Microsoft’s chief executive, Steve Balmer, in an interview with the Financial Times addresses the next priorities facing the biggest software company in the world, now that Vista has been launched:

“FT: …Search: where are you going further with search?

BALLMER: It’s one of these areas where we are clearly not the market leader. The market leader is clearly doing well in the market. It’s perhaps even more dramatic in Europe than in the United States, in general. Google has a higher share in Europe. The share numbers that usually get cited are US share numbers, but if you take a look it will be more dramatic. And yet the experience leaves a lot to be desired.

Something like 50 per cent of searches don’t actually result in an answer to the user’s question. Interesting factoid. The average search I think is 2.1 words. Isn’t that odd? Why don’t people type more into search queries? Because they’ve learned: the more you type, the more false positives you get. But isn’t that ultimately ironic, the more you’re willing to tell the computer, the less good job the computer does. That’s not very acceptable. The more I’m willing to type in, you would think that ought to get me a better answer back than a worse answer.

The chance to innovate in the experience is quite dramatic. We believe in that. We’re investing in that. We’re going to have to be long term – we count that as a value – we’re going to have to be long term, patient, disciplined, really in our thinking and just keep after it, keep after it with new innovations, continue to try to change the experience for the user.

In some senses, it’s one of the dullest experiences in the technology world today – ours and Googles and Yahoos – it’s not a shot at anybody else’s. But you’ve got to believe with user interface changes and technology you can do better than today’s search user interface. It’ll be an area we continue to invest in and push forward.

FT: In terms of winning this battle, how much of it is about the actual underlying technology, and how much about the way it’s packaged and branded. To what extend are you losing share at the front end and not necessarily getting as far at the back end for technology reasons, and how much of it is because of the other skills required.

BALLMER: Let me put it in three buckets.

Bucket number one is the base of the base of the base: how good are our results compared to other guys’ results? And I would tell you that in blind tests we’re pretty close. I can’t say we’re better, but I can say we’re pretty close. In blind tests.

Number two is: how does anybody innovate in the user interface, the user experience? How accessible, if you will, is it and how simple is it to get the answer to the question given the back end technology? And that’s an area where we have small innovations, but you should expect to see more from us.

And probably it’s an area where frankly, if you’re the market leader it’s a little harder to break out of your pattern than if you’re not the market leader. Let me just say it that way. As market leaders we have more of a temptation not to…

FT: As an underdog, you can invade…?

BALLMER: You would think so.

And then number three, is the brand. And brands can be tough of course, but as I point out to our people, the brand for search five years ago, six years ago, wasn’t Google, it was Yahoo, and now it’s Google. So it’s with the right technology innovation that people can really see a difference. It’s with the right business model innovation. Right now, the business model is fine, on the other hand there’s a lot of money that just sits there in Google between the merchants and the advertisers, the people who provide goods and services. A lot of it just sits there instead of flows through. It’s a bigger pot. Take the FT. You do not get to keep as high a percentage of what you take in relative to your user community as Google does relative to it’s user community. There’s opportunity for business model innovation as well.”

Search market share in 2006

Establishing a brand name in the search market place has not been easy for Microsoft so far, as CNET reported:

“Microsoft’s Live branding has been tremendously confusing and has hurt the company, and it is very likely contributing to the situation they are in right now,” said David Smith, an analyst at Gartner. “They’ve created another brand and have not differentiated it.”

No wonder, Google is still the king of search…

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