It has been announced that on June 3rd Microsoft's new initiative at the search sector called "Bing" will be deployed globally. According to reports Microsoft is currently third within the search sector. Based on a Nielson rating, Microsoft commands approximately 9% of the search sector. However, Google and Yahoo control 64% and 16% respectively. Refer to: http://nielson.com/nielsonwire/online_mobile/top-10-search-providers-for-april-2009-us/
In 2008, Microsoft attempted a acquisition bid for Yahoo. Microsoft pursued a 65% premium bid for Yahoo valued at $45 billion. Hypothetically, if Yahoo had of accepted the bid, Microsoft would have deployed $45 billion and the combined entities would have 25% of the market compared to Google at 64%. Regardless of the failed bid, Microsoft is still required to pursue a strategy that will enable the company to compete with Google.
There are reports that Mr. Ballmer has resumed negotiations with Yahoo in regards to a potential search deal. Refer to: http://blogs.com/techtraderdaily/2009/04/10/report-yahoo-microsoft-in-talks-on-search-ad-deal/
Why is Mr. Ballmer in talks with Yahoo and at the same time releasing a new search engine?
According to Mr. Ballmer "Bing, is the first step in delivering innovation in search to enable consumers to find information quickly and make informed decisions". Refer to: http://www.cdrinfo.com/Sections/News/Details.aspx?NewsId=25414
The main dilemma with the above statement by Mr. Ballmer is the notion that it is the "first step in delivering innovation". Microsoft for several years has not been known for delivering innovation. It is a company that for several years has built a reputation on copying other innovative products but not to the same level of success. A not so popular "Zune" is a primary example of this hard reality facing Microsoft.
In an attempt to be optimistic, perhaps Microsoft has the capability to produce a truly innovative product. According to a report with CBS Marketwatch, the new search engine is designed to be a "decision making" product. Refer to: http://www.marketwatch.com/story/the-good-news-and-bad-news-on-bing
However, as pointed out in the above article, there is no reason why Google and Yahoo cannot produce a similar product. Therefore, does Microsoft have the capability to produce a truly innovative product that Google can not emulate?
Based on consumers response to Microsoft products in the past it is difficult to remain optimistic in regards to how consumers will respond. It has been mentioned on numerous occasions that Microsoft has a battered image. Therefore, with over 60% of the searches being conducted through Google, it is difficult to imagine consumers will migrate to a new Microsoft product.
In 2007, at an analyst meeting, Mr. Ballmer was confronted with a question concerning acquiring Yahoo. Mr. Ballmer indicated that Microsoft was "organic minded". Less than one year later Mr. Ballmer announces a bid for Yahoo.
In 2008, Mr. Ballmer pursues a 65% premium bid for Yahoo valued at $45 billion. This bid fails and Mr. Ballmer indicates that all negotiations with Yahoo are final.
In 2009, it is reported that Mr. Ballmer has entered negotiations with Yahoo in regards to a potential search deal.
In 2009, while in negotiations with Yahoo, Mr. Ballmer announces the release of a new search engine to compete with Google.
Perhaps the most important initiative for Microsoft would be to develop a platform that could enable the "decision making" ability of "Bing" be integrated into the SLT. It appears that the first step should be to develop a product that would enable Mr. Ballmer and the SLT to enter a query for how to compete with Google and then get the best answer. It seems evident that Mr. Ballmer is failing at finding information quickly and then making informed decisions.
It is without dispute that the most important search initiative for Microsoft is the "Search" for a New CEO.
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