Microsoft (MSFT) is continuing to lose market share in the search business to industry rival Google. Where it once forecast that revenue might grow by as much as 11 percent, the company now sees full-year sales growth in its Internet services business of just 3 percent to 8 percent. The shift from Yahoo's Overture engine to Microsoft's own AdCenter paid search system has had a particularly strong impact, with Microsoft taking a hit in the amount of revenue the company derives from each search query. The company is also losing ground in terms of overall share of the search market.
Search quality leading to lower search volume. Ouch. Microsoft's in-house AdCenter marketplace generating less revenue per search than MS received as a Yahoo affiliate. Double ouch. And AdCenter exhibiting not-infrequent hiccups with API availability and stability. Ouch again.
(Seeking a response from a MS spokesperson, I tried asking Ms. Dewey, "Why is microsoft falling behind in search?" She answered cryptically, "Never use pirated software." Perhaps Redmond's black-suited avatar is suggesting that MSFT is at its core still an operating system and office suite company?)