Robert Scoble, Max Blumberg and many others have commented over the past week about the launch of Microsoft's search engine. I commented on Max's blog re my take on the likely success of Microsoft in it's new venture:
My take on this is that is that if MSFT play on Google's turf (as they currently are) they will remain just another player in the market. The leaders in THIS search market have already been defined. Customers will gravitate to the known leaders, not a me too product from MSFT. I think the market understands this as shown by the near doubling of Google's share price since it's IPO. This speaks volumes despite MSFTs well telegraphed intentions.(This product has been available for use as a Beta for ages)
To be a threat, they need to dramatically change the search market dynamics - either through a paradigm shift in the technology or dramatic changes in the business model of search. Both of these allow for differing positions and propositions to the consumer. And a chance for MSFT to play on a more favourable battle ground.
MSFT however is not seen as a great leader in engineering terms and the early reviews of their search tech confirm this - good not great. Put simply, paradigm shifts ain't MSFT's thing! (having said that, search is still a relatively immature market and paradigm shifts may still come along.)
MSFT's best option is to change the business model like they did with Netscape (and with the bundling of Word, Excel etc into Office before that, hence killing Lotus, WordPerfect etc). In this case they focused on providing a good enough rival to Netscape, but dramatically changing the business model by giving the product away. How could Netscape, as a one product company with a market capitalisation of over $10bn, compete with free?!
However, what I can't see yet is how they can dramatically change the dynamics on search. Google is free to the user. And while they continue to provide good quality search results, they will have the traffic and still be able to attract the advertisers.
If they fail the MSN example is a great analogy of where they may end up. In the mid 90s MSFT felt that it was losing out to AOL and launched MSN. They could never position that product sufficiently different from a content or business model perspective. Result = a moderate success in the market that still struggles to make money.
My guess is that companies like Verity, Fast, Autonomy continue to do ok for a while at least by positioning themselves around specific niches in the market. The challenges of search in the corporate data warehouse still provide enough complexities that MSFT and Google are not seen as viable competitors in the market.