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Wayward Microsoft

Let's not underestimate the significance of the botched Microhoo deal on the future of Microsoft's business, says Ars Technica contributor Don Reisinger. Microsoft thinks its future is online, but without Yahoo, the software giant has very little to stand on, on the Web. It's a pitiful third in search advertising, with just a 9% share, and its overall online business operated at a deficit of $1.2 billion this year. Now, how can Microsoft move forward when it's back to square one?

Still, CEO Steve Ballmer pipes on: "There is this huge, huge, huge new opportunity around the Internet and online and we have to embrace that opportunity and invest in that opportunity," he told analysts and shareholders last week, adding that the company would now invest another $500 million in the company's online business.

Well, talk is pretty cheap on the Web, says Reisinger, and Microsoft better find a new online chief soon to replace the outgoing Kevin Johnson. That person needs to get to work right away on forming strategic alliances and strengthening Live Search. In fact, Reisinger thinks search is the major component, and Microsoft needs to do something "major" to gain market share quickly. As Ballmer himself said, "search is the key to unlocking the enormous market opportunities in advertising, and it is an area that is ripe for innovation." But this is precisely why Microsoft still needs Yahoo, Reisinger says.

Read the whole story at Ars Technica »

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