The Microsoft Strategy

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Its been a long long time since I’ve posted here.A  (I’ll tell you what I’ve been upto very soon.)A  Because its been a long time, I wanted to start out with a super-duper stellar post.A  But thats just delaying things.A  So let me start out with a hypothetical brainstorming post that will likely not help you unless you are one of the top execs at Microsoft.

Microsoft recently made a bid for Yahoo.A  Their reasoning is: to beat Google’s 75% dominance in the search and online advertising market, they have to partner up with Yahoo or they’ll never become numero uno.

I think thats a disastrous move.A  Two stale companies can’t usually beat a nimble company.A  Just like you-and-me can’t team up on LeBron James and defeat him. We have to improve our skills first.

So how can Microsoft improve their skills?A 

To know the answer, you have to ask one more question: how did Google achieve the #1 position online?

1. Google created a search engine that gave out far better results without any clutter

2. Google then created or bought ad space or partnered with others so that their ads can be shown.A  (While you search / while you check emails / while you surf other websites.)

So lets evaluate each of Google’s dominant fields and see how to beat them.

Search Engine DominanceA 

I’m of the opinion that there can be no better system than listing search results on the basis of how many other websites link to yours.A  Links are the votes that determine online popularity.A  The only other option is to chase the idea of human voting to determine popularity.A  And for that, Microsoft will have to buy StumbleUpon.com from eBay or create something similar.

Advertising Dominance

Why is Microsoft lagging in their online ad sales?A  Because they don’t have as big a reach as Google.A  And so most merchants only use Google Adwords.A  What can Microsoft do?A  Use Google API to match up with Google.A  By using Google API, Microsoft can come up with a “one-click-import” feature where merchants and advertisers can import their Google Adwords campaigns to Microsoft instantly!

Microsoft can then work on their “reach” to one-up Google.

Email Dominance

How to beat Gmail?A  There are 2 ways to come up with a better email system.

i. keyword@username.MSN.com email addresses.A  By allowing people unlimited email aliases, they can have better control over spam.A  For eg: if I wanted to register at WSJ.com - I would give my email id to them as: wsj@ankesh.msn.com.

ii. Pay people to email.A  Share the ad revenue that Microsoft earns via email ads with the users.

Browser Dominance

Because FireFox uses Google as the default search engine, Google has bagged a big share of browser searches without their own browser.A A  Microsoft has to open up their browsers so that others can create extensions and add-ons for IE browser too.

And as long as Microsoft is doing that - they might as well allow people to create extensions for MSN messenger too.A  And maybe people can come up with extensions for the desktop too?

Ads on Other Websites

Two things Microsoft can do:

i. Buy WordPress.com to compete with Blogger.com

ii. Give a bigger share of revenue to publishers than what Google gives.A  And lower the minimum payment threshold from $100 to $20.A  And pay on a weekly basis.A  Improve the payment terms and lots of publishers that use Google Adsense will move to Microsoft.

Aquisitions

Instead of Yahoo, there are other better properties to buy.

i. WordPress.com

ii. ebay.A  By buying eBay instead of Yahoo - Microsoft would also get StumbleUpon.com (the only other technology that hold the promise to make their search engines better than Googles), Skype.com (a far better instant messenger) and PayPal.com (an obvious match with their ad program)!

iii. Facebook.A  To extend their advertisers reach.

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Posted by Ankesh Kothari under Misc on 07 Feb 2008

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