Microsoft Corp. (NASDAQ:MSFT) has had enough of Google Inc.'s (NASDAQ:GOOG) success and plans to do something about it. MSFT CEO Steve Ballmer claims that his company is the world's No.3 seller of online advertising and has no intention of remaining an also-ran. The company believes that it can advance its position by relying on improved focus on search technology.
Of course, this is a song that has been sung before. Microsoft now has about 8% of the search market and Google's lead here seems to be insurmountable. Yahoo! Inc. (NASDAQ:YHOO) is banking on its new Panama technology to take advertising share from its rivals, especially Google. Microsoft would have to move its piece of the market towards Yahoo!'s, which stands at just below 24%.
Impossible? Wall Street thinks so. Virtually no one believes that the 75% of the search market that belongs to the two leaders is likely to go anywhere else.
But, Microsoft has a reputation for being dogged even in markets with entrenched leaders. When the Xbox came out, it was given very little chance of rivaling Sony Corp.'s (NYSE:SNE) Playstation franchise. But, not all safe bets pay off.
Microsoft's dreams about the search market may be just that - dreams. But if the company is willing to spend on the search market like its did on the Xbox, it may be a nightmare for someone else.
Douglas A. McIntyre is a partner at 24/7 Wall St.