Microsoft and Google go mano-a-mano

Microsoft switches to own online ad broker service and cuts former ad service - Yahoo's Overture - in bid to better compete with Google in massive online ad market.

Microsoft's launch of adCenter is part of the world's largest software maker's push to better compete with Internet rivals Google (Research) and Yahoo (Research) in a U.S. online advertising market estimated to be worth around $15 billion.

Advertisers bought pay-per-click ads on MSN search through Yahoo's Overture service until last year, but adCenter handled an increasing percentage of those transactions during testing in recent months.

AdCenter will be initially limited to paid search, but Microsoft envisions the service being a one-stop shop for online advertising across many of the company's software platforms including Xbox games and mobile phones.

OKey...........So With that in mind, what could Google go after?

Michael Cohen, director of research with Pacific American Securities, thinks Google should stick to do what it does best: search.

"Here's a company that has the ability to raise cash and do anything they want. But I think they'd be ill-served if they didn't stick to their core strategy," Cohen said.

To that end, Google is said to have recently bought the rights to new search technology that allows users to view answers to search queries without having to leave for another Web site.
Still, Google is clearly broadening its scope beyond search. Google once noted on a corporate Web page about its philosophy that it did not "do horoscopes, financial advice or chat." Yet, Google now does two of those three things. (We're still waiting for the Google horoscope beta.)
As such, Bill Tancer, general manager of global research with Hitwise, an Internet research firm, thinks Google needs to make more deals in social networking. He said Google's biggest threat will not come from search engines like Yahoo! (Research), Microsoft's (Research) MSN or IAC/Interactive's (Research) Ask.com but from MySpace, the social networking site owned by News Corp (Research).

"Google's core business is helping people consume information on the Web. As we see Google grow out its content offerings such as finance and maps, I think they'd have to make a serious play into more social and user-generated content," he said.
Google already has some presence in this area - web log tool Blogger, photo sharing software service Picasa and social networking site, Orkut, for example. But Tancer thinks Google needs to make an even bigger splash.


Google's ultimate goal is to be more competitive with Microsoft on several fronts, the company has a long way to go. Google had nearly 5,700 employees at the end of last year, up from about 3,000 at the end of 2004. Microsoft has about 61,000 workers worldwide.

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