At Microsoft’s analysts’ meeting Thursday, Steve Ballmer, the chief executive, talked more about wanting to copy Apple. Mainly, he referred to working with PC makers to make sure that the true wonders of Windows Vista are not obscured by all those nasty extra programs.
You can take the same laptop, oftentimes, and pre-configure it one way and you get almost instantaneous boot, and fantastic battery life. If you pre-configure it with software in another way you get long boots, and much less battery life.
But according to a report from Mark Ververka of Barron’s, as passed on by Eric Savitz, Mr. Ballmer is copying another signature Apple play: teasing people with talk of a top secret truly amazing product.
When button-holed in the hallway by an investor, Ballmer again mentioned that the company has a secret initiative that it will unveil in online services in the near future that will be an innovation that should improve the company’s online performance. “But that’s the one thing I’m not going to talk about,” Ballmer told him.
You would hope that Microsoft had something to show for all the money it is putting into its Internet business. After all, the biggest news of the meeting is the company warned its shareholders that it will continue to “ante up in a significant way” spending $1.2 billion to $1.5 billion a year on research and development for its online unit.
He did hint at one new feature under development as he discussed search, still the company’s priority. He said there are three factors that matter in search: results, brand and ads. While he did not boast that Microsoft now runs a better search engine than Google, he did say that “we feel quite confident in where we are, actually, today, in blind tests, so to speak, and where we’re going to go.”
Google is simply a better brand he conceded because “obviously the market leader always has the best brand reputation.” Advertising he said would help that.
And most interesting he talked about the lack of advertisers, not as a problem in making money but as a deterrent to potential users, who prefer pages which have ads that are related to what they are looking for. (This reminds me of one of the quirkier pieces of Google’s doublespeak: It calls the group in charge of making more money from ads, the Ads Quality team.)
Mr. Ballmer described Microsoft as facing a Catch-22 in this area. Advertisers are not interested in Microsoft search if it does not have users. But what can it do, if it believes that users won’t search if it doesn’t have enough ads?
One solution would be buying Yahoo for its market share. But Mr. Ballmer was clear that this was no longer in the cards. “We had a discussion with the C.E.O. of the company,” he said. ” We couldn’t reach a deal. You move on.”
Mr. Ballmer said that the company was working diligently on narrowing the advertising gap.
We may have to get kind of way out of the box in order to get back in the box. The most important thing right now is to make sure we work on the relevance of those ads, and the team is exploring two or three, actually, different concepts to get there. But, I don’t choose to chat about it today.
I wouldn’t be surprised if Microsoft wants to subsidize advertisers or even pay them to place ads on its site (just as it is paying people to search).
Is this the secret innovation that Mr. Ballmer teased investors with in the hallways? I don’t know. His logic on search is sound. But it would be a sad commentary on the state of Microsoft’s creativity if the most exciting product of a $1.5 billion-a-year research budget was a way to put more advertising on its Web site.
From 1 to 25 of 36 Comments
Ah Saul, I wonder if you and the other tech pundits could take a lesson from your newpaper and even more so your magazine friends regarding Microsoft’s business with consumers.
I would guess that the “pass along” rate for every other corporate licensed user is approximately 3:1. The number of PC’s loaded from corporate software available to spouses and offspring is a significant and shady congregation that precludes a general statement that MS isn’t a “successful” consumer company.
WRC
— WalkerI don’t think having more advertisers is the issue for Microsoft. Having a better search engine with faster crawl speeds/indexing, better ranking algorithms, and less spam would be a way of getting more users than Google.
— Michael StoppelmanBallmer has no secret plans worth banking on. The company is old, stuck in it’s plethora of internal problems, still thinks that technical saavy comes from “leading developers” as if they are sheep, and still being fooled that software as a service is the way to go.
Microsoft has led software developers, who jumped on their technologies and Microsoft’s recommended use of these (”best practices”), too many times down a path that leads to poor performance, bugs, and each path has built in obsolescence.
Try maintaining a web site that was originally written in .Net 1.0 or 1.1 for example. Many problems arise.
Some may ask, why not use the latest then? My answer to such a question is that no matter what direction a developer or development team takes with Microsoft’s technology there is that continual “gotcha” of features no longer being supported and performance issues where one begins to ask the question, “Why are we using this technology that is not reliable down the road?”
— Again And AgainMicrosoft’s business model is evolving towards software-as-an-ad-delivery-system. Without a consulting business and their for-fee desktop model being assailed by OpenSource and Google, their only future revenue stream must come from ads or subscription services through the net.
Unfortunately for the rest of us, they actually believe their own hype, specifically: we consumers WANT more ads, and the desktop ‘experience’ (what a weasel word!) is enhanced by more ads delivered!
— DKPatrick“Mr. Ballmer is copying another signature Apple play: teasing people with talk of a top secret truly amazing product” Are you crazy? Apple almost NEVER talks about unreleased products. When they do (iPhone 2.0 preview earlier this year), they generally deliver exactly what they previewed. Microsoft constantly refers to future magical products that never materialize in order to suppress investment in competition and distract the media from the failings of their current products.
— IleThe problem is that Google currently has the majority of the market share. Even though Yahoo and MS have great search engine (which may or may not be better), most users wont switch without a real incentive.
MS needs to provide a significant free product that ties in directly to their search. Then, the users will flock to the new product, and will have the ability to use its search and view ads.
If they decide to simply continue trying to gather partnerships to provide more advertisements on their search, they are going to fail miserably in attempting to close the gap on Google.
— TedFunny, given the release of the App Store, I was thinking about the change at Apple and their inviting third party apps for the iPhone platform.
I was imagining a video mashup/remix of Steve Jobs’ head on the sweaty torso of Steve Ballmer bouncing around on the stage chanting “Developers, developers, developers,…developers…”
The Ballmer remix, if anyone is up to it:
— Davidhttp://www.youtube.com/watch?v=hadxBZWxNrs
Ridiculous. Live Search makes no sense. Live Search thinks it’s smarter than me by “auto-correcting” me and then asking me if I wanted the results I typed. Live Search returns so many irrelevant results that they rival the old search engines of 1997 (HotBot, AltaVista).
Google, on the other hand, returns *exactly* what I typed, then asks me IF I want to look at these other results. Google’s results are so highly relevant (everybody knows this, surely Ballmer must pull his head out of the sand).
Live Search is so awfully bad I’m actually surprised Ballmer can even suggest it works to the smallest degree. Live Search is a train wreck.
— BugsBunnyVista is Microsoft’s Stalingrad. MS is fighting too many wars on too many fronts. Gaming, web search, OS, software, hardware, media….the list goes on and on. Any tech space MS perceives to making a profit, they bull they way into copying or buying technology and hardly ever innovating. Consequently their products suffer. MS is trying to be all things to all people–never truly fulfilling anyone. Vista has been a HUGE flop. I know that from my peer group (that either is employed in the tech sector or has an interest in tech), no one has upgraded to Vista. I DO know of people switching from Windows to Mac (myself included). Microsoft’s products just seem half-baked, buggy, and not secure. I have lost all faith in their products and brand. Vista may well be MS’s Stalingrad…
— EricHow delusional is this Ballmer and his team if they actually think we consumers want ads on our search engine?? Ads are annoying, slow down the browser, and get in the way of the information we’re really looking for.
— KerriWhat Ballmer said is absolutely nonsensical. People do not prefer Google as their search choice because Google have more targeted ads, they do because 1) It was the first truly popularized search engine; 2) The quality of the results were unmatched; 3) Google, in fact, gave the illussion that it actualy did NOT had any ads. As a matter of fact in the book “The Search” is written that 65% of Google users cannot tell the difference between the results and the paid ads. It’s bewildering to me that nobody points to the absurdity that people do not use a search engine because it does not have enough ads. Microsoft should just admit that the correct equation is “More audience share equals more ad revenue”. And by the way, anybody that owns Yahoo! stock, please don’t be fooled, Microsoft MUST buy Yahoo! In order to survive Wall Street. If there was any other way they would have done it and save themselves the money and hassle. Google is king, the only company that have what Microsoft need to move his stock price is Yahoo!, no other alternative, therefore the only thing that Microsoft can do is buy them. This is one of those rare ocassions that you can have a sure thing in Wall Street. Buy Yahoo!, wait, see Ballmer squirmed and give up, become rich.
— Common SenseBoy, talk about being out of touch. Ballmer actually believes that we choose our search engine based on the quality of the ads?
We choose Google simply because Google is now synonymous with search, and it gives us what we are looking for. No one is ever going to switch their searching to Microsoft unless they create something that is leaps and bounds ahead of what we have already. Which is pretty near impossible, because there is nowhere to leap to. We like what we have.
And to suggest that the key lies in creating better ads, which we ignore anyway, is just delusional.
— GlennFascinating article. It does appear that Microsoft’s best option is either to purchase Yahoo or simply come up with a better source of advertising revenue.
http://www.linkedin.com/in/stephanschwartz
— Stephan SchwartzIsn’t it possible that Ballmer has outlived his usefulness at MS? Sure, he’s bright, maybe brilliant, and has plenty of energy. But he’s old, has been around a long time and is saddled with a legacy vision of MS which badly needs to move on. So far, the results speak for themselves.
— andrewWhat’s very interesting is that many people, when they are presented with a MS product *outside* of the MS brand are often impressed by the results (photosynth is a good example, the mojave project is another). The problem really isn’t the technology it seems but the fact that it has the MS logo on it.
— ChrisAds on my desktop– Now I’ll have to get a Tivo for my PC.
— OMGMicrosoft is not a successful ‘people’ company because they do not know people.
Bill Gates, call me, e-mail-using a header, will help.
The entire company is missing the obvious.
Am serious. Will only charge equipment and will give you a correct way to promote.
Ms America , does not care about what you seem to think.
You handle ’search’ , i will set up the rest.
Yes, v experienced.
Expect the items i need and the right to keep.
Will do more in 6 weeks than that group has done in all these years.
Try me, suppose i really do know ?
This is not a joke.
p A Pointon
— P. A. PointonI don’t believe for a second that Microsoft’s clientele is clamoring for more advertisements. With Mozilla, there is a shareware program called “Customize Google” which removes all advertisements from all Google pages — search engine results, gmail, Google reader, etc. This is one of the most popular Google add-ons and I would bet that a clean search with no advertisements is largely what drew people to Google in the first place.
Calling this an “exiting” improvement is like when you’re asked to list your bad qualities in a job interview, and you tell them, “Oh, I’m too dedicated. I work all the time, leaving almost no time for outside activities.” If this breakthrough is exciting, it’s about as exciting as root canal.
— LLLConfiguring a PC in a way that causes long boot times and short battery life? (these two are somewhat correlated…)
I could be tempted to say something snide. But then,
as my cousin the priest says, “give in to it. then it won’t bother you anymore.”
I suspect that configuring a pc with windows, at least in default state, will cause it to take long to boot and be quick to run down the battery…
‘Quality’ is performance balanced against cost. So
from the perspective of those who are selling ad space,
quality is indeed related to revenue generation.
‘look and feel’ is secondary, insofar as it relates to revenue generation.
Perhaps in general people do want to see some advertising, and probably those people would feel better
— J Omega Tabout it if that advertising were ‘relevant’ to them.
On the other hand, it doesn’t matter to me if the ad is relevant or not; I can (and do) ignore it just the same, unless I’m looking for information
that might be contained in ads.
But then, I never claimed to be a ‘typical’ consumer.
Wonder if anyone knows what the 15,000 researchers are doing? What is the management mechanism?
— CharlieHello.
I’m wondering why no one on these blogs ever has anything positive to say about Microsoft. Especially concerning search engines and Vista. Is it just the contribution-negativity bias, in which people who feel negatively about a topic are more likely to be motivated to write a comment?
Think about all the jobs and learning opportunities / career changes they provide to people right here in Puget Sound and all over the world
Who knows. MS is not the devil, and neither is SB.
— S. TurnerAds adding value? What twaddle. Google’s innovation has been to keep the ads at a level that is almost totally unobtrusive, yet a fantastic revenue generator. It is remarkable what a little enlightened finesse will do. MS is neither an innovator, nor a finesse player, they are the robber baron investors in the post robber baron years. Transition is their only viable strategy, to date their success at transition has not been overwhelming.
— SidMicrosoft defines competing with Google as “competing for ad revenue.” Users won’t bother with their product until it’s “competing for relevant search results.”
Microsoft’s laughably bad Live search engine is a disaster. Unable to compete technologically on search, their plan to attract advertisers was simply buying Yahoo!’s customers. They failed at that too.
Microsoft’s stock has underperformed compared to the NASDAQ since Ballmer took over. Meanwhile GOOG is up 300% since their IPO.
Microsoft’s failure vs. Google on both technology and market penetration should signal the end of Ballmer’s reign. Though I suspect Microsoft’s problems run far deeper than Ballmer; the only real signs of life seem to be coming from the XBox division.
Bill Gates probably saw all this coming and figured he’d throw in the towel while he still looked like a genius.
— SnoofyAt this time I cannot live without Google. As mentioned above, it is sheer nonsense to attribute its power to ‘ads’ one way or another.
As also mentioned here, Google’s simple strategy not to clutter their website with ‘colorful’ (and extremely annoying) ads has been extremely successful. Google has what they call ’sponsored links’ - 100% ads and we users know that. Are are sometimes useful and, apparently, a huge source of income for Google. Their regular entries may also be ads but most of them are not. Very simple and very effective.
I NEVER click on ‘beutiful’ ad with many colors, animation and crap like that. I have probably bought bunch of things advertised as ’sponsored links’ on Google.
As others have already mentioned here, Ballmer simply does not know what he is talking about. I also agree with the comment that Microsoft should restrain itself from being everywhere and, in the end, nowhere except for operating systems and fairly good (and very expensive) Office Suite.
Ballmer has been around for a long time. It is amazing how much he believes his own miscoceptions.
Vista needs some work, Mr. Ballmer! Forget about search engines.
— Ladislav Nemec, CAPeople want relevant ads that do not distract from their main goal. I think Google has found the right balance - a very effective search engine with a clean UI, and inoffensive ads that are related to my search terms.
I’m a systems engineer and developer working mainly on MSFT platforms (actually I have a Mac and VMWare Fusion hosting my Windows environments…). When I search MSFTs websites for documentation I use Google with the site:microsoft.com command because MSFTs own search never seems to find anything.
Ballmer is missing the point completely. Instead of copying your competitors why not build on your strengths or find a new market?
MSFT should go back to basics. The Office 2007 initiative was awesome - a simple UI that casual users can quickly find their way around. Let’s see the same in the next version of Windows! Through out all the legacy crap and move on.
Some great things have come out of MSFT eg Surface, Photosynth - but after the initial fanfare I hear nothing more about them.
— Jack Hawkins