Microsoft’s Vietnam: Search
July 21, 2008
What an interesting idea. ZDNet posted a short item that caught my attention on this 95 degree Sunday in rural Kentucky. Larry Dignan’s “Microsoft’s Search Ambitions Are Its Vietnam” appeared on the ZDNet Web logs on July 18, 2008. I suggest you read the item here. Mr. Dignan has opened a new line of analysis about the Microsoft – Google face off.
The key point in the piece for me was:
The online services business lost $1.23 billion for the fiscal year ending June 30. I [Mr. Dignan] quipped that it’s no wonder that Microsoft is so hot for Yahoo. Something has to save this online business. And what’s startling about that figure is that Microsoft only lost $732 million in 2007. Microsoft’s online services business was actually profitable in 2005.
Mr. Digan is spot on. One point warrants further comment, however. The cost of catching Google may be beyond Microsoft’s reach. Here’s why?
- Google continues to press forward and Microsoft’s efforts to catch Google seem to be focused on where Google was in late 2006 or early 2007. A leap not a catch up is needed.
- Time is working for Google and against Microsoft. Each month Google continues to increase its lead in Web search. At some point, Google will dominate the market, which means that the race may be over for Web queries and online advertising.
- Google is “seeping” into the enterprise. Microsoft seems confident that its three big revenue producers will fund the online battle with Google. I think the complexity of products like SharePoint will open the door to newcomers, not necessarily Google, by the way. Any revenue loss increases Microsoft’s vulnerability.
Agree? Disagree? Let me know your thoughts.
Stephen Arnold, July 21, 2008
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