We published an updated research snapshot on Microsoft yesterday which is going into a decent product cycle on the OS (finally!) which should be followed by a another with Office 10 and possibly even a Windows Mobile that isn’t an embarrassment.
Looking at the recent search market share we couldn’t help wonder what Microsoft can do better to gain share in search. For the record we know that success is about more than search and in some ways that might even be “yesterday’s market” but it is closely watched and some decent sustained share gains by Microsoft would no doubt translate into higher stock value for them, possibly by a large amount.
Millions of people will be moving to Windows 7 soon and a transition like that is the perfect time to capitalize on making other behavioral changes. (There’s lots of science behind this but umm.. you will have to “bing it”, nope doesn’t work.”) Anyway it’s a real opportunity for Microsoft but I wonder if they will be smart enough to think out side the box on this one or just annoy everyone with the usual “do you want to make Bing your default search engine” about a dozen times before we download Google Chrome and leave Internet Explorer for those IE-only sites. The vast majority of users obviously have made Google their default search engine and even IE users have done so.
One way is to offer something that includes Google but promises more. Like “would you like to keep Google as your default search engine and have the results amended on the side with selected non-overlapping results from Microsoft search?” Yeah, maybe. We find lots of shortcomings in using Google in our research work so know that there are better algorithms and libraries for different types of searches. Microsoft could exploit that.
Outside the typical browser search scenario Microsoft could offer search boxes in other contexts like their office products, desktop, taskbar, and so on that are places people might want to look for things but not want a typical “web search.” Maybe it’s just wikipedia, maybe it’s just slide shows or documents. These are searches you might want to do right from your desktop, Powerpoint or Word. In the same way that Google Chrome recognized that the URL and Search windows should just be one, Microsoft could recognize that search can happen anywhere and maybe shouldn’t involve a browser at all.
Lastly if being smart doesn’t work power and money can be a stopgap. Some might scoff at the idea of “frequent search points” but for many people they might work. Imagine if Microsoft offered free products and services based on your search volumes? Getting a free copy of Office 2010 is worth something to many people, possibly enough to at least keep Microsoft as the default search in IE (even if they use Google and Chrome most of the time.) There are some signs that Microsoft is getting this a little bit. Putting Microsoft Security Essentials out there for free is a good example. It eliminates that “Windows tax” that many paid to Symantec or McAfee to combat the typical security threats and performance issues that bedevil Windows users.
In our recent note we upgraded Microsoft management execution from a “D” to a “C” but getting to a better level requires doing things smarter, better and with more success. We’ll be looking for signs of improvement in Windows 7 beyond just the quality of the OS which we already know is very good. If Microsoft is going to beat back incursions from companies like Apple and Google they will need to get their management and execution up to a “B” soon and there’s a mountain of work to be done.
Our current Intrinsic Value estimate for the shares is $30. The report is available in our research library and can be downloaded after a free registration and approval process.
[Disclosure: The author has a long investment position in the form of options on Microsoft stock at the time of this writing.]
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