Earlier this week, Microsoft unveiled a new promotion that tries to encourage more people to use Microsoft Live Search instead of Google. Here's the way it works: Each time you search on Live Search, you receive "tickets" -- think of them as airline miles. After a certain number of tickets, you get various goodies. With 525, you get five music downloads, 1,100 tickets gets you a T-shirt, and 1,800 tickets gets you airline miles, and so forth. This comes on the heels of a similar promotion five months ago where users who purchased certain products through the search engine could get some of the purchase price back. Oh, and you have to be one of the first million to participate in order to get the tickets.
Is anyone honestly going to be swayed by this really lame marketing campaign? Seriously, this reeks of desperation from Redmond. I'm beginning to wonder if, in fact, anyone cares that Microsoft's recent major product campaigns -- perhaps with the lone exception of the XBox -- have all been major flops. Put another way, Microsoft doesn't matter anymore.
Let's take Exhibit A: Microsoft Live Search. Launched in 2006, this search engine has been, for the two years of its existence, way behind the serious players here, Google and Yahoo. The most current data from comScore show that Microsoft only hold's 8.3 percent of market share, less than half of Yahoo, and way, way way less than Google's commanding 63 percent. Microsoft had gotten as high as 13 percent last summer, but lately the company has been hovering around 8 percent.
Last year, Microsoft's own corporate bloggers touted the fact that the company was "committed to win," and that the company was "going back to basics." This post was quickly and roundly ridiculed by former Microsoft employee and Internet personality Robert Scoble, who rightly pointed out that between Google, Live.com, Ask and Yahoo, only Google could provide the location of a notary in Palo Alto. I'm going to bet that most of you out there, like me, in nearly all cases stick almost exclusively with Google for your day-to-day search needs. There's a reason why this company is so profitable (recent economic activity notwithstanding).
Exhibit B: the Zune. Also in 2006 (November to be specific) Redmond launched the Zune, Microsoft's answer to the iPod. As of May 2008, the company had sold 2 million of the little guys. The company likely retains its single-digit market share in the portable digital music player sector. As MacUser's David Dahlquist put it at the time:
Apple, in the meantime, has sold 10.6 million iPods in its latest quarter. If one does the math, that means that Apple has moved more than five times the amount of MP3 players in the last quarter than Microsoft has moved in the last year and a half. Coffee break's over, boys; time to learn how to innovate.
Last month, Microsoft decided that it could improve on the first generation by releasing new versions of the players along with new software to go with it. The New York Times' David Pogue wrote:
The new Zunes haven't changed at all except in color: blue, pink, red or black for the Nano-like model (4 to 16 gigs, $130 to $200 ) and black for the 120-gigabyte model ($250). But next to the sleek, shiny iPods, Zunes still look like dark, Soviet-made bricks.
Earlier this year, the Zune Guy (he got a tattoo with the Zune logo!) went iPod, and the major American electronics retailer GameStop decided to stop selling them entirely. Among my gadget-toting friends, I've only seen one in the wild. And I've seen more iPods than I can count.
Exhibit C: Vista. Even before it was called Vista (it used to be called Longhorn), there was a lot of rumbling that Microsoft's major OS upgrade would flat-out suck. There were delays as early as 2004. Upon its release in 2007, it was largely panned -- the Wall Street Journal's Walt Mossberg called it "a worthy, but largely unexciting, product." More recently, major companies like Intel have advised against upgrading to Vista because there was, according to an anonymous Intel source quoted by the New York Times, "no compelling case for adopting Vista." Hell, even Microsoft now admits that it sucks. You guys spent $6 billion on a product that you admit sucks?
Yes, Microsoft has made a truckload of money on smart business decisions in the past. But these days, it seems like its just pissing its future away by releasing products that no one is actually interested in. If this is the brilliant strategy that Steve Ballmer is planning on using to take on Apple and Google as Gates fades into the sunset, he might want to reconsider.
Update on yesterday's Skype story: Skype spokeswoman Jennifer Caukin didn't answer my questions directly, but rather pointed me to a blog post by Josh Silverman, the president of Skype. In the post, Silverman acknowledges the monitoring program, and wrote: "It was our understanding that it was not TOM's protocol to upload and store chat messages with certain keywords, and we are now inquiring with TOM to find out why the protocol changed."