Microsoft's Search

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  1. Issue - Google search is hurting Microsoft's search
  2. Microsoft's positions
    1. Operating Systems
      1. MS-DOS became the leader in the 1980s (purchased from another OS company)
      2. A number of people created software for Microsoft's OS
      3. The cost of creating windows went up as did its licensing fee
    2. Application Software
      1. At first people used wordperfect and lotus for word processing
      2. Eventually, they made Word and Excel easier to use and offered discount pricing
      3. They eventually took the lead and took the dominant position in the application software arena
    3. Internet Browsers
      1. At first Netscape had the dominant position in the browser market.
      2. IE was created and distributed through ISP's and AOL.
      3. Netscape couldn't compete despite going open source. IE took the market share
      4. There was a law suit against MSFT for monopolistic practices and there was a settlement saying that they could not bundle their software in certain ways.
    4. Java
      1. Become popular as a platform to develop windows applications
      2. Microsoft tried to package its own version of java to only run on MSFT --> Sun sued.
      3. MSFT settled with Sun for 1.6B but Java turned out to be not as useful as people thought it would be
    5. Linux
      1. Linux offers some competition
      2. MSFT makes source code more open
      3. MSFT tries to make itself compatible with linux through venture with Novell.
    6. Search
      1. People didn't think that search would be that big of a deal because they didn't know how to make money on it --> they don't take it seriously
  3. Google
    1. Figured out how to make search profitable
    2. Diversified (projects came bottom up from their employees)
    3. Distributed google search through PC manufactures and through Firefox (which has a large part of the browser market
  4. State of Search
    1. Provides high margins and high revenue and predicted to grow
    2. MSFT believes that search is still in its early stages despite being very complex
  5. Microsoft at search
    1. Microsoft had search as part of its MSN portal, but search was never really the focus till they saw how profitable google made it.
    2. Microsoft considered buying a search engine and a ad serving solution but eventually decided to build them from scratch
    3. They eventually switched over to using their own Ad software.
    4. Microsoft has a number of disadvantages to Google:
      1. Fewer number of active searches
      2. slower search results because of fewer data centers
      3. smaller pricer per click-through rate than google.
      4. smaller advertisement network
    5. As of 2007, MSFT searches were as relevant as Google's
      1. Features
        1. MSFT tried to ad features to the search but the good features were easily replicated by Google
        2. MSFT acquired a semantic search company, but that didn't do much good
        3. MSFT tried to purchase Yahoo, but that was fought off by Yahoo's board