Live Search Pushes onto Google Turf
|
News Analysis. Microsoft bundling deals with Dell and Verizon mark a strategic turning point. After years of losing out to Google for lucrative search deals, Microsoft reverses momentum. |
To be clear: Microsoft isn't going to magically reverse Google search market share gains simply by cutting deals like these. But Microsoft could slow or even stop share losses. Something else, and it's super important: Microsoft is getting its marketing shtick together. Over the last 24 hours, the company launched Windows 7 Beta 1, Windows Live Essentials and new Windows Mobile features with surprisingly coordinated marketing—pretty good marketing, I must concede. It's aspirational, as in your life will be better for using Microsoft products or services. Good marketing can strengthen Microsoft's consumer appeal against Google.
Microsoft has lost the search battle on the desktop, but mobile is still up for grabs—even with Google there having 60 percent market share, according to ComScore. Google's success comes from a small base of mobile data users. There is plenty of room for Microsoft to gain traction.
That makes the Verizon deal important, and timely. The conclusion of Verizon's Alltel acquisition makes the carrier the largest in the United States. Microsoft has the right partner. But there is some lag between announcement and availability of Live search on Verizon phones. The companies have given a broad target of the first half of the year. The five-year agreement also covers advertising, presumably which Microsoft will deliver to the phones.
The question: Will this deal set off a race to lock in other carriers? I have to say yes. Google can't solely rely on Android and Chrome to keep mobile search high. Besides, Verizon has slapped Google in the face here. Hard. My Google Watch colleague Clint Boulton asks: "Is Google's hunger for more Internet users biting it in the behind?" He cites Google's spectrum interference, which forced Verizon to make an unwanted $4.7 billion bid to win.
"I can't help but wonder if Verizon's deal with Microsoft is a little old-fashioned payback," Clint writes. "Why else would Verizon partner with what many consider is an inferior search product to Google?"
I think that Google has started to get too big for its britches, making the company look more like Microsoft did in the late 1990s. Back then, Microsoft's browser and operating system dominance caused fear and trepidation among some partners. Businesses that have been there, done that with Microsoft won't want to do it again with Google.
Recent Google bundling tactics are oh-so past Microsoft. Clint posted not once, not twice, but thrice on the topic of Google evil related to product and services bundling. He writes:
Google's creation of Chrome means the company has jumped the shark of innocence. Rail about the Google.org philanthropic unit all you want, but I think Chrome exposed Google for the power-hungry machine many of us knew it was. Chrome effectively put Google in Microsoft's league, just on the Web instead of the desktop.
Google is becoming Microsoft at a time when Microsoft is becoming something else. For starters, Microsoft is the search alternative—and one less threatening because of low market share. Microsoft is unbundling its Web-based products from Windows just as Google steps up bundling, particularly around Chrome and Gmail.
All companies go through similar growth patterns. At one time, Microsoft was the scrappy startup with cool brand association and popular products. But Microsoft grew older, more arrogant and power-hungry. Today, the more middle-aged Microsoft has started to take more of a leadership role among technology companies. Sure the company has plenty of flaws, but there is a maturity that Google lacks.
Google is in the process of moving from that young, loved company into arrogant adulthood. The similarities between Google and Microsoft at similar stages of development, starting with monopoly, are striking. Like Microsoft, Google can't resist bundling and tying products together, leveraged off of search. What Google is today with search, Microsoft was with operating systems 15 years ago.
The point of all this Google rambling: Microsoft is in a position to make friends where Google is making enemies. To Microsoft, Google lost Verizon and Dell, the latter which Google already had. That's a deal Microsoft snatched away from the search and information company.
Microsoft's long success is built on partnerships, particularly with OEMs. There, Microsoft is finally walking away from its arrogant ways, which maybe is some explanation for its success wooing Dell. During the 1990s, Microsoft treated OEMs like they needed Windows to succeed, and the company used some aggressive pricing tactics to get the operating system everywhere. Compare that attitude of the past to last night's Consumer Electronics Show keynote, where Microsoft CEO Steve Ballmer acknowledged: "Windows is really nothing without the innovative hardware that it runs on." Chairman Bill Gates wouldn't have said that during the 1990s.
OEM deals are important for another reason: Microsoft has moved products/services like Messenger to the cloud; they're no longer packaged with Windows. That's the aforementioned unbundling from a few paragraphs back. Microsoft needs Dell, HP and other OEMs more than ever to distribute its Web-based products and services. Dell will preload Windows Live Essentials and default to Live Search on consumer and small-business PCs.
As I've asserted many times before, no company partners like Microsoft. Partnering will be a differentiator, particularly as Google's aggressiveness increases. I predict that Google will drive customers back to Microsoft. New partnerships will help drive Live Search traffic and over time help Microsoft increase search share. But it's a long haul, and Microsoft won't win simply by cutting deals with PC manufacturers.
Whether or not Microsoft likes it, cell phones are the future of personal computing. Mobile phones are better suited to search than PCs. After all, where do people most need to find things? When they're out and about. The Verizon search deal is a great start, but Microsoft needs lots more carriers to gain on Google. The two charts above give some sense of which Web sites people go to online. Take a close look at the second chart, which shows the Web sites people access from their mobile phones. Do you see Live Search on the list? That's Microsoft's Google problem.
[Please send your tips or rumors to watchtips at live.com].
Comments (21)
Joe;
Thanks for the graphs and information. I really thought there is only one real search engine provider out there and that is of course, Google -- I jest about the others.
I did try the "bait" that Microsoft was or still is using on their "Live Search." In fact, I did give it a try for over a month as my default search engine and signing up for the Live Search Cash-back program. I exclusively used this site in all my searches, and guess what, I got nothing, no pounds, I mean dollars for my troubles -- Rank!
No sense crying in my Ale over it -- Moving on.
"I think that Google has started to get too big for its britches, making the company look more like Microsoft did in the late 1990s. Back then, Microsoft's browser and operating system dominance caused fear and trepidation among some partners..."
Brilliant point and observation, Joe.
Clint writes: "Google's creation of Chrome means the company has jumped the shark of innocence. Rail about the Google.org philanthropic unit all you want, but I think Chrome exposed Google for the power-hungry machine many of us knew it was. Chrome effectively put Google in Microsoft's league, just on the Web instead of the desktop."
Aye, this is what many of feel, really do. Since this is specifically about Google, or the things that Google is doing according to your humble opinion, do you think that Google will be successful in creating a dent into the Microsoft Desktop Operating Systems?
I mean to say, with Google with an audience of over 120 million people, I am assuming the graph is reflecting people, not hits, that would be in the trillions. Nevertheless, if they can produce a reliable product in this realm, and Microsoft being overall, their own worst enemy, (I know Chrome is only a browser by the way)what is to keep Google from launching a successful Modular Unix-Based OS? <--Maybe this should be a question for Linux Watch instead, my apologies...
Listen, I am all for competition, we can see what FireFox has done to get Redmond off their arses and force these lads to continue development of the IE Browser.
Posted by Draoi Dubh | January 8, 2009 6:53 PM
"Listen, I am all for competition, we can see what FireFox has done to get Redmond off their arses and force these lads to continue development of the IE Browser."
The problem is that IE development efforts are now too little, too late. Firefox, Chrome, Opera, Safari, take your pick. All are standards-compliant and all outperform IE (7 or 8) by an embarrassingly large margin. Not to mention that all are inherently safer than IE.
Posted by Will | January 8, 2009 7:32 PM
"Like Microsoft, Google can't resist bundling and tying products together, leveraged off of search. What Google is today with search, Microsoft was with operating systems 15 years ago."
Like what exactly? How can you bundle anything with search? I have used their search many times and have never had software bundled. Unless you mean advertise, like all those other companies that advertise.
If Microsoft's war cry was "Window's not done til Notes wont run", what is Google's?
Posted by billybob | January 8, 2009 8:39 PM
The Wolf, the wolf is coming!!!
Sorry Joe, the only wolf that I know is Microsoft (still), but I understand the MS' need of soiling to others
----------
Why else would Verizon partner with what many consider is an inferior search product to Google?"
Money?
--------------
If MS (having the desktop Kingdom -still- furthermore the browser IE for default) is losing Market to Google, why it could be changing?.
I think that have the desktop control is afar more important that those new agreements.
I mean if I am into my stadium I am with my fans and I am losing badly, will be a new T-shirt changing that? That is not logical.
Posted by Marco | January 8, 2009 9:14 PM
@Marco
What you said is so true. With all the advantages of Microsoft and the mass useage of Windows (as Andre likes to point out with his "stats") and all the money MS has, it still didnt manage to get a grip of Google, so what does that say about MSlive?
-
I said on the other thread, mobile phone surfing IMO is a novelty. It is far more time consuming than productive (perhaps why Netbooks are popular as they are a happy medium)
-
Google is a household name (rightly or wrongly) and if Dell chooses to have MSlive as its default search engine, Id put money on users simply changing it back to Google. These tactics may get a shortterm increase for MS, but IMO people will always use what they want. Users of today (as Ive said before) are not like those of yesterday, they know the products they feel happiest with and will use them. They will not blindly follow simply because the PC they bought from Dell has MSlive as default (IMO)
-
Its really kind of sad when you think that Microsoft has to resort to pre configuring MSlive on Dell machines, just to get users to use it.
Posted by Goblin | January 8, 2009 9:36 PM
I think the mobile phone operators are really wary of Google because Google keeps trying to buy airspace and has a goal of producing a low cost cellular network. Ie cheap internet anywhere at a low monthly price. Remember cell phones only charge $0.50 per month in India. Prices in North America are artificially high and the cell phone companies desperately want to keep it that way. Ie this is just one overprice monopoly (cartel) propping up another.
Posted by smist08 | January 8, 2009 10:35 PM
@smit08;
I did not know about the $0.50 per month. In America, it should be somewhere around $0.37 per month, and China, how much is it there... I am almost afraid to ask...
Posted by Draoi Dubh | January 8, 2009 11:44 PM
Nice read Joe.
Google might escape all the regulatory action provided by the EU and the likes for bundling though because they do not charge anything for their products. Not Android, not Chrome, not the toolbar. So it can't be illegal bundling if there is no selling right?
I wonder if there would be a case where Google would get struck down because they actually do bundle but at the next hop, (search)advertising...
If they do get slapped down that would be brilliant for Microsoft who is basically the only healthy search company left (Yahoo is financially unhealthy imo) Time will tell.
And in regards to your colegue Clint:
Clint writes. "Why else would Verizon partner with what many consider is an inferior search product to Google?"
Business obviously. The cash introduced would be ample to get em to switch. As long as the effect is not big enough to throw off users they'll do whatever rakes in the most money.
Posted by Charlie | January 9, 2009 2:24 AM
"Why else would Verizon partner with what many consider is an inferior search product to Google?"
I'm not sure that many people do consider Live search inferior to Google. I think there's a vast number of people who've never heard of Live search (at least here in the UK; I can't speak for the rest of the world). It's become part of the language "to google" something when you want to look up information online. For so many people, Google means search.
And while the majority use Google and are happy with it, why are they going to go and hunt for another search engine to use?
I've used both search engines and I honestly can't say that one is better than the other. Both do what I expect a search engine to do. I want information, I type in a query, I find information. Both let me find what I'm after so, as an end user, I can't easily judge between them.
The problem Microsoft has in the search space is not that people think its product is inferior - it's that no one thinks of it at all.
Posted by Jess Meats | January 9, 2009 3:54 AM
On the Verizon deal, who really owns the search provider preference the carrier or the user? Do you think AT&T could strike a deal with Microsoft and have iPhone default to Live Search, doubt it! Over Apple's dead body.
Posted by Richard | January 9, 2009 3:57 AM
Much ado about nothing.
Posted by Phil | January 9, 2009 7:12 AM
By the way, 'bundling' is not a crime. Businesses do it all the time. Abusing the normal market by exploiting your monopoly is.
So far I have not seen any explanation of how Google is able to control any market.
If they suddenly started charging 10 times what MS charges for search advertising, does MS have to raise the price too? Can Google stop other search engines working once you use them? They do not control the market at all, they just offer the best product at the best price, that's market forces working perfectly.
@Goblin, you really should get a decent internet enabled phone. Maybe the iPhone? It has saved my bacon more than once because I was able to browse whilst I was out. I also use it when I am not next to the computer for light browsing. I have even made ecommerce purchases. It is productive, that's why people keep going on about it.
Posted by billybob | January 9, 2009 8:05 AM
@Jess
I do feel the Microsoft offering into search is inferior to Google. I've tested both head to head and Google just does a better job at finding what I am looking for.
But that could be because I know how to use Google seeing I've been doing so for years now.
Posted by Charlie | January 9, 2009 8:05 AM
@Charlie
Fair enough. I haven't done any tests comparing the two because I haven't ever felt the need. As long as I had a search engine that found what I was after, I was happy.
I do know how to use Google. I've been using Google for years. I changed my default search engine when I applied for the job at Microsoft, otherwise I'd probably still be using Google now. Not through any fault of Microsoft's, but just because it was what I was used to. I haven't done extensive testing (or any testing at all) so all I can say, as an end user, is that I'd be happy using either.
Posted by Jess Meats | January 9, 2009 8:42 AM
My benchmark for search engines is a search for 'firefox' - it separates the men from the boys.
The correct domain is www.mozilla.com with the correct page being /firefox. Google gets it perfectly and Yahoo gets the domain right. Live search brings back spam in the top 3 results, the right result does not appear until number 4.
They are better than last year though.
Posted by billybob | January 9, 2009 8:56 AM
Hi billybob,
its not so much a question of getting a decent phone (peopel have said many good things about the iphone to me) its more of a case that i find mobile phone surfing fiddly and alot slower than that of what im used to. Im sure its essential and rewarding to many people but its my opinion that people "are wanting a little more" hence the demand for netbooks.
Posted by goblin | January 9, 2009 9:55 AM
I deal with a lot of home users, and Microsoft's deal with Dell may make headlines, but in reality it doesn't mean much of anything. Of the hundreds of home users I've dealt with over the years, only a small handful keep keep Microsoft as their default home page or search provider. From my observations I would say Google ranks first by a wide margin. Next would be whatever settings their ISP set as default. Microsoft and Yahoo are a distant third. Even the ones that don't have Google as default, most still tell me they use Google when they need to do a search.
Posted by DavidG | January 9, 2009 12:10 PM
@billybob
I was intrigued, and so I just performed your "firefox" benchmark test for search.
Here are the top 3 results:
Live Search
1. Firefox web browser | Faster, more secure, & customizable (www.mozilla.com/en-US/firefox)
2. Mozilla Firefox Project (Development Information) (www.mozilla.org/projects/firefox)
3. Mozilla.org - Home of the Mozilla Project (www.mozilla.org)
Google
1. Firefox web browser | Faster, more secure, & customizable (www.mozilla.com/firefox)
2. Mozilla | Firefox web browser & Thunderbird email client (www.mozilla.com)
3. Mozilla.org - Home of the Mozilla Project (www.mozilla.org)
Yahoo
1. Firefox web browser | Faster, more secure, & customizable (www.getfirefox.com)
2. Mozilla | Firefox web browser & Thunderbird email client (mozilla.com)
3. Mozilla.org (mozilla.org)
My results do not seem to reflect what you've reported, but that aside I'd have to say that Live and Google are virtually identical, with Yahoo being somewhat less informative but only marginally so. I may give a slight edge to Live on the first result because it recognized I was an en-US user and directed me to that sub-page rather than just /firefox, but that is really splitting hairs.
I believe at this stage of the game Jess has it right: it's not about inferior results anymore, it's just that no one thinks Live when they think of Search.
Posted by Scooter | January 9, 2009 2:35 PM
I suspect its a regional thing, for me the results are.
www.firefox.org.uk - UK spam
ie7.com - People having a joke, maybe they are British.
www.mozilla.com/en-US/firefox - Wrong language, should be en-GB
Posted by billybob | January 9, 2009 3:54 PM
Yeah, I can see where region would have impact, especially on advertising. I just checked the UK versions (live.co.uk, google.co.uk, yahoo.co.uk) and found the results to be very similar between Yahoo and Live, but my subjective opinion is Google carries a slight edge on relevance for the UK-based search.
Interestingly, that ie7.com site directs to mozilla.com/firefox, with a disclaimer at the top of "Neither this site nor Mozilla is connected with Microsoft.". Totally inconsquential to Search, but amusing as hell. I'm guessing that domain owner is waiting on a huge payday from MS that is never going to come. For more amusement, check out www.ie9.com :)
WRT to the en-GB, however, Live is still correct: there is no en-GB page. (www.mozilla.com/en-GB/firefox results in a 404.)
Thanks for discussion. Very informative.
Posted by Scooter | January 9, 2009 4:12 PM
This is actually the correct page. You get redirected if you go to the generic /firefox page.
http://www.mozilla-europe.org/en/firefox/
Google does not show you the US page just because it crawled from the US or set en_US headers. It's a common error that Live and Yahoo still make. OK if you are an American I suppose, but what about the other 3/4 of the planet? It's OK in this case because nobody has heard of Verizon here so it will not impact us.
Posted by billybob | January 9, 2009 8:42 PM