Gates: Microsoft betting on e-commerce search

Bill Gates makes lemonade at Advance 08 conference, saying, "It's kind of fun to be the underdog."

(Credit: Ina Fried/CNET News.com)

Update 11:30 a.m. PDT: Added more details about the cash back program and comments from Overstock.com CEO.

REDMOND, Wash.--Microsoft still wants to be all things to more people in search, but, in the short term the company would settle for just getting people when they want to buy stuff.

The company's big search news, as previously noted, is a program that gives customers cash back when they use Microsoft's Live Search as the starting point when making a purchase.

"The one you'll see us particularly invest in in a major way is a deep focus on commerce," Chairman Bill Gates said on Wednesday at the company's Advance 08 advertising conference. "Commerce represents about a third of all searches, but a dominant share of the revenue."

Gates said that, although the program is just beginning, the company has signed up more than 700 merchants representing about 10 million products.

"The overwhelmingly positive feedback from all the partners confirms there is this opportunity for change," Gates said.

The cash back Live Search program is based on the Jellyfish.com acquisition from last year. Although other sites have offered cash back to shoppers, Microsoft is building it into the search process itself, a process it is counting on to boost the popularity of such efforts beyond hard-core bargain hunters.

In video messages, the chief executives of Zappos.com and Overstock.com praised the move.

"It takes so much of the risk off the plate of the advertisers," Overstock CEO Patrick Byrne said in a video message, before appearing onstage with Gates. Byrne and a handful of partners were trotted out briefly, but did not speak before walking off again. "I hope they got the picture. If not, we will stage it again later," Gates said.

The move comes as Microsoft continues to badly trail Google and Yahoo in overall search. The company has used financial rewards in the past to gain users, although such efforts have also been short-lived gains that largely disappeared once the incentives went away.

Gates reiterated that Microsoft is a long-term player in the search market and tried to put the best face he could on being a distant third in the business.

"It's kind of fun to be an underdog," he said. "It's neat."

[zgreenwell]

So they're competing against Froogle, which once you find items you're often able to purchase them with google checkout. I think Microsoft has a lot of ground to catch up with Google even in just commerce searching.

[Mr. Dee]

I wonder how long Microsoft can keep up this losing battle. Distant third is really cutting it deep right now for them and it just makes it seem like a dead end business. Sure 47 billion dollars is enough to keep the dream alive, but in todays economy that can dribble away over time. Yes, there is always Windows and Office revenue to keep the good times going, but there is another problem - maturity of those products are getting to a level where upgrades aren't like what they use to be.

I still can't find myself to use Live Search, Google is good, its good enough for what I want both in text results and images. Microsoft needs to work on Search in a way thats equal to Google or better. If it means acquiring Yahoo!'s Search technology, so be it!

[BrianDuper]

There is already a site up that compares the Microsoft Live Search Cashback Product Prices to sites like Froogle, mySImon, Amazon etc. Amazing how fast the web adapts!!

http://www.startjoint.com/shopcompare.aspx

[winstein]

Overstock cuts off 3000 affiliates to avoid paying NY sales taxes. Does this mean that Overstock will now start charging NY residents sales tax? Microsoft's new incentive program is the real reason for Overstock to cut off 3000 affiliates. Will the cash incentives be big enough for people to switch their search engine? Maybe not in the long term. Ultimately, it is the better service that wins.

[t8]

Copying Froogle.


=

[tundraboy]

Great! MS just dug another sinkhole to pour money in. I am in awe of this company's amazing ability and to find innovative and interesting ways to throw money down the drain.

[zack20]

Froogle? I have not about Froogle for a year. Went to the ever-expanding Google products page and there was no mention of Froogle.

http://www.google.com/intl/en/options/

That Google "experiment" must not have worked.

[wlrock]

@Mr. Dee -

You've got a point on people who use Google continuing to use it - there's not much Microsoft or anyone else can do in core search to overcome a "just good enough" product. After all, when you look for a particular item and it comes up first on all of the major search sites, what incentive do you have to switch? Just for the heck of it, I personally tried Live Search exclusively 3 months ago, planning to see if I could "find" what I was looking for without going back to Google on a regular basis. I expected I'd have to use Google at least 50% of the time because of all the bad press Live Search receives, but I found a very capable search experience that in some ways (images, video, products) was even better than my Google experience, and I've ALWAYS found what I was looking for in the very first page of search results. It also presents information in a format that I prefer over Google's stark and gaudy pages. All that said, your point about acquiring Yahoo!'s search technology is off the mark - rather, I believe the acquisition is more about search "share'. And that is what the Cashback program seems to be going after.

[Net Doc]

In early 90's Microsoft propositioned me to help them design the first version of MSN. As I had been running a commercial online service for years prior and working with a community of system developers I turned them down. In recent years they STARTED to get the idea that they couldn't do it alone and have started to embrace open source... now they have gone full circle. With this move they are proving they do not understand HOW and WHY Google is so popular.. the MILLIONS of sites that profit off of AdSense and as others have mentioned here.. OverStock with it's affiliates. I will not only opt-out of ANY affiliate program of ANY company marketing through Microsoft search, I will doubly encourage ALL users to continue to use Google search and support PPC advertising through Google. Microsoft will not succeed trying to be like a Wal-Mart in retail. Online WE the individual site operators, ISPs, niche content portals are the highway that Wal-Mart tries to build stores on. Microsoft just lost millions of exit ramps. It's almost 15 year since MSN was launched and they still haven't figured it out. Google will only get stronger and Yahoo will only become more expensive for them to try to buy. Now if Google releases an OS, we won't need Microsoft at all.