Google: Hitwise Says Search Share Hit 66%; Microsoft Gets Fast

It is hard not to read these two pieces of news as flip sides of the same coin. On the one hand we have Hitwise saying this morning that Google’s share of all searches in the last four weeks of the year hit a remarkable 66%, up a point or so from all of last year. It is impressive stuff, and an ever more daunting platform from which Google can continue its dominant efforts in search, advertising and web apps.


On the other hand, we have this morning Microsoft buying FAST Search and Transfer for $1.2-billion. The purchase (oodles of chatter here) of the Norwegian company, known for its enterprise and unstructured search technology, is an attempt by Microsoft to end-run Google, taking a stronger position in enterprise search, as opposed to butting its head more (for now) against the market that Google dominates. Showing Microsoft’s seriousness, this deal is being done at a premium to previous deals — 5.9x 2008 sales, versus prior deals at 4.5x  — and it represents (according to Goldman Sachs) 5.5% of Microsoft’s cash balance.

You should read this as Microsoft increasing its efforts outside of traditional search. Having largely failed at getting a self-sustaining and growing position in core Internet keyword search, the company is now coming to the clear realization that it is, to some extent, pushing on a rope, with organic growth just not in the offing. While I generally like that Microsoft is getting more aggressive, put against Google’s escalating search share this is still expensive, fringe, and definitely playing at the edges of search. Show me a Microsoft deal for Yahoo — bring search, advertising and content — and then we can talk.


  1. I think Autonomy is over-valued too, but they just signed a $70m deal with Citigroup, around subprime record discovery. With that kind of driver in mind, this may well end up a very astute piece of business by Microsoft, even though the premium looks v significant at this point.
    disclaimer: I am not an investment analyst

  2. Talk about what? What a stupid deal it was?

  3. Can’t think of a company other than MSFT (or possibly AT&T before the breakup)that had the problem of people not wanting to use any product with the company’s brand on it unless they just have absolutely no viable alternative. Tough problem to overcome. Perhaps MSFT needs to just give it up in all consumer areas outside of Windows and MS Office, since everyone knows how MSFT acts when dealing from a position of market dominance and will therefore never trust them again if they have a viable alternative.

  4. I have this feeling that Microsoft is going to turn more and more into an enterprise company, from OS’ to office, to Dynamics to Sharepoint, to SQL Server, etc, it makes sense for the company to focus on the enterprise market given its struggles in the consumer internet market and the disaster that was Vista. Just a hunch, but I believe that’s where they are going to draw the battle lines. Taking away the enterprise from Microsoft is not going to be easy, even if they sometimes seem clueless.

  5. Will someone please point out why Vista is a disaster? I mean monetarily. I keep hearing it but no one ever shows any data to back it up. Everything I see says it is selling well.

  6. Search Engine Trivia: if I’m not mistaken, FAST owns what used to be Altavista’s enterprise search tech.

  7. Vista is selling well, yes. So it’s not a sales disaster, per se. However, it is a PR disaster. Benchmarks show that Windows XP SP2 is faster than Windows Vista in just about every test. One of the selling points of Vista was supposed to be improved performance. Also, Vista was supposed to be a drastically new operating system, as different as 3.11 was to Windows 95. Most, however, fail to see such a huge change. Yes, under the hood, the changes were drastic. Yes, on the surface, there’s new functionality. For the most part, however, if these same features had been added to Windows XP, it’d be faster and more comfortable for people. And, in fact, Microsoft is trying this very thing… an update to Windows XP is expected to add Vista-like functionality. And then, there are the compatibility issues. These are the same compatibility issues that Windows 95 had initially when it first came out.
    So, while sales of Windows Vista have been pretty good, quite a number of people are unhappy with their purchase. Many are just forced to accept it with a new laptop or PC that has Windows Vista pre-installed. Some people are even reverting back to Windows XP, but this is a losing battle. If you try to “stay behind” Microsoft will just “leave you behind.” So, Windows users have learned to upgrade eventually, no matter what.
    Lastly, Windows Vista was originally expected in late 2002! In other words, it was FIVE YEARS LATE. So, by being five years late, and already getting hyped up by talk of the next new amazing operating system five years ago, people’s expectations were astronomically high. Microsoft spend nearly three times as long on this iterations of the Windows operating system as any other version, and yet most are underwhelmed and unimpressed.
    So, in terms of sales, it is doing well. In terms of expectations, most have been let down really hard.