Live Searches Drop Below 1 Billion
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News Analysis. August U.S. search share data shows ugly declines for Microsoft in 2008. |
The month's data, released today by ComScore, is but a snapshot of a longer trend. I went back to the historical data, which shows how big Google gains are compared to Microsoft losses.
Microsoft's share of U.S. searches dropped 4 points, to 8.3 percent, between July 2007 and August 2008. During the same time period, Google gained 7 points, to 63 percent search share. For Microsoft, the heavier blow will be psychological. In August, its number of searches dropped below 1 billion, approaching the dregs occupied by Ask and AOL.
U.S. Internet users conducted 11.7 billion searches in August, 7.4 billion through Google. But, when including YouTube, Google searches top 10 billion.
The numbers should greatly disappoint Microsoft product managers, particularly considering how much improved Windows Live Search is. I now tend to use Live Search alongside—and sometimes instead of—Google. Live Search typically delivers different results and often better ones. But better often doesn't win the market, otherwise DVDs would have replaced Betamax not VHS, and Netscape Communicator would have bested Internet Explorer 4 a decade ago.
Microsoft can still regain share, but it will have to be done through marketing, not lofty acquisitions such as the failed Yahoo takeover. Microsoft's recent Powerset acquisition is a good example of nowhere gains. A Wednesday post on the Powerset blog identifies some of the early integration into Windows Live Search. But I agree with eWEEK colleague Clint Boulton that, at least in the short term, Microsoft won't gain search share because of Powerset.
Live Search is one of the few products or services that Microsoft consistently advertises. But there needs to be more marketing, and it has got to be loads better. Right now, Microsoft's Google problem isn't complex:
- Google has better branding success.
- Google search is available in more places, through deals with AOL, Dell, Mozilla and others.
Google's ad platform may attract advertisers, but not consumers. Most people don't use Google so they can see contextual ads. They want to find stuff. Google's ad platform is only as good as its ability to make money for third parties; search queries are the major agreement. Google should be no problem at all if Microsoft put its priorities in place; people can easily switch search providers. Google Chrome is a problem, but I've blogged about that.
Google: Questions of Monopoly
The search data comes during troubling times for Google. The U.S. Justice Department and European Competition Commission have increased scrutiny of Google's ad deal with Yahoo, which some analyses indicate would lead to 90 percent search share. Google is defending the deal, while Microsoft works behind the scenes to quash the deal.
Under terms of the agreement, Google paid search displays alongside Yahoo's only in Canada and the United States. The agreement is nonexclusive, and Yahoo chooses the search term queries and the pages on which they appear.
Earlier, I took the position that trustbusters would stay out of the Google-Yahoo deal, and they might have if not for Microsoft interference. But I can't fault Microsoft's approach, because the company has identified a potential long-term: advertising pricing. Trustbusters are quick to jump on any situation that stinks of price fixing. Google's dominance gives the company greater control over what publishers pay to advertise online.
According to IDC, Internet advertising spending will reach $65.2 billion this year, and it will increase to $106.6 billion in 2011. Annual estimated growth rate: 15 percent to 20 percent. Impressive, but still small. IDC says that Internet advertising would only account for 10 percent of spending across all media categories this year and 13.6 percent in 2011. Display advertising would account for 20 percent of worldwide ad spending during the next three years.
The question for trustbusters: What happens next? Technically, the price controlling argument is full of bull, because Internet ad spending only accounts for one-tenth of all advertising spending. Google dominance in one sector doesn't make the company a dangerous ad/search monopoly. For example, the decline in U.S. newspapers isn't mirrored in many overseas markets, where sales and subscriptions are booming. Not everybody uses the Internet, particularly in emerging markets.
But what happens when more Internet-connected billboards and kiosks appear in retail operations across the globe, or more data-capable cell phones bring the Internet to more people? As Internet use propagates, Google's dominance in search and advertising should concern trustbusters. Problem: The rapid pace of new technology developments and resulting competition make predicting changes difficult.
That's the big lesson from the Justice Department's case against Microsoft. Many of the imposed remedies came too late to achieve their goals, and Microsoft faced tough competition later on that could have organically corrected some anticompetitive practices. The desktop PC was king of the world in 1998, when the government brought the case. A decade later, Microsoft is besieged by competitors—most cloud computing developers, Apple and Google, among others.
In the United States, current antitrust law and standing precedents discourage establishing far-reaching competitive policy. This is not the case in Europe, where policy setting is part of the Competition Commission's responsibility for keeping markets competitive. But even on the continent, trustbusters may find it difficult to oppose the Google-Yahoo deal, particularly in the context of letting Google buy DoubleClick. What policy justification is there for a DoubleClick double standard?
How Should Microsoft Respond?
Microsoft has some tough decisions to make about what to do next. Declining search share bolsters arguments that Google is gaining control over an important, but still emerging sector of the advertising economy. Should Microsoft let those declines continue or redouble efforts to make gains against Google?
I believe that Microsoft has already lost the search wars. Google obsession distracts Microsoft from areas that are much more important. Top of the list: Mobile. It's simply abominable that Microsoft has so bungled its mobile market strategy. Two fundamental problems:
- Windows Mobile is a train wreck at the same time upstart Apple brings speedy iPhone to the race.
- Windows Vista demands too much hardware for use on smaller notebooks and netbooks, for which the company licenses Windows XP Home instead.
Google has a mobile strategy, one that is bringing products to market surprisingly fast. Google and T-Mobile plan to announce the first Android phone next Tuesday. Sources at HTC, the phone's manufacturer, put October to December sales between 600,000 and 700,000 units. I think that's an outrageously high number, even if handsets sell for the expected $199. If the phone does well, it will be because of HTC and T-Mobile branding and marketing. Other than Maps, Google has no real brand presence in the mobile market, and most consumers don't care about operating systems anyway. They do care about price and what the phone will do for them.
Something else: In the United States, T-Mobile has a new 3G network with limited market availability. I don't see the Dream, as the phone is called, pulling those sales numbers without T-Mobile international sales. Initial sales aren't Microsoft's problem. What are:
- Google has a competing mobile platform in market.
- Google can extend search and search advertising to that platform.
- Developers can begin writing applications for the Android Marketplace.
I'll say it one more time: Microsoft needs a mobile Manhattan Project. Microsoft shouldn't worry about search share coming from PCs but from mobile devices. Microsoft could actually regain search share through an effective mobile strategy. Mobile manufacturers sell more cell phones in one year than the entire Windows PC install base. The competition clock is clicking.
[Please send your tips or rumors to watchtips at live.com].
Comments (16)
I guess M$ needs to decide if it even really wants to be in this market. Perhaps it would do better to concentrate on operating systems and office productivity applications. Does it really need to get into every other market that anyone is making money in? Maybe it should start doing oil exploration and open some gas stations.
Posted by smist08 | September 19, 2008 3:42 PM
As much as I would like to get in a few digs at Vista, and say that MS is doing what any other company does and expand/adapt to new areas. I dont blame them for wanting a piece of this market, and if I had a financial interest in MS I would want them to have a strategy here.
In regards to the OS, yep agree, but then MS appears to be interested in the sale of its software, but according to the many forums out there, it doesnt seem so interested in your problems after you've bought it.
Posted by Goblin | September 19, 2008 3:56 PM
I've only looked at "Live Search" when a news article talks about it. But you didn't include a link so I tried "livesearch.com" - but I'm sure that is not Microsoft's site. I found it by googling for "live search".
See, that is part of the problem for MS - google is now a verb. You hear it all the time in conversations and occasionally on TV. Plus I can guess at the URL by trying "google.com".
Perhaps Firefox Ad Blocker works too well for me to see "Live Search" ads to even know that it exists.
Posted by Jamie | September 19, 2008 8:55 PM
For a short time I wanted to try out the new Cuil engine, only to be sorely disappointed. It takes a while for people to change search engines, and there needs to be a good reason. If Google continues to deliver relevant content, they will stay king of the hill for a long time to come.
By the way smist08, you're not too clever. Only several million other anti-MS-ers use the dollar sign, and it's a tired old diatribe. That and every other newbie ending every other sentence with LOL. Please... try to be more original if you want any credibility.
Posted by John Anderson | September 20, 2008 12:50 AM
M$ a tired old diatribe (nice word) only used by newbies? LOL.......DOH!
I would hope Im not classed as a newbie, since using John Anderson's theories on internet typing, I am an experienced Asm coder so would I am certainly L337. Who the hell is John to say whats tired (unless he's the trend setter on the net now)
John, WoUlD u Be HaPpIeR iF i TyPeD lIkE tHis? - I wouldnt want to loose credibility.
Do you know what I think is tired and looses people credibility? Silly remarks. LOL - DOH (done it again)
Maybe John would be kind enough to educate us all, as to whats tired? Being that hes got the definitive word on whats new and trendy on the net. LOL (DOH! and again, I must be a real newbie)
John, get a grip, what an irrelevant comment. LOL (DOH!)
I use M$, does that make me anti-microsoft? I dont see how, I have a 360 which I think is great, I am just anti-Windows and anti-lamer. So that means I poke fun at Vista and sanctimonious lamers like John (look up that word, you can add it to your vocabulary, and use later)
All the best,
GoBlIn
Posted by Goblin | September 20, 2008 4:01 AM
@smist08 :
Your comment was actually right on the mark.
Looks like you your comment really irrated John Ander$on, LOL LOL LOL! There now I can fit in with the "several million other anti-MS-ers use the dollar sign." At least I will be in good company. News for John Anderson, most of us just want MS to improve, it has nothing about hate. And people who blindly defend M$, now there's "a tired old diatribe."
Posted by The Hand | September 20, 2008 12:37 PM
i disagree Joe.
While you are right on sales comparison between PC and phones I really doubt that many people will be using their phone to make searches even in a decade from now. Most mobile users (talking percenaages here) don't even know how to store a number in the telephone catalog. Unless it's an emergency of some sort, powers users will be using something more covenient for doing a search, such as a PC or something that does not have a 4 inch screen. Why abuse phones and your eyes?
Posted by Evan | September 20, 2008 1:26 PM
August 1st, microsoft-watch, article called "Microsoft Sizes Up Its Competitors": "Bwahahaha, Microsoft doesn't list Google as a Windows Mobile competitor. So, does Microsoft not view Google's forthcoming Android mobile platform to be a competitive threat? I don't see Android as much of anything. It's rapidly become evaporatorware."
Something changed in between?
Posted by Filip | September 20, 2008 2:25 PM
Live Searches Drop Below 1 Billion
You know Joe, there are a lot of search engines out there. Google is set by me, as my home page. Why, because its the best as far as getting relevant results and loading up fast, plus the news and other links. Then there is the amount of spying and surveillance that the search engine does on you, M$ excels on collection of user data and selling of that data, more than any other search engine I can think of. MSN/Windows Live, or whatever Micro$oft wants to call it this week, is or has been painful in the past. Just the fact that Micro$oft has to constantly change the name of their search engines, OS, etc, is painful. Where is the consistency? Google has it, but Micro$oft lost it long ago, if it ever had it.
As for using a second search engine, it will never be a Micro$oft one for me. I would go where you Joe will not, to multi-engine searches like Dogpile and Mamma.com. But then, the Boss is not making me promote all things Micro$oft like you, so I have that option. As for example, eweek's clever use of the M$ Silverlight in several of its blogs so far. How did that go over Joe with the readers? Just the fact that only Google and MSN/Windows Live search is mentioned in the blog is fact enough that Micro$oft is paying the bills here.
Posted by chips | September 20, 2008 10:54 PM
The one good thing about M$ LOL (sorry John) is that when it blunders into a realm of IT, in doing so highlights just how much we take Google for granted.
For me too Google is my home page, and Im ashamed to admit it, but for years now Id never even considered using anything else, I was happy with the results. Ill still stick with Google, although as Ive said before I wont be going with Chrome, the main reason being Im very happy with my setup and it works for me.
Quote Evan "While you are right on sales comparison between PC and phones I really doubt that many people will be using their phone to make searches even in a decade from now."
I would have agreed with you until I purchased an MDA Mail with Windows Mobile on it. Now Im using it all the time on the way to work (google of course) after dealing with the misery that is Windows Mobile, its not too bad an experience and as I look around on the train others are doing it aswell. I dont believe this will take 10 years to take off, I think another year or so and mobile surfing will be an almost mandatory part of owning a mobile, after all most phones come with "non-phone" features like radio, torches, etc etc. The mobile phone it quickly becoming the "swiss army knife" of products to have in your pocket.
Posted by Goblin | September 21, 2008 4:23 AM
So, here's what Microsoft could do: integrate Live Search into the IE 8 address bar, like Google did with Chrome.
That's the dim, dark secret of Google success: when faced with a page with only the search field available, people just type in the web address they are looking for. They don't type in key words, they just type whatever they think the address is in the search field, then click. As often as not, the actual site is the first link on the search page after the advertising. Or, the owner of the address may PAY to be the first link.
Google's fortune is based on stupidity; people think tey're searching when all they're doing is typing in the wrong place.
Posted by PMC | September 21, 2008 1:08 PM
PMC says:
"So, here's what Microsoft could do: integrate Live Search into the IE 8 address bar, like Google did with Chrome."............
While that might work, it maybe more than doubtful that government regulators or the EU, would ever allow the Microsoft Monopoly to do this. While both MS and Google are some sort of monopoly, only MS bundles IE with Windows. Google Chrome is an elective download. Also the Windows and MS Office products are riddled with lock-in, where as Google and Google Chrome, only lock-in, is its so much better than the competition. Although Yahoo is not so bad as a 2nd search engine, but even some of the MS fanboys here will not even use MS Search.
Microsoft needs to give up on beating Google, its just wasting money doing so. Google understands what the internet users want, while MS just want to charge them for anything and everything. MS should sell the data centers they are building. As without Yahoo, MS will not have the clout to effectively use these data centers to full advantage. MS does not understand the internet, if they did they would have long ago made Windows so it was a lot better protected from malware than it is now.
MS needs to sell the zune to another company, as it clearly not an Ipod killer, or profitable.
The Xbox line is another story. MS may never make a dime off the Xbox with as many problems as its had. But the Xbox is actually a mini computer, and as such, would give MS the basic to design a computer that would be all Microsoft. Sort of like what Apple does. This would be where the real money is at for Microsoft. They could also make their own version of a completely new OS for this as well, and maybe have it play xbox games as well. There is no real money in hardware right now. Even Dell wants to sell off its manufacturing plants. MS should buy them, as it would give them the plants and the people to make their own brand of locked in propitiatory Apple type computers. And of course, they would also continue to make Windose for the other OEM's at the same time.
As far as MS investing or buying oil companies, watch out, cause if they were there, we would be paying $12 a gallon by now.
Posted by chips (the real one, spelled little c with an s on the end) | September 21, 2008 3:23 PM
Quote Chips "As far as MS investing or buying oil companies, watch out, cause if they were there, we would be paying $12 a gallon by now."
Dont forget we'd also have to finish refining it ourselves, because it probably wouldnt work properly on 90% of engines. Not to worry though, we could just buy a new car everytime MS changed the recipe.
Posted by Goblin | September 21, 2008 5:48 PM
chips:
MS should buy them, as it would give them the plants and the people to make their own brand of locked in propitiatory Apple type computers. And of course, they would also continue to make Windose for the other OEM's at the same time.
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Are you truly serious when you say that or you're joking? Ok, let me guess what comes next:
...And as a matter of fact, Windows wouldn't be running as well on the other OEM's hardware as on MS's own machines, forcing the former to finally ditch it and adopt another OS like, say, Linux.
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Goblin:
Dont forget we'd also have to finish refining it ourselves, because it probably wouldnt work properly on 90% of engines. Not to worry though, we could just buy a new car everytime MS changed the recipe.
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And don't forget that each new recipe would come with different grades: Basic, Premium, Ultimate, Professional, etc. And they'd automatically add the carwash on the bill without the customers asking for it.
Posted by Ryannoyed | September 21, 2008 10:33 PM
You have to appreciate what is going on here. It's the battle between the titans. Its exciting, but a warning should be heeded by MS. The fact is they don't need to be in the search engine business. This diversion from their bread and butter could be devastating.
Posted by Coder Blues | September 21, 2008 10:57 PM
I tried MS search (is that the same as Live Search?) years ago and never tried it since. Aside from being clearly inferior to Google Search, the creators seem to have put in interesting biases against results when you use certain search terms (linux, opera, and similar). The result was that the user got results that were MS approved rather than results the user may be interested in and arranged according to inferred relevance to the user. I still find Google Search very useful and never really had a compelling reason to even try MS search again.
Posted by Mad Scientist | September 22, 2008 3:05 AM