Is Google Microsoft's white whale?

Microsoft is beginning to look a bit desperate in its hunt for search

market share. Speaking at a dinner at the Churchill Club in Silicon Valley, Microsoft CEO Steve Ballmer said the company is willing to lose "5 to 10 percent of total operating income" for 5 years to win in online search, a market where Microsoft plays a distant third at best.

Right now, Google holds the lion's share of the search market, with the latest numbers from comScore actually showing Google grabbing market share from its rivals. In August, Google had 63% of the market (up from 61.9%), compared to Yahoo's 19.6% (down .9%) and Microsoft's paltry 8.3% (down .6%).

Doesn't conventional competitive wisdom say that if you can't be No. 1 or No. 2 in a market, perhaps it's not the place to invest? And if you are going to invest, you better have a good plan in place? But while Ballmer admitted Microsoft is obsessed with growing search market share, he was unable to articulate an actual strategy. The closest he came to that was this tidbit:

"We need to do some work to fundamentally reinvent the search business model. You don't brute-force your way into a market. You only make great strides when you redefine the category for the user."

Ballmer better come up with his redefinition fast. While Google's search success probably sticks in his craw, Google is no Netscape and won't be easy to topple. And spending that much time and resources in one losing area is risky. Microsoft is being attacked on all sides--VMware in virtualization, cloud computing, new browser wars, Apple vs. Vista's lack of success and so on. While the white whale of Google and its search juggernaut keep taunting the Ahab of Microsoft, Microsoft's overweening focus on beating Google in the search game could end up swamping its business.

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Copyright © 2008 IDG Communications, Inc.

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