Ballmer: My impatience hurt our search business

With Yahoo sporting a new CEO, Microsoft is likely to make a run at buying its search business again. The question, however, is whether it's simply too late for the software giant to make a credible bid to catch up to and surpass Google in paid search.

As suggested in an excellent, probing article in The Wall Street Journal, Microsoft, not Google, may well be the reason for Microsoft's virtual nonexistence in paid search:

The story of Microsoft's early missteps helps explain how Google became the uncontested leader in making money from Internet searches, and why Microsoft is trying so hard to make up for lost time. It also exposes a broader challenge facing Mr. Ballmer, as he guides his company of nearly 100,000 employees: how to foster groundbreaking technologies and businesses that are under his nose.

With investments into nearly every major area of software, Microsoft has plenty of innovative ideas and technologies. Its challenge is deciding which ones to nurture. But as Mr. Ballmer manages Microsoft without (Bill) Gates...he said the Keywords episode and similar missteps are at the front of his mind.

"The biggest mistakes I claim I've been involved with is where I was impatient--because we didn't have a business yet in something, we should have stayed patient," Mr. Ballmer said in an interview. "If we'd kept consistent with some of the ideas" that Microsoft had in-house in 1999, "we might have been in paid search."

Has anything changed? Historically, Microsoft has chased the wrong competitors, or the wrong competitive strategies, on the Web. As the Journal explains, Microsoft's early foray into Internet revenue models had it fixated on AOL and subscription-based content, rather than on search-based advertising. The same thing could be happening now.

In focusing on Google, is Microsoft neglecting the bonanza for vendors that monetize the conversations happening on Twitter, Facebook, and elsewhere?

Ballmer notes his lack of patience as the reason Microsoft struggled to make a dent in Google's search revenue, but ZDNet's Larry Dignan offers a more poignant reason: lack of focus.

While tied to impatience, it was almost certainly Google's make-this-work-or-go-under approach to search that helped it figure out search advertising. Microsoft makes billions of dollars on Office and Windows. That is why its best new product in years is SharePoint, which marries the two, and not MSN Live or other Web products, which are a distraction from Microsoft's core business.

Patience may be an attribute that Microsoft should develop, but I believe that focus and ambition are more important. Microsoft will struggle to truly focus on the Web while offline desktop and server revenues continue to pay the bills.

[MyRightEye]

It took 10 years after Apple registered Apple.com for Microsoft to register Microsoft.com. They have never "got" the Internet. They still don't. And that they never will is almost besides the point as OS X take center stage for the next decade at least. It will be at least a decade before Microsoft either dies, or revives, for right now though, their relevance simply fades by the hour.

[rapier1]

Apple.com was registered in 1987 according to whois.
Microsoft.com was registered in 1991 according to the same source.

While this does mean Apple had their domain 4 years before Microsoft both were in the game pretty early as far as these things go. I agree the MS didn't really see the value of the internet until probably... 1994 or 1995 I believe they 'get it' now.

[karlengblom]

It's an interesting point that there are many innovations right under the nose of Microsoft management that they are not noticing. For example, Microsoft has had a huge human-computer interaction effort. Many of the people working there probably knew that new interaction devices would be the next big thing in gaming. But noone asked them, and Nintendo created the Wii and made billions.
Patience, however, is not the problem. Microsoft has always been a very patient and persistent company.

[ppgreat]

"That is why its best new product in years is SharePoint..."

Bwah-ha-ha-ha-ha-ha-ha. What a restricted, cumbersome product?symbolic of the way MS thinks. Try sitting down to do something as simple as set up a site for departmental document sharing and you immediately run into the limitations and the necessity of having to have other MS products to get it to work. Maybe.

The only site that ever worked consistently (i.e., when the SharePoint server was not crashing and bringing down our network, necessitating IT to segregate it from the rest of the network and requiring DAILY maintenance even then to work) was when a couple uploaded their wedding photos for all to see.

The Microsoft Tax continues. And so does the March of the Lemmings.

[badmojo42]

so what product would you like your company to use instead of SharePoint???

[markedman0965]

Steve Ballmer may be one of the few people on the planet that has a worse public image than George W. Bush. Microsoft's board would be wise to replace him or at least not allow him to speak publicly. I have never met or spoke to anyone who has a positive opinion of him.

[dragonbite]

Hind-sight is 20/20.

If they knew how big search advertising was going to be then they would have gotten into it.

If anybody knew what was going to be the next "big thing" then they would go for it without hesitation. The problem is that it is not that easy. You have to look forward, and put your $%^^ on the chopping block and hope your gamble pays off!

Microsoft did that when it put out DOS and Windows! IBM did it when it put out OS/2. Apple did it when they came out with the iMac, iPod and iPhone!

What Microsoft needs is some fresh blood and the willingness to listen to them.

It may even be good for Microsoft to mentally (not literally) split themselves into smaller, more autonomous parcels (like Office, Windows, Web and Developer departments) which can be more flexible and able to jump onto some new technologies and act/react as fast as their nimble competitors.

[Bill_I]

Hey Steve B, its time to throw another chair. Going postal did not stop us from getting the mail. Edison keeps the lights on somehow. There is gas to put in your car. The phones and internet work. Why not try to bring MS into focus as the public utility it has become.

[brian.lee]

Microsoft needs to stop thinking about how they can milk money from customers and users and just start focusing on making a good product that people will use. For once just forget about the dollar and make something useful. That's why people don't trust Microsoft because they know especially after Vista and Vista Ready that there's some GOTCHA waiting around the corner... here's a great example that happened to me 2 days ago...

I bought am HP tablet pc it was $899.00 not bad it came with Vista Home Premium... I've used it for about 2 months. It's slow... Ok I can live with that until they get SP3, I tried to send a FAX from my tablet since it has a modem built in... GUESS WHAT They removed the fax functionality from Vista Home Premium... I have to UPGRADE to the next version it's 11PM and I'm fuming...

What do I do... I whip out my old Windows XP laptop and send my DAM fax with my XP laptop...

Thank you Microsoft... Here's what I'm going to do next I'm going to buy a $60 dollar Fax modem from Apple for my MAC... that's right You've pi$$ed me off so much I'd rather pay Apple than give you another DIME because I'm tired of your GOTCHA's.

[ewelch]

All the proves is he's more humble than George (never made a mistake as president) Bush.

[shahnyboy]

Here's the input of just your daily computer user:

There's something to be said about the EXPERIENCE someone feels when using these everyday products.

Google:
i feel like i'm getting valuable services for free. I mostly use their search engine and maps.google but its so easy and helpful that i have become reliant on them. I just found out about their free 411 service and will prob. start using that too! Are they making money off this? Probably, but i'm not paying a cent for it.

Apple:
My wife and i own mac laptops. Both are nearly 5 years old and running great (a bit slow but great). We paid premium prices for these compared to other brands but the experience is so smooth and hassle-free that we have no reason to switch. In fact, we're both students and cant afford expensive stuff, but when we need reliable everyday computer, apple is it.

Microsoft on the other hand...
i feel like you're always PAYING one way or the other - either monetarily or in experience. I've owned and used MS for a long time before the switch. In fact, when i do have to use a Windows computer, using my Mac again is like getting out of a rental car and sitting in a Lexus. Most everything feels clunky and very "un-intuitive" in Windows and i'm always dodging this window or that just to get to my files. (Like why does it take 5 steps just to locate and eject your tiny flash off a windows machine?)

You can argue about a lot of things but eventually it is what the user FEELS like they're getting for their money. And MS is just plain lacking in that department. And worst of all, Microsoft doesnt know what's wrong and their efforts/excused (apple-tax?) are way off target.

[MSSlayer]

You pay a high price to Google. The currency is your privacy.

[loose_screw]

MSSlayer: give it a rest already. There is no such thing as privacy on the net. If you want privacy, go live under a rock.

[MSSlayer]

Yes there is privacy on the Internet.

Go ahead us Google spyware. Would you offer up personal info to some marketer that calls? No? Then you shouldn't let Google store your docs, scan your hard drive, and read your email.

[MSSlayer]

If he would have said: "My incompetence hurts Microsoft" then I might have respected him a little.