Business Insight Zone

This Ars Technica piece conveys Microsoft CEO Steve Ballmer’s great confidence that his company’s Live Search product will someday break into the upper ranks of search. On one level, this seems like Ballmer’s typical chutzpah, which apparently operates equally well whether the CEO is talking about areas where the Hegemon of Redmond already dominates or those where it merely intends to dominate someday.

For some relevant data, look at the numbers on search market share charted here. The bullet: with 9.2% of the search market Microsoft runs third behind Yahoo (19%) in 2nd place and waaaay behind Google (67%) in 1st place. (Ask trails the pack at less than 4%.)

Interpretation A: Google owns this market, Ballmer’s full of chutzpah (or something that starts with “b” and ends with “t”), and Microsoft is wasting its time.

Interpretation B: Google owns the top spot and probably will for a goodly chunk of forever, BUT:

• Yahoo has been hurting, could be a target for acquisition (even by Google, if the feds would allow such a thing), and may find its way into the history books as one of the flameouts of the early Internet era.
• Microsoft has more money than most sovereign nations.
• Given these facts, Microsoft overtaking Yahoo in search seems pretty realistic.

When he took the reins at GE, Jack Welch famously applied an old Peter Drucker axiom: make sure you’re #1 or #2 in every business you’re in — or else get out of that business. If, as the Ars Technica piece indicates, Microsoft is in search for the long haul, it could become a solid #2 competitor in a money-making field that is only going to grow over time. This looks even better for Microsoft when you consider all the ways that it might tie search into the other parts of its business.

So maybe Ballmer isn’t crazy.