Google is a different animal. Google is improving its race car and turning fast laps. Meanwhile Microsoft is ordering new paint for its soap box derby racer, which looks a great deal like most other soap box derby cars. Where’s that IRL or F-1, Microsoft?
Stephen Arnold, May 11, 2008
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