2009: The Year Ahead – Live Search

Of all of Microsoft’s live services, Live Search could be far and away the most interesting story of 2009.  New leadership, increased pressure to perform, lingering questions about a Yahoo! search deal, the coming of age of new technologies, and quite possibly even a whole new name are all stories to watch in the coming year.


12-04Lu_lgDr. Qi Lu, a veteran search technologist coming from Yahoo! to lead Live Search, will have a full plate when he starts his new job as President, Online Services Group,  on January 5th. Its no secret that Live Search has gone nowhere fast in search share, and both Live Search and Yahoo! continue to suffer under the dominance of market leader Google. Lu is a distinguished technologist with a long resume, according to the press release announcing his hiring:

Before joining Yahoo! in 1998, Dr. Lu was a Research Staff Member at IBM Almaden Research Center. Before IBM, Dr. Lu worked at Carnegie Mellon University as a Research Associate, and at Fudan University in China as a faculty member. Dr. Lu holds 20 U.S. patents, and received his bachelor of science and master of science in computer science from Fudan University and his Ph.D. in computer science from Carnegie Mellon University.

Since Dr. Lu won’t officially begin his new job until January 5, we can only speculate what kind of direction he’ll take Online Services and Live Search, but speculating is the fun part!  With a strong technology background (and perhaps just as importantly strong ties to Yahoo!), expect Live Search to concentrate on getting better at core search, and innovating in that space.  With a power struggle involving Brian McAndrews (who came to Microsoft with AQuantive and is now leaving the company) an old guard at Microsoft who haven’t placed much importance on search, and a number of other players in and around Windows Live and Live Search now apparently settled for the time being, Dr. Lu will need to get the ship moving.  Expect a decision soon on Yahoo!, either to acquire the search business, or finally move on.  No one should be better equipped to either incorporate Yahoo! search with Live Search, or make a decision that it just won’t work, than Dr. Lu.


logo_yahoo We won’t go over the sordid details of the failed attempt by Microsoft to acquire Yahoo! early last year, except to say that walking away seems to have been the correct call.  Microsoft could still do well by a search deal with Yahoo!, however, and Yahoo! seems willing to listen, especially since a deal with Google fell through (and don’t kid yourself into thinking that Microsoft didn’t have a lot to do with that).  One way or another, we should hear an end to the speculation about a Microsoft- Yahoo! deal.  Even if a deal does get done (and it sure makes a lot of sense to us), we’ll have plenty to talk about as Microsoft sorts out how to bring the Yahoo! search business into the fold, how Yahoo! fares, and what Google does to fend off what could be a more formidable foe.

Of course if a deal doesn’t get done, still the best place for Microsoft to increase search share could be by taking it from Yahoo!, and the sharks could circle quickly around Yahoo!’s business.  With a search deal in place, Microsoft would have a vested interest in the health of Yahoo! as a company, and a search deal would reflect that.  Without a deal, all bets are off.


In spite of the saber rattling coming out of Redmond, Google continues to just get stronger.  For all the problems Microsoft has with online brands, Google continues to be golden, and consumers continue to flock to Google, and away from Microsoft.  It’s been an eye opening experience to monitor Twitter Search for terms like Microsoft, Windows Live, and Hotmail.  While Twitter gets more mainstream, the passionate hatred of Microsoft doesn’t diminish (we all know what the Silcon Valley bubble thinks of Redmond, but Twitter is beginning to track a wider audience now, and the news isn’t pretty).  Even given a comparable product, Microsoft faces an uphill battle (and the truth is Live Search has quite a ways to go before it is nearly as good as Google.  Sure it’s better than it was, but so is Google!).  Microsoft won a round by quashing the Yahoo-Google search ads deal, but that was a small skirmish in a big war.

Will Google continue its runaway success?  Will the economy, or a strong run by a Dr. Lu led Live Search slow it down?  What about Google’s growing issues around anti-trust?  Microsoft’s success in search may be as much about slowing down Google as in anything Microsoft does in the space, and Google will continue to play a big role in Microsoft’s search strategy in 2009 (and well beyond, to be sure).


About a week ago Danny Sullivan took Microsoft to task and called on them to get serious, really serious, about search.  Danny chided Microsoft for going in for the quick buck, without focusing on what really matters, which is to make search better.  In his piece, Danny quotes Bill Gates (and highlights some key phrases):

If we thought somebody was doing the best possible job that could ever be done in search and there wasn’t some big revenue out there, maybe we wouldn’t do it, but quite to the contrary. Whether it’s understanding maps or virtual worlds or document analysis, today’s search is nothing, and we’ve got the software technology that will drive it to those new levels, as well as being a very significant business.

In 2009, whether Danny gets Steve Ballmer to chant “Search Marketers, Search Marketers, Search Marketers” or not, Microsoft could well begin to drive search technology to new levels.  Last year Microsoft acquired Powerset, and we should begin to see the fruits of that acquisition come to bear.  And even though Google dropped Lively, Microsoft has continued to make significant investments in “virtual worlds”, both with the way that it processes and handles 3D imagery for Live Maps, and in acquisitions like Caligari, with TrueSpace, and partnerships like Dassault Systemes with 3DVia.  Will we see some kind of map/virtual world/immersive product come to light in 2009?

Consumer/Commercial Search

cashbacklogo Microsoft’s strategy up to this point has been to go after a small portion of search, that while it may not show up in the search share numbers, generates a disproportionate amount of the revenue, and there are signs that marketing tricks like Live Search cashback are making an impact.  In the past year, concentration on “commercial search” has been about the only visible difference in Live Search.  How will the new leadership, now run by a technologist rather than admen like Kevin Johnson and Brian McAndrews, feel about this emphasis on marketing “gimmicks”, especially if they seem, at least up to a point, to be working?


Ahhh, the Search Brand Question: it’s been an elephant in the room for quite some time now.  Microsoft admitted last year that it needs to “fix the brand”, and there have been a number of hints that Microsoft may turn to a new brand, Kumo, wipe the slate clean and go from there.  Certainly one failing of the non-acquisition of Yahoo! is in not getting the brand: even if Microsoft acquires the Yahoo! search business it won’t get the name.  We know there’s still a big push coming for Windows 7 (hopefully Microsoft didn’t pay $300 million for a couple of Jerry Seinfeld ads), so it might make sense to ride those coattails with a marketing push for a new search brand.  Will a new name make much of a difference?

Economic Realities

No one knows quite what to expect in this world’s economy in the new year, but everyone’s scared.  How will Microsoft react if winning at search doesn’t mean piles of cash pouring out of a robust economy?  What happens to online advertising, search marketing, and the economy in general are sure to be big stories in the coming months.


There’s no question that Search is not where Microsoft wants it to be. However its far too early to think that Microsoft is prepared to, or even thinking about, giving up.   In spite of all of the obstacles, Microsoft’s Live Search, with new leadership, quite possibly a new name and brand, some innovative technological advances, and an economy that might just stir things up a bit, stands probably in a better position to succeed than it ever has.  If nothing else, it will be fun to watch.