Microsoft is Down, but Don’t Count Them Out

Microsoft has clearly stumbled in implementing its search and online advertising strategies. They were late to the search game, depending on Overture and Inktomi for too long. They seem to have underestimated Google, and have been playing catch-up for the past couple of years. But should we count them out just yet?

I’ll admit, even when they made a move, with the Live Search and Windows Live products, they made missteps. There’s still massive confusion about how the MSN and Windows Live brands fit together. This month, they saw the departure of Live Search VP Christopher Payne, who was replaced by Satya Nadella who’s currently heading the Microsoft Dynamics team in the Microsoft Business Division, marking another setback.

That’s all recounted in an early obituary of Microsoft from BusinessWeek, “Where Is Microsoft Search?.”

But it’s still too early to count Microsoft out, even with a 10-percent share of searches lagging Google’s 50-percent-plus share.

For one thing, Microsoft adCenter includes some pretty innovative technology, and shows that Microsoft isn’t just trying to catch Google, but to surpass them in some areas, such as targeting. Most advertisers who’ve used it say it’s great, it just needs to have more traffic.

They’ve also got some very bright people working on monetizing search, including former CEO Steve Berkowitz, Yusuf Mehdi and Joanne Bradford.

And as much as I hate to agree with Steve Ballmer, in some respects Google is a one-trick pony. Their attempts to branch out into print, TV, radio, and video have not gone smoothly. That’s not to say they can’t do quite well for themselves by dominating Web search ads, but that well will eventually run dry, or another innovator — which may be Microsoft — might come along and take it away from them.

I must say, I can only remain cautiously optimistic for so long. Explaining away disappointing performance by saying you’re “taking a long-term view of the business” won’t work forever. But there are enough good things happening with Microsoft for me to give it a bit longer before I write their eulogy.

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