Microsoft's History in the Search Market

By joecoxjoecox (1257807041|%a, %b %e at %I:%M%p)

Introduction

Why has Microsoft had such a hard time in the search market? In the past, they have consistently proven themselves as an elite company that can successfully enter new, innovative markets. Microsoft has not only developed quality products, they have actually taken a majority share in the new markets from the start-ups that dominate it. Examples of this are its Internet Explorer browser, SQL server, and many other products.

However, we all know this has not been the case with its decade-long effort to compete on search. Unfortunately, this blog is not meant to explicitly answer why they haven't succeeded. I hope to give you some information that may help you form your own answer/opinion, but I would mainly like to address Microsoft's search history…their decade-long effort. You will see that it is not simply because they haven't been trying.

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Importance of the Search Industry

We all know how much power and market share that Google holds in the search industry…a lot. Microsoft has spent hundreds of millions of dollars trying to combat them, mainly because of how much advertising revenue they are missing out on. "In 2008, U.S. online ad spending reached $23.4 billion, with search advertising taking 45 percent of the pie."[1] On top of the missed revenue, the powerhouse Google is becoming fierce competition in Microsoft's other markets, such as Web Browsers (Google Chrome). I don't think I have to explain further the high importance Microsoft has put on succeeding in the search market.

The Past Decade

Pre-2005

The battle for market share in the search industry was much closer back in the late 1990's to about 2004 - 35% Google, 32% Yahoo, and 17% Microsoft. Since then, Google consistently pulled away to the commanding lead they hold today, and Microsoft has consistently fallen.

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2005-2008

"In January 2005, Microsoft took the wraps off of a beta version of a consumer search engine it had spent two years building from scratch. For years, Microsoft had used Yahoo's search engine to power MSN Search. The following year, Microsoft removed the beta label from the search engine, branded it with its new Live moniker and stopped using Yahoo's search engine for good."[1] The past few years we have seen them constantly try to criticize Google's technology and search experience, but have only seen Google grow stronger.

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2009

This past May, as most know, Microsoft came out with Bing and is throwing millions of dollars at it to promote it.

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While it is much better than the old live search and many industry experts have said good things about it, it has by no means captured a good chunk of the market share like they hoped it would. Maybe it needs more time, but I doubt it. It's growth is already starting to decrease. "According to comScore, Bing's share of U.S. search queries rose slightly from 9.3 percent in August to 9.4 percent in September, while Google grew more, increasing its share from 64.6 percent to 64.9 percent. Yahoo, in second place, saw its share of queries fall by half of a percentage point to 18.8 percent."[1]

This past July, Microsoft signed a deal with Yahoo. A very important aspect of the deal is that ALL queries between the two will be routed through Bing. This is great for Microsoft because the nature of how search engines work and become better - through more searches by its users. Essentially, the new deal gives Bing a lot more searches, and Bing therefore becomes a higher quality search engine. But I guess the deal is going to take two years to finalize, so both Microsoft and Yahoo will have to continue battling on their own until then.

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