February 27, 2007 10:01 AM PST

Microsoft still trying to answer Google's wake-up call

Microsoft Chief Software Architect Ray Ozzie doesn't necessarily think Google has all the answers, but he does credit the company for opening Microsoft's eyes.

"Google's success very clearly caused an inflection point within our industry and within Microsoft in terms of understanding advertising as an economic engine," Ozzie said Tuesday, speaking to analysts at a Goldman Sachs investor conference in Las Vegas. "It was a wake-up call within Microsoft."

Despite pouring resources into its MSN and Windows Live efforts, Microsoft has struggled to compete broadly in the Web search space against Google. Ozzie said that the company is still working hard there, but is also putting some of its energy into more vertical types of search, which is industry- or topic-specific search. He pointed to this week's acquisition of Medstory, a California-based company that develops health care search technology.

"Just try it," Ozzie intoned. "Go there and type into the search box what ails you. I think you'll actually be quite surprised--quite pleased with the results."

Ozzie said Medstory's technology is first being added to MSN Health, but that it will ultimately be included within Microsoft's broader Live search engine.

Vertical search pages are just one of the possibilities, Ozzie said, adding that advertisers are happy to look beyond Google if there are simple and effective ways of doing so. "Advertisers, they just want to reach their audiences," he said.

Beyond advertising, the second major influence of Google on Microsoft has been to point to the importance of being able to offer software-based services, he noted. Ozzie made several references to work Microsoft is doing behind the scenes to build a companywide services engine. All of its business units will be able to tap into the engine to add services components to their products, and those tools eventually will be available outside Redmond as well.

"We've been building that services platform," Ozzie said. "The economies of scale that we gain internally are going to be available to third-party developers and enterprises."

Microsoft first announced its Live online services effort at a November 2005 event in San Francisco with Chairman Bill Gates and Ozzie. Many of the initial efforts were simply existing MSN products rebranded with a Windows Live name. Recently, Microsoft has been putting some Windows Live products back under the MSN brand, including Windows Live Shopping and a Wi-Fi hot spot finder.

Microsoft has also since announced that it is pulling back from plans to drop the Hotmail name from its Free Web mail service. In that case, Microsoft is going for a hybrid name, Windows Live Hotmail.

Pressed about what all of these new services capabilities might cost, Ozzie deferred to Microsoft CEO Steve Ballmer and Chief Financial Officer Chris Liddell. However, he indicated that many of the costs are not one-time expenses.

"There is a level of data center and infrastructure that we continue to need to build," he said. "This is just going to be a continuous investment."

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9 comments

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Not pleased...
"I think you'll actually be quite surprised--quite pleased with the results."

Um, actually no. The page is cluttered, there doesn't appear to be any organization of the results and the results did not match what I was looking for. So no, not pleased at all. WebMD does a better job (not that I think they're any good either really).
Posted by ballssalty (219 comments )
Reply Link Flag
MS is not an Internet company....
Folks...I don't mean to point out the obvious but MS is simply Not "an internet company". Period...full stop.

I don't think they will ever be able to compete with google, yahoo, or myspace....never mind the avalanche of new rich GUI (Web 2._ is (c))and social networking sites.

Why? cause they are an application and OS company. They are too big...to Corporate and too Quarterly numbers driven to really break through do something amazing and new. Don't get me wrong they can definitely use the internet (by sort of bolting on IP Capabilities and www to their apps) but its no different than Oracle creating a web interface to their Databases software. They might even be the plumbing to the internet with their ASP and .NET (not really, but for arguments sake), but that does not make them an Internet player.

So can they throw their money and weight around to survive in this brave new world of Ad revenue, Search, social networked widgets, OS irrelevant application..yes of course. They still ARE MS.

Will they ever beat any of the other SE...Nope They will always be an "also ran"...the days of waiting for market to mature and jumping in at the last minute to overtake, or proprietary closed protocols and file formats...are over.

what will they do now?
Posted by LarryLo (164 comments )
Reply Link Flag
"what will they do now?"!
A very good option is to release the rest of the "Source-Codes" it is holding for the 800lb Gorilla (OS/2) to IBM for it to roam freely in the wild like some "hogs" do! Which, according to the reports... the meat is leaner (in essence, there goes the loss of Windows OS "bloat-ware" by allowing OS/2 to run in the wild freely among all the net-savvy applications - Lotus Notes and all)!
Posted by Commander_Spock (3123 comments )
Link Flag
Correct
MS have never understood the Internet because they are too focussed on software for PCs.
The Internet belongs to those companies that are 110% focussed innovations for the Internet.
That is why everybody googles.

It all started back in the days of the proprietry MSN network.
They tried to compete with the Internet, then they decided to embrace it but only for the sake of making Windows relevant in the new Internet age.
They then went hard out (actually too far) to win the browser war and then they said OK that's it. We did it and then stopped.

While they stayed still, Firefox, Google, MySpace, and others crept up and have overtaken them.

Meanwhile Microsoft has to keep their focus on Windows and that pretty much guarantees that they will never be a dominating force on the Internet platform.

The problem for MS is Windows is too lucrative to try and focus elsewhere, but deep down they know that they are handing the Internet to the likes of Google who will and are making a ton of money from it.

Telcos face a similar problem. Do they embrace VOIP and cannabilise their own existing business, or milk their old systems for what they can and let someone else make the money from VOIP, which they too know is the future.
Posted by t8 (3716 comments )
Link Flag
But For The Trees...
... that Ossie and some of those on the REDMOND CAMPUS now seem to be saying (re: "Beyond advertising, the second major influence of Google on Microsoft has been to point to the importance of being able to offer software-based services, he noted. Ozzie made several references to work Microsoft is doing behind the scenes to build a companywide services engine. All of its business units will be able to tap into the engine to add services components to their products, and those tools eventually will be available outside Redmond as well.

"We've been building that services platform," Ozzie said. "The economies of scale that we gain internally are going to be available to third-party developers and enterprises.") in that they cannot see the "FOREST" that is the International Business Machines Corporation (IBM).

LOTUS NOTES 8.0 (HANNOVER) anyone!

<a class="jive-link-external" href="http://www-142.ibm.com/software/sw-lotus/products/product4.nsf/wdocs/hannover" target="_newWindow">http://www-142.ibm.com/software/sw-lotus/products/product4.nsf/wdocs/hannover</a>
Posted by Commander_Spock (3123 comments )
Reply Link Flag
Are you a bot?
A talkbot.
Posted by t8 (3716 comments )
Link Flag
SEO Help Guide
For those of you looking to find answers to getting high web site rankings check out this eBook:

<a class="jive-link-external" href="http://www.search-engine-traffic.net" target="_newWindow">http://www.search-engine-traffic.net</a>
Posted by ashgilpincom (30 comments )
Reply Link Flag
 

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