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Microsoft Search Suffers Steady Decline In Market Share

Microsoft's declining share is important because the company has made search a key component of its push to catch up with Google in the multi-billion-dollar online advertising market.
Microsoft's online search has suffered a steady decline in market share over the last 12 months, while its biggest rival Google continues to grow.

The downward trend of Live Search, formerly called MSN Search, is reflected in figures released recently by three Web metrics firms: ComScore Networks, HitWise, and Nielsen/NetRatings. The site SearchEngineWatch plotted the monthly numbers for each of the top three search engines. With some hiccups, leader Google saw a steady increase in market share, and No. 2 Yahoo stayed about the same.

Commenting on Google's gains, Bill Tancer, general manager of global research for HitWise, said Friday, "it's very possible it could be at the expense of Microsoft."

Microsoft's declining share is important because the company has made search a key component of its push to catch up with Google in the multi-billion-dollar online advertising market. Over the last several years, Google has reaped billions of dollars by selling text ads related to search results. Microsoft was late to the game, launching its AdCenter services for online advertisers in the United States in May. Yahoo launched an overhaul of its ad services in October.

A major contributor to Microsoft's troubles has been in its handling of the transition from MSN Search to Live Search, said Charlene Li, search analyst for Forrester. "Microsoft hasn't done itself any favors by adding to the whole brand confusion," he said.

For example, people who begin their search on MSN are sent to a Live Search results page that has a different look and feel than the portal, Li said. The dramatic difference causes confusion, and makes everything seem like a work in progress, which doesn't instill confidence in the user.

"Users are very fickle, so when something changes on the site, they either like it a lot or don't like it," Li said. "In this case, they're saying they don't like it."

At least one person working for Microsoft has acknowledged problems in trying to catch Google. Commenting on the poor showing over the last 12 months, Erik Selberg of Live Search said in his blog that the numbers were "brutally, painfully true."

"Here's the honest truth. Microsoft will continue to lose share until it can make Live.com something people chose versus just the [Internet Explorer] default," Selberg said. "That will happen when the average person starts to see Live.com as a bit better than Google."

Selberg, however, said it's not realistic to expect Microsoft to make progress quickly as a relatively new entrant into the search market.

Adam Sohn, a spokesman for Microsoft's Windows Live group, said in an e-mail that the company is confident it will gain market share in time.

"Over the last nine months, we focused intently on bringing Live Search from beta to final version," Sohn said. "With our search experience now in the right place for widespread consumer use, we are just beginning the execution of our broad marketing strategy, as well as building strategic partnerships that we expect will expand and grow our user base over time."

From October 2005 to October 2006, ComScore and Nielsen/NetRatings, respectively, had these numbers for each of the search engines: Google, 39% to 45.4%, and 47.7% to 49.6%; Yahoo, 29.2% to 28.2%, and 21.8% to 23.9%; and Microsoft, 14.6% to 11.7%, and 11.3% to 8.8%.

HitWise's latest numbers, which started in February and ran through Nov. 25, showed Google increasing share from 57.6% to 61.8%, and Yahoo nearly flat at 21.9% to 22.4%. Microsoft, however, declined from 13.8% to 9.59%.

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