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Microsoft’s Cool With Third Place

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The good news for Microsoft is that the company pulled in something like $12.5 billion last quarter. The bad news is most of that didn’t come from search, and the company expects less of its revenue to come from search in the near future.

Mr. Softy, after several long rounds with Google, and a lot of bragging, is ready to admit what we’ve known for a long time. He’s losing at search.

At one point, the feeling in Redmond was that search revenue would grow by 11 percent. Now they’re thinking more like three to eight percent over the next two quarters.

Where once the rumored battle cry was “kill [effing] Google,” the meeker spokesperson says search is a long-term project and the company is “comfortable” with it for now.

Comfortable, says Microsoft CFO Chris Liddell, but not happy.

Earlier this year, Yahoo pretty much conceded defeat to Google as well. A number of straight months in second place could cause that. At one time, Yahoo was as feisty as Microsoft, and got into arguments about whose index was bigger. Now, eh, they’re cool with 25 percent.

It’s interesting that powerhouses like Microsoft and Yahoo have confirmed what we’ve all known for a long time: Google’s a full-on juggernaut.

The only way to come close to competing with Google online at this point is to merge, or for Microsoft to buy Yahoo outright – a $40 billion purchase.

Together Yahoo and MSN would have nearly equal search market share (well, they’d still be behind Google by 10 percent), but would also host vast multitudes of visitors for the most amount of time.

Seems like it would be a good move. Then again, all Google has to do is bring all of its promoted and non-promoted services front and center onto a portal page – which it probably should do anyway.

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