This story was written by Robert Andrews.
Steve Ballmer is still talking up Microsoft's (NSDQ: MSFT) search ambitions, and still openly regretting its ongoing underperformance in that department. It's a familiar doctrine but, in light of the missed Yahoo (NSDQ: YHOO) opportunity, all the more poignant. Ballmer told FT.com: "I do fault us for the speed with which we dove into search, primarily because we didn't see the business model. Google (NSDQ: GOOG) did a nice job on that, and that's why they won. One of the mistakes we made is having a five-year gap between Windows releases did calcify our ability to react to anything."
Stoically, Ballmer downplayed the Yahoo deal's importance: "At the end of the day, Yahoo was not an online strategy. It was a way for us to accelerate our own online strategy."
So what now? Ballmer rejected the suggestion Microsoft should have gone for a more "Web 2.0" play than Yahoo, nor is the strategy simply about general internet presence or buying Facebook: "At the end of the day, this is about the ad platform. This is not about just any one of the applications. The most important application for the foreseeable future is search." Reuters interpreted that as Ballmer "ruling out a slew of internet buys", though he didn't say as much. "We don't have to dominate, but we'd better have a darn good chunk of the search market over time, and we're working away at it."
Certainly it seems more a case of "build" than "buy" for the time being. In Europe, where Live Search has around three percent market share, Microsoft tried to woo advertisers at the Cannes Lions International Advertising Festival earlier this week, promising it would create its second "Search Technology Centre" to drive up innovation around its own search site.
As for the one area of "innovation", if you like, that Live Search is exhibiting (paying a rebate to users who buy products found using the facility), Ballmer dared to dream Microsoft may be a leader in at least this space: "I think Google is going to have to decide whether they want to come with us. If this Live Cashback thing is successful, they're going to have to decide if they want to play the game or not." "Onward and upward, baby. Onward and upward."
By Robert Andrews