January 25, 2007 4:40 PM PST

Microsoft 'not happy' with search results

Microsoft 'not happy' with search results Microsoft is continuing to lose market share in the search business to industry rival Google, something the software maker's financial chief said Thursday he is "not happy" about.

And things aren't expected to turn around any time soon. Microsoft said Thursday that its Internet services business will produce less sales growth over the next two quarters than the company had previously forecast.

Where it once forecast that revenue might grow by as much as 11 percent, the company now sees full-year sales growth in its Internet services business of just 3 percent to 8 percent.

"Success continues to elude Microsoft in this market," Technology Business Research analyst Allan Krans said in an e-mail interview. He said Microsoft is hardly alone, with other rivals also struggling to keep pace with Google.

"Given Google's large head start in the market and its ongoing momentum, we think it will be very difficult for Microsoft to have a real impact in the online search market during 2007," Krans said. "However, Microsoft continues to take a long-term approach to this market, and plans to keep the investment dollars flowing into its ad business."

Microsoft has been investing heavily to try and grow its ad-backed businesses, aiming to build a second Windows Live brand to sit alongside its MSN business. In recent years, the company has shifted to its own technology for both the underlying search engine and for paid search.

The shift from Yahoo's Overture engine to Microsoft's own AdCenter paid search system has had a particularly strong impact, with Microsoft taking a hit in the amount of revenue the company derives from each search query. The company is also losing ground in terms of overall share of the search market.

A report on December Internet traffic from ComScore Networks showed Microsoft losing half a percentage point of market share in U.S. Web queries, down to 10.5 percent. Google and Yahoo both posted gains, to 47.3 percent and 28.5 percent, respectively.

"On the search side you are correct we lost market share," Microsoft CFO Chris Liddell said in response to an analyst's question on the company's earnings conference call. He said he is "clearly not happy with that."

Liddell said Microsoft continues to "take a long-term view of this business" and that the company is making progress in some areas. The company also hopes this year to turn the tide in its revenue per search query. "We still expect to get revenue per search equal to where we were a year ago by the end of this year," he said.

Other parts of Microsoft's advertising business are doing better, he said, pointing to the display advertising business.

"Clearly there is a better story on the display side," he said. "We are growing broadly in line with the market...We're comfortable with the progress we're making there."

The company is investing billions in its advertising business, but the company's forecast Thursday shows it meeting overall financial goals only because of better than expected strength in its core Office and Windows franchises.

Microsoft appears committed to growing the business organically, Krans said, adding that he doesn't believe the company will buy Yahoo, a prospect that has been the subject of on-again, off-again rumors.

"Although the company does acquire, most of Microsoft's purchases are smaller-scale, tuck-in acquisitions that fill gaps in current product offerings," Krans said. "Yahoo's current market cap is $38.37 billion, which would be a large purchase even for Microsoft."

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49 comments

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They aren't getting anywhere because their search results suck
Even on Microsoft's own products and technologies, Google returns more relevant results. And then the farther you get from "normal" queries Microsoft comes back with totally irrelevant data. Not everyone searches on what Paris Hilton did last night?
Posted by ludwick8 (2 comments )
Reply Link Flag
Bingo!
That is the bottom line. If they would make a search engine that worked, people would use it. I use Google because it is finding the things that I am looking for. I can find more answers to IT than I can use any search engine, therefore Google is my choice.
Posted by Panamon (12 comments )
Link Flag
Microsofts problem
Microsofts problem is simple.

It was so successful in the OS market that it has been typecast to that market.

When people think of the Internet and Internet services it is Google that comes to mind because Google is an Internet company and Microsoft is an OS company.

Coca Cola would have the same problem if they started selling cars.
Posted by t8 (3716 comments )
Reply Link Flag
Re: Microsofts problem is simple
"Microsofts problem is simple". Yes, but I think it is because they are a one trick pony.

They rule the desktop because (IMO):

1. They produced a "good enough" operating system (utilizing the best ideas of a lot of other people), then

2. were brilliant in marketing it.

Now, unfortunately for them, they are venturing into areas where they have to compete on the merits of their products. And the Microsoft name means very little and may even be a liability in some cases.

These days, in many people's minds, Search = Google, Music = Apple, Viruses = Microsoft.
Posted by rcrusoe (1305 comments )
Link Flag
agreed
They have the worst search engine out there. Everyone I work with at MS uses Google to find anything relevant.
Posted by Oloco (1 comment )
Reply Link Flag
I agree with all but something else
I agree that the search results are far less than desirable, however, it seems to be a bit better now than previous years. Google still brings up far more results but I noticed how many had nothing to do with what I was looking for and MS was more solid in terms of WHAT I was looking for but the actual results were still not as good as the Google results with the ones that did pertain to my search.

I also agree that many look at MS as an OS company ,not search. I think this is due to MS forcing it on people, not being as good a search engine so people look at it as a second rate, quick fix for searching until better comes along. One fact that irritates me is that MS includes the ratings of people who use MS to download Windows updates, well, what choice do we have? You can't use Firefox to do this. If not needed for updating, where would the statistics lie then? I would think this is forcing people to use MS services.

Lastly, let's not forget what browser is typically linked to MS searches. Yep the IE, the browser that so many have gotten spyware from, the unsafe, slower browser. Windows+IE+MSN = disaster in many eyes. Ok, so IE7 is more secure than 6, fine, it looks better too, fine, it's slower than 6, yes. When you have so many who associate MSN+IE, what do they think will happen to their search status? They forced this 3 ring combo on us for so long, now it's biting them. I still cringe at the thought of going into IE and using it at all. They have a lot to prove and improve before i'll ever use that combo again.

Paul
Posted by PKsteven (13 comments )
Link Flag
???
Microsoft has a search engine? Never heard of it!
Posted by GGGlen (491 comments )
Reply Link Flag
Windows Live or Dead?
Is "Live" Windows (OS) or Internet?

Have you noticed how much Windows copies the Internet.
Internet has search & live feeds, so Windows copies that feature.
Microsoft is so desperate to kind of merge Windows and the Internet, but it isn't working.

One day people will realise that Windows is irrelevant.
The real platform is the Internet and the devices to access that platform are called smart devices.

The OS is fast becoming commodity. All you really need is a browser and good input and output ability.

The future belongs to companies that provide good services. Google comes to mind, but Microsoft doesn't.
Posted by t8 (3716 comments )
Reply Link Flag
All you need is a browser?
That's if you only CONSUME information. But few people live off that. For people that actually MAKE things (plans, projects, designs, music, videos, documents, data sheets, pictures, 3D models, animations, etc.) a full Operating System and some applications are a necessity.
If Windows is or is not the best Operating System for all that is open to debate, but just because YOU don't use anything other than the browser doesn't mean that people with more productive lives don't.
Posted by herby67 (144 comments )
Link Flag
ie sucks...... msn is fine..
ie has always lagged behind mozilla.. if it wasnt in the engine it was in the gui...

I use several browsers... though I use firefox the most... because I am hooked on certain plugins... like smoothwheel.. make the plugins compatible and give me a standard user interface.... and the fastest engine with the best standards coverage.... and I will end up searching msn.... personally I could care less were I search (as long it loads super fast)... I find the search sites to be similiar enough most of the time.. nowadays..

maybe they need some sort of apple sherlock thing.. oh, they cant legally get away with that.. oh well... i guess we have to let lawyers design software.. and index the web
Posted by wone123 (32 comments )
Reply Link Flag
Jobes likes IE
thats not what Steve Jobs said at Mac Expo in 97.
Posted by zeeboid (92 comments )
Link Flag
Never Say Never! A Simple Solution for MS!
"Microsoft said Thursday that its Internet services business will produce less sales growth over the next two quarters than the company had previously forecast...", the solution - hand over the rest of the code-base that it holds for the OS/2 Operating System to IBM and then get IBM to hand the whole works to the Open-Source Community for further enhancement thereby giving OS/2 its rightful place as the internet OS it was being designed to be. In the long run "all parties" would benefit financially from offering "Internet services" (service contracts) to would be clients as are some of the business models within the open-source communities!
Posted by Commander_Spock (3123 comments )
Reply Link Flag
Which year was OS/2 built?
OS/2 mean to be an internet OS? Now that's new. Time twistering new.
Posted by cshsieh (9 comments )
Link Flag
Commander_Spock is a talkbot, not human
Hi Commander, how are you today? What is your bizarre response
this time? Your program still needs more tuning. Good luck with
that.

Have a nice day!
Posted by lesfilip (496 comments )
Link Flag
the final solution.....
release an x-windows vista runing on linux.. and then fund open source developers to integrate the web... and of course... take advantage of the apple chipset
Posted by wone123 (32 comments )
Link Flag
what are smoking
...must be some good stuff.
Posted by FutureGuy (742 comments )
Link Flag
Microsoft's Search Engine
the problem i see the search engine seems to not be able to find many of the search request. what one usually gets is stuff totally unrelated to the request. this is especially true if the search is at a local level.

it is sad when i have to go to yahoo to obtain my results. it almost seems that the microsoft search engine is incomplete. it does find some stuff but still gives you a whole lot of unrelated results as well.
Posted by Docsenko (1 comment )
Reply Link Flag
Why sad?
Why is it sad? A tool is a tool, and if one of them can't do the job, it
shouldn't be sad to use the one that can.
I hope you don't get emotional over your choice of screwdrivers :-)
Posted by GGGlen (491 comments )
Link Flag
Groups, Spaces: Software + Staff Problems
One of the reasons they may not fare so well is the state of the software running tools like MSN Groups, Spaces, and other services: crashy software, lost data, slow response times.

This, compounded by an autocratic tyrannical attitude from MSN staff over user-generated content, probably in an attempt to monetize that content more effectively (at the cost of loyalty.)

Microsoft seems to have forgot that they are no longer Microsoft: they are no longer the central force of the industry (although they remain a large player and influencer); unless they get their act together they will, over time, be relegated to the role of provider of the thing that boots and takes time until it finally recedes in the background to let the user free to work and play on the web: a byway, no more.
Posted by Rants&Raves (199 comments )
Reply Link Flag
Live ... Stealth
Make "Live" search unique by making it "Stealth". No history ANYWHERE of what you searched for nor the web sites you visited. Stealth Search, Stealth Surf, Stealth Purchase only on ?Live?. Everyone will want to use the "Live" engine and companies will clamor to make sure they are found on "Live" results thereby improving search results and of course advertising revenue.
Posted by Steve Hirst (21 comments )
Reply Link Flag
Microsoft can't even build a good search for Microsoft.com....
How are they going to do it for the whole internet? When you (should) know the sum of the content on your website and how it relates, and you can't even give relevant search results for a query, how are you going to do it on a scale thousands or million times larger with content you didn't even create???? That doesn't even get into the fact that Microsoft.com's navigation is so bad, you can't even tell where you are on the site.....
Posted by kenkrauss (2 comments )
Reply Link Flag
That's funny because it's true
If I want to search Microsoft, I go to Google, click 'Advanced Search', and enter 'microsoft.com' in the 'Domain' field.
Posted by mh20932 (41 comments )
Link Flag
Lack of trust for MS
Google may not be prefect, but they have a high level of trust by most Internet users. Most people I talk to do not trust Microsoft for much of anything, much less for providing a critical service such as Internet search.
Posted by Microsoft_Facts (109 comments )
Reply Link Flag
I won't use them...
simply because they are Microsoft. It's that simple for me.
Posted by System Tyrant (1453 comments )
Reply Link Flag
If MSN Search/Live Search was any other company...
...That wasn't backed by Microsoft, they would have long gone
belly up...
Posted by PCCRomeo (432 comments )
Reply Link Flag
Google Hits often Irrelevant
Both MSN and Yahoo do a better job in keeping the information about my websites up-to-date. Google's information is either a lot sparser or out of date - compared to Search.MSN or Yahoo Search.

The most irritating thing a about Google are totally irrelevant hits ranked on top. If I enter a manufacturer's name and product code, I expect the maufacturer and the information page (data sheet) to be listed first. Unfortunately, that information is often totally absent on Google.

(One thing: Google does have a way to complain about missing URLs or irrelevant hits.)
Posted by batavier (66 comments )
Reply Link Flag
M$ search is a joke
I use Google desktop search to search my email since the email search in Outlook takes several minutes to find what I can find in seconds with Google. Wake up Bill.
Posted by nyabdns (16 comments )
Reply Link Flag
I can find
solutions to programming problems quicker on Google than I can on M$ technet or their forums. Wonder why they would be losing market share?
Posted by nyabdns (16 comments )
Reply Link Flag
The FUTURE...
Google keeps updating its Google Apps.
Google Aps make MS Office irrelevant.
Google buys Ubuntu and creates GUBUNTU.
Google Search is integrated into GUBUNTU.
Microsoft DIES(no need for expensive hardware updates, insecure and crappy OS)
Posted by yacahuma (530 comments )
Reply Link Flag
Do not under estimate
Live search results are much better than msn search results and almost as good as google's. Do not under estimate Microsoft, they are capable, of re-writting everything again and again till they get it right...they have done it before...
Posted by kalodev (5 comments )
Reply Link Flag
And the thing is...
...; they already have "other people's money" (yours and mine in their "war" chest) to do it with!
Posted by Commander_Spock (3123 comments )
Link Flag
Does Microsoft ever get it right?
They certainly rewrite their software over and over again, but do the ever get it right? The only thing they're really good at is deluding customers that the next version will fix all the problems of the previous version.
Posted by mh20932 (41 comments )
Link Flag
Bought the Xbox with Kinnect for Christmas 12/16/2010 having problems with the power pack going on and off went back to the store we bought from Game Stop who told us returns were extended until Jan 31st. We called microsoft to tell them of problem they want me to ship the powerbox to them and will return or give another within 15 -30 days. No wonder no-one trusts anyone anymore they dont stand by their products this system is not 6 weeks old and they dont want to know unless I pay I ship and I wait and I spent the $300 for something we cant use.
Posted by chrtommy (2 comments )
Reply Link Flag
 

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