Ballmer: My impatience hurt our search business

Microsoft's CEO wants to call out his impatience as a core cause of his company's irrelevance in paid search, but lack of focus is arguably a bigger fault.

With Yahoo sporting a new CEO, Microsoft is likely to make a run at buying its search business again. The question, however, is whether it's simply too late for the software giant to make a credible bid to catch up to and surpass Google in paid search.

As suggested in an excellent, probing article in The Wall Street Journal, Microsoft, not Google, may well be the reason for Microsoft's virtual nonexistence in paid search:

The story of Microsoft's early missteps helps explain how Google became the uncontested leader in making money from Internet searches, and why Microsoft is trying so hard to make up for lost time. It also exposes a broader challenge facing Mr. Ballmer, as he guides his company of nearly 100,000 employees: how to foster groundbreaking technologies and businesses that are under his nose.

With investments into nearly every major area of software, Microsoft has plenty of innovative ideas and technologies. Its challenge is deciding which ones to nurture. But as Mr. Ballmer manages Microsoft without (Bill) Gates...he said the Keywords episode and similar missteps are at the front of his mind.

"The biggest mistakes I claim I've been involved with is where I was impatient--because we didn't have a business yet in something, we should have stayed patient," Mr. Ballmer said in an interview. "If we'd kept consistent with some of the ideas" that Microsoft had in-house in 1999, "we might have been in paid search."

Has anything changed? Historically, Microsoft has chased the wrong competitors, or the wrong competitive strategies, on the Web. As the Journal explains, Microsoft's early foray into Internet revenue models had it fixated on AOL and subscription-based content, rather than on search-based advertising. The same thing could be happening now.

In focusing on Google, is Microsoft neglecting the bonanza for vendors that monetize the conversations happening on Twitter, Facebook, and elsewhere?

Ballmer notes his lack of patience as the reason Microsoft struggled to make a dent in Google's search revenue, but ZDNet's Larry Dignan offers a more poignant reason : lack of focus.

While tied to impatience, it was almost certainly Google's make-this-work-or-go-under approach to search that helped it figure out search advertising. Microsoft makes billions of dollars on Office and Windows. That is why its best new product in years is SharePoint, which marries the two , and not MSN Live or other Web products, which are a distraction from Microsoft's core business.

Patience may be an attribute that Microsoft should develop, but I believe that focus and ambition are more important. Microsoft will struggle to truly focus on the Web while offline desktop and server revenues continue to pay the bills.

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About the author

    Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay.

     

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