Unlucky on the Internet: Microsoft’s Battle Is Lost

Microsoft’s situation to is similar to that when a new, grandly-announced motor backfires. The world’s largest software corporation is suffering another setback in the battle against Google—and should think about its internet strategy.

Microsoft wanted to get into the market for online advertising in 2007, when the company purchased online advertising firm aQuantive for $6.3 billion in a bid to outdo Google, the leader in this area. This move was an attempt to bring in billions of dollars, equal to what their competitor makes through graphic internet ads and the sale of links.

The takeover is now turning out to be a gigantic misinvestment, which Microsoft strategists have obviously thoroughly misjudged. At $6.2 billion, aQuantive is now being written off. Microsoft’s PR jargon sugarcoated the misjudgment thusly: “The aQuantive takeover did not accelerate growth to the degree anticipated.” [http://www.forbes.com/sites/roberthof/2012/07/02/the-6-3-billion-dud-will-microsoft-ever-master-the-online-ad-business/?utm_source=dlvr.it&utm_medium=twitter]

In other words: a disaster. The billions in investments have not paid off. That should be sufficient for the corporation to think hard about its online business strategy.

The write-off is further proof that, for now, the corporation has lost the battle for online income to Google and Facebook. Via its online marketing subsidiary, DoubleClick, Google was in a position to make substantially more than Microsoft through aQuantive. Microsoft’s decision five years ago to make the purchase was certainly ambitious, but quite correct. The company could have expected good growth, just like the whole industry.

A Lack of Knowledge

But what happened then? Suspicions are becoming reality that in terms of online business, Microsoft lacks know-how compared to Google. A ray of hope became a disappointment.

Because of that, aQuantive is just a (very expensive) symptom of a fundamental problem in Microsoft: The company simply cannot shake Google’s near-monopoly of the sector. Google’s search-engine serves almost 90 percent of European market, and even in the U.S. there is not all that much of the cake left for Microsoft. In the U.S., the market shares of Microsoft’s search engine Bing are barely worth much more than nothing. The multi-billion dollar business is still Google’s.

In the future, Microsoft would be better off taking risks and using trial-and-error in areas where it excels. The company earns its money mainly through customer companies that use Windows operating systems and the Microsoft Office packages. In the consumer field, the Xbox gaming console is a very successful product.

That is where the corporation should put its efforts and money. To put it anywhere else would just be gimmicky, and aQuantive is just too expensive for Microsoft to mess around with.