Tuesday, June 3, 2008
Buying Friends and Influencing People?
So is this the way Microsoft (MSFT) intends to try to best Google (GOOG)?
Pay consumers to search? Pay computer companies to put its search in their hardware?
Ah, Dale Carnegie’s big-bag-of- money tactic!
What’s next? Giving out dollars in Internet cafes for folks to stop using Google’s simple box?
In any case, it will be interesting to see if using Microsoft’s copious cash reserves–more now if it does not complete a transaction to buy Yahoo (YHOO) for upward of $40 billion–to goose its prospects will be successful.
I doubt it, as these kind of deals have come and then have quickly gone in the Internet space, as companies seek ways to get users to look over their wares using every trick in the book.
What works, of course, is making a product consumers want to use and over and over again without resorting to payoffs and fixed deals.
But, so far, with only a tiny (and declining) 9.1% of the search market to Google’s huge (and rising) 61.5%, making a better mousetrap has not worked for Microsoft.
Thus, cue the giant incoming truckload of cheese.
So, it was probably a forgone conclusion for Microsoft to make a deal with the world’s largest personal computer maker, Hewlett-Packard (HPQ), to put a toolbar that uses Microsoft’s Live Search on its upcoming PCs in the United States and Canada, starting in 2009, as was announced yesterday.
Live Search will also be the default search engine in the browsers installed on the new PCs. In the deal, Microsoft replaces Yahoo, which had previously been touted by HP.
And, while Microsoft did not give details about the agreement, I think it would be safe to say the software giant paid a pretty penny for the privilege in a pay-to-play deal format that is as old as the Internet.
Years ago, MSN and AOL (TWX) would compete in similar money contests to get their services on desktops. And, of course, Microsoft got into a lot of trouble over the way it tried to get the Netscape browser off of them.
But, one would also assume it is saving up its pennies for a similar deal with Dell (DELL), where Google now gets top rank on its PCs until 2009, after forking over a pile of its own cash.
This comes after Microsoft’s announcement last month that it would initiate a cash-back program for consumers who buy goods using its search. Called Live Search Cashback, it is a little like a loyalty program mixed with a rebate program.
And a lot like trying to buy your way into a market when you have found your technology is not getting you the kind of traction you need.
Unfortunately for Microsoft, which is showing some nice competitive spirit, these efforts are not likely to yield the results it needs to keep up with–let alone catch–Google or even get into the No. 2 spot currently occupied by Yahoo.
As BoomTown wrote yesterday, there is only one way to do that–buy Yahoo–and that deal remains stillborn.
Please see this disclosure related to me and Google.
