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October 2, 2008 8:40 AM PDT

Analyst sees desperation in Microsoft SearchPerks

by Ina Fried
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Microsoft's effort to woo Internet searchers with financial incentives strikes one Wall Street analyst as a "desperate move" that will make little headway.

On Wednesday, Microsoft announced SearchPerks, a frequent-flier-like program that gives searchers one "ticket" for every search they do via Microsoft's Live Search engine.

To Collins Stewart analyst Sandeep Aggarwal, though, SearchPerks is just another sign that Microsoft lacks a "Plan B" strategy to gain share against Google without buying Yahoo.

"Our preliminary reaction is that SearchPerks will likely result (in) a sub-standard outcome," Aggarwal wrote in a report Thursday. "In our view, attempts like this one can in fact hurt Microsoft's reputation in the eyes of end-users and advertisers."

Speaking of Yahoo, its shares have hit new lows, trading around $16.50 recently--half of the $33 per share that Microsoft was willing to pay at one time. Some say a combination of the economy and a lack of alternatives mean that Yahoo will eventually find its way into Microsoft's arms, though the software maker has not been offering any warm words for Yahoo of late.

In any case, Aggarwal still says people should buy Microsoft's shares, despite his lack of enthusiasm for SearchPerks.

"Though organic efforts to ramp up Microsoft's online business are not enough, we like the shares especially given its market-dominating software franchise, strong balance sheet, and $40 billion (stock) buy-back program," he wrote.

During her years at CNET News, Ina Fried has changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley. These days, most of her attention is focused on Microsoft. E-mail Ina.
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by Kev_Orng October 2, 2008 9:12 AM PDT
Yeah, who needs another points program?

I have yet to find one that's worth the trouble of signing up for, let alone downloading and installing spyware for, or for that matter, switching to IE.
The one my grocery store offers isn't worth the extra card in my wallet. Seriously, nobody would ever sign up for these things if they sat down and did the math on exactly how much value it is possible to extract from the points.
Reply to this comment
by SebDavies October 2, 2008 9:15 AM PDT
Well it got me using it and live search club but when I found out prizes are only for US i stopped.

But at least theyre given stuff out for US people, don't see yahoo or google doing that! Plus the prizes are quite good! So I disagree with the analysist.
Reply to this comment
by Dalkorian October 2, 2008 3:10 PM PDT
Well, I'm not a prostitute so I don't go "shopping" for internet search services from a company that has failed to make an impact at this for the last dozen or so years just because they'll pay me. I'd rather use a company that has a proven success record in this regard.

Bet you can't guess who that is. ;-)
by rmva October 2, 2008 9:17 AM PDT
Is Sandeep Aggarwal old enough to remember Green Stamps?
Reply to this comment
by Colin-Beveridge October 2, 2008 9:21 AM PDT
why would the world's largest software company have to buy users if their search offering was genuinely competitive and attractive?

I am totally amazed that this promotion got through the corporate approvals process. The potential for embarrassment far outweighs any benefit (I do realise that they will benefit technically, rather than commercially from this exercise).
Reply to this comment
by yipcanjo October 2, 2008 9:23 AM PDT
"Desparation"? I believe that the proper spelling is "desperation".
Reply to this comment
by Zoe Slocum October 2, 2008 9:37 AM PDT
Yes, the typo has been fixed. Thank you.
by KRz9292 October 2, 2008 9:33 AM PDT
How can one take this article to seriously when the headline contains an obvious spelling mistake? Is this just another example of sloppy blogging masquerading as journalism?

disparate |?disp?rit; di?sparit|
adjective
essentially different in kind; not allowing comparison : they inhabit disparate worlds of thought.
? containing elements very different from one another : a culturally disparate country.

desperate |?desp?rit|
adjective
feeling, showing, or involving a hopeless sense that a situation is so bad as to be impossible to deal with
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by SebDavies October 2, 2008 10:15 AM PDT
Or that people writing these are humans. Its a speling mistake, does it matter?!?
by Mr. Dee October 2, 2008 10:12 AM PDT
This is just a category Microsoft needs to give up on. Just like how they own the desktop, Google owns websearch and Ad-Sense, accept it Mr. Ballmer.
Reply to this comment
by David Dudley October 2, 2008 11:30 AM PDT
Desperation? Certainly. But there are fringe benefits regardless as it allows people their potential first taste of Live search. The real question is simple, though: will incentivizing users create stickiness or will they simply leave after their daily points limit and hop back to Google?
Reply to this comment
by Penguinisto October 2, 2008 12:23 PM PDT
Seriously? MSFT should just cede the search market to Google and be done with it. It has already cost them more than they are really able to afford - the debacle of Vista as a huge ferinstance.

Yes, I know Ballmer has this big fat vision of the web being MSFT's next territory to conquer, but I seriously doubt that they'll be able to make a big enough dent to really be much more than an 'also-ran'. This in turn puts a monster dent in their business vision - if they cannot control the web, they eventually cannot control anything. Operating systems are fast becoming a commodity. Office suites and enterprise services I can see them holding onto - at least until the need to speeding up the upgrade treadmill just to get any kind of growth starts nibbling at the MSFT board's collective mind.

Seriously - if MSFT expects to be more than just a dying niche player 10 years hence, they need to get back to basics. They need to stop chasing markets and start creating new ones. They need to stop chasing after other corporate successes (Sony's PS2, Apple's iPod), and find emerging market segments that have the potential for growth and profit - but that no one has really capitalized on yet (which is how Apple managed to completely dominate the portable media market).

To their credit, they have managed to do well in the Enterprise suites space (Exchange mostly), but they're finding a lot more competition now than they did when they first started, and they're going to need to do interoperability more (you know, like add support and connectors for *nix and OSX clients) if they expect to keep what they have.

Anyrate - yeah, search they should just give up on for now. Unless google really screws up, they have no real hope of catching up there.

/P
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by AppleSuxLeo October 2, 2008 12:33 PM PDT
AAPL dropped almost $9 so far toaday...MSFT has dropped 19 cents so far...Glad i`m a PC !
Reply to this comment
by kauwalk October 2, 2008 12:39 PM PDT
Bill Gates found out he has too much money so he will send you a check for $3282 if you will use his search site. I know this sounds crazy but I have used it over 100 times and have so far collected over $250,000 and am expecting more checks in the mail right now. Get 10 friends to send me $1.00 each and I will tell you how to register to collect.

Kauwalk
Lagos, Nigeria
Reply to this comment
by Dalkorian October 2, 2008 3:13 PM PDT
LOL - I remember that email!
by jinx101a October 2, 2008 9:44 PM PDT
Haha @ kauwalk. Now that's good stuff. =)
by t8 October 2, 2008 1:27 PM PDT
What about Vista Perks?
Reply to this comment
by Dalkorian October 2, 2008 3:15 PM PDT
Fista perks? Are you serious? You paid them and they screwed you over, now you want your money back? Do you ask this of prostitutes you didn't like too?

LOL! Caveat emptor!
by t8 April 5, 2009 2:11 AM PDT
Yes I can agree that prostitutes and Vista are in the same league.
by jinx101a October 2, 2008 9:43 PM PDT
"Reader sees desperation in Analysts join the crowd and bash everything Microsoft opinion". Even if search perks is a good idea, most of these articles just look for anything Microsoft is doing currently and takes the opposite, often condecending and warrentless side to make their splash. Unbiased journalism is dead on the Internet (which is to say, most Internet articles that try to pass themselves off as news are opinion pieces anyway). ;P
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by DrtyDogg October 3, 2008 3:44 AM PDT
I thought they where already doing this with the search club toolbar.
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by laxmanchip October 9, 2008 9:32 AM PDT
The contest started 10/1/2008.
They give you 500 pts for signing up.
The Xbox 360 controller costs 5,500 pts.
This leaves 5,000 pts to be earned.
At most you can get 25 pts per day.
5000/25 = 200 (days to get enough tickets).
200 days from 10/1 is 4/19/2009.
The contest ends on 4/15/2009.

There is no way anyone could obtain enough tickets to purchase the controller. Shame on Microsoft for misleading consumers!
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