Ballmer Says Microsoft Can Experiment in Web Search (Update1)
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By Dina Bass
March 20 (Bloomberg) -- Being the underdog in the Internet- search market has one advantage for Microsoft Corp. Chief Executive Officer Steve Ballmer: He says his company can experiment, while rival Google Inc. plays it safe.
“Google does have to be all things to all people,” Ballmer said yesterday in an interview in New York. “Our search does not need to be all things to all people.”
Google may be tentative about changing the look of its search pages, causing the company to take fewer risks, said Ballmer, 52. The challenge is similar to what Microsoft faces with its Windows operating system, which needs to appeal to a broad range of customers, he said.
Microsoft will experiment with new business models and ways to present Web search results, Ballmer said. So far, its efforts haven’t made much headway with users. The company controls a smaller portion of the Web search market than it did four years ago, when it switched from using Yahoo! Inc.’s search technology. Building market share will be a step-by-step process, Ballmer said.
Microsoft handled about 8 percent of U.S. search queries in February, according to ComScore Inc., a research firm in Reston, Virginia. Google accounted for 63 percent searches, with a 21 percent share for Yahoo.
“Eight doesn’t have to go to 60. Eight to 60 -- whew that’s hard,” Ballmer said. “Eight has got to go to 10. It’s got to go to 12, got to go to 15, 18, 20.”
Missed Innovations
“The premise of Ballmer’s argument is that there is still time,” said Rob Helm, vice president of research at Directions on Microsoft in Kirkland, Washington. “People have been doing advertising on the Web for a while now, and Microsoft has missed some of the major innovations. It’s not clear to me that there’s that much running room left for Microsoft.”
Google’s size doesn’t prevent the company from innovating, said spokesman Eitan Bencuya.
“Search remains at the core of everything Google does and we are always working to improve it,” he said. “We are more focused on search innovation, and have more engineers working on search, than ever before.”
Microsoft, based in Redmond, Washington, rose 45 cents to $17.59 at 9:53 a.m. New York time in Nasdaq Stock Market trading.
Ballmer, who bid as much as $47.5 billion for Sunnyvale, California-based Yahoo last year, said yesterday that striking a partnership with Yahoo “makes all the sense in the world.” At a conference, Ballmer said he has spoken with Yahoo CEO Carol Bartz on the phone and that they will meet when it’s appropriate.
Kim Rubey, a spokeswoman for Yahoo, declined to comment.
Search Incentives
Microsoft, which is testing a new search engine under the name Kumo.com, wants to help customers find what they’re looking for more quickly by understanding the gist of their query better. The company is also giving cash back to users who buy products that they search for, as well as offering incentives to advertisers.
Learning the intricacies of the Web-search business has been a challenge, Ballmer said.
“I’ll tell you the search business has been harder for me and for other senior people to learn than most businesses,” he said.
Another challenge for Microsoft is keeping up with Google’s investments. Google, based in Mountain View, California, spent $2.36 billion on capital expenditures last year. Microsoft’s capital spending was $3.6 billion for all of its businesses in 2008, according to UBS AG.
Increased Investments
Microsoft will need to boost its investments in computers and data centers to handle the burgeoning amount of information on the Web, created through sites such as Facebook and Twitter, Ballmer said.
“You’ve got to be willing to play a scale game and it does tend to favor the market leader, especially a market leader that’s got the kind of super-dominant share that Google does,” Ballmer said.
Microsoft has pledged to keep overall expenses little changed in the fiscal 2010 year, which begins in July. In order to invest in search products and recruit engineers, Microsoft is trimming other areas, cutting as many as 5,000 jobs and getting rid of businesses like the video-game studio that produced “Flight Simulator.” |
