Microsoft News Tracker

Microsoft’s Dare Obasanjo notices an uncanny familiarity in the Windows Live Drive story from yesterday:

I have to agree with Mike Torres, 2006 is really 1998 in disguise. With the release of Google Page Creator, Google Finance, Google Calendar and the upcoming GDrive (aka Yahoo! GeoCities, Yahoo! Finance, Yahoo! Calendar and Yahoo! Briefcase knockoffs) it is now clear to me that Google’s master plan is to become Yahoo! 2.0. On the other hand, with some of the recent Windows Live announcements we seem to be giving the impression that we are chasing Google’s tail lights who in turn is chasing Yahoo! tail lights who in turn is chasing the tail lights of various ‘Web 2.0′ startups. Crazy.

There are more broadband connected users now than there were in the heyday of the dotcom bubble, but it’s very unclear whether that will be sufficient to ensure success for all the Internet reruns we are seeing.

The Fortune profile of Ray Ozzie mentioned on Tuesday reported veritable drooling in the Microsoft executive suite over the potential rewards from Internet advertising. But how are things going today? Maya Roney at Forbes reports the current state of play in Google Maintains Lead In Search, Ad Growth:

Global advertising could grow 35% in the first quarter of 2006, with search advertising growth continuing to outpace branded and Google continuing to lead in market share gains, according to a recent Merrill Lynch report.
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The analysts expect Google to increase its advertising share in the first quarter to 30%, up from 28% in the fourth quarter of 2005. Yahoo!, Time Warner AOL and Microsoft MSN will likely lose advertising share as the first quarter is not a strong branded quarter, they said.

The distinction here is between direct sales of display ads on the companies’ own “branded” content sites (e.g. the recently announced Microsoft deal) versus ads appearing with the results of the respective search engines. Google isn’t a strong branded content provider although they are trying, and conversely, the others have strong content offerings, but are weak in search (AOL, of course, uses Google). Related to search advertising is Google’s lead in contextual ads placed on 3rd party Web sites since Yahoo and Microsoft aren’t even out of the gate.

As an example of the battle for branded advertising, see Making Money From Online Maps which describes how Yahoo and Google are duking it out for a distant second place in online mapping with Time Warner AOL’s Mapquest still the reigning champ.

Finally, while Google may be the only one gaining share, a rising tide lifts all boats as Yahoo demonstrated in its earnings announcement yesterday:

Yahoo, the chief rival to Google Inc. in the market for Internet search advertising, saw revenue in its branded and search advertising businesses rise 35% to $1.38 billion, as more consumers and businesses pay to have their ads displayed next to search results. Anthony Noto, an analyst at Goldman Sachs, estimates that search sales grew 9% from the previous quarter.

Sue Decker, Yahoo Chief Financial Officer, would not confirm whether that growth rate was accurate, in an interview with MarketWatch.

Scott Banerjee at MarketWatch:

Sony Corp. on Thursday said it is reducing the price of the PlayStation 2 video game console to $129 from $149 in a move that effectively paves the way for the introduction of its next-generation PlayStation 3 hardware.

The move comes on the heels of a recent price reduction of its PlayStation Portable handheld console. It should open up the spotlight for the Japan-based electronics giant to showcase the PlayStation 3 console at E3, the video-game industry’s trade show held in May.

The cut was expected and also helps hold the line against the Xbox 360. By way of perspective:

The PlayStation 2 is easily the world’s most popular video-game console, having sold more than 101 million units, compared with 24 million Microsoft Xbox units and 21 million Nintendo GameCube units. In the U.S., the PS2 commands a market share of more than 55%, according to NPD Group.
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Although Xbox 360 shipments have been slower than expected, Microsoft maintains it is on track to meet a global distribution target of 4.5 million to 5.5 million units by the end of June.

Next Monday marks the start of the week-long hearing before the EU Court of First Instance where Microsoft will try to overthrow the 2004 antitrust ruling against them. We’ve already had a preview of the arguments on each side, but Reuters has prepared a scorecard of the issues and the players as well as this summary by David Lawsky and Sabina Zawadzki. In case all the Microsoft vs EU match ups are confusing, here’s the net:

The court will not deal with the side issue of a Commission threat to fine Microsoft up to 2 million euros a day for failing to comply with the interoperability order.

The EU regulator is expected to decide on that in May, and that could give rise to a separate appeal later.

In the main case, the Court of First Instance will determine whether to overturn or modify the Commission’s ruling and fine. It will take months and possibly a year to reach a decision.

Its ruling on facts is final, but legal issues may be the subject of an appeal to the European Court of Justice, the highest EU court.

My guess (and it is merely that) is that Microsoft is unlikely to obtain any relief at the end of the road. If you’d like to explore a darker vision of the whole European Union regulatory process, check out Back in the E.U.S.S.R. by the Motley Fool’s Rich Smith:

Fifteen years after the demise of the Soviet Union, Europe still yearns for the good old days.

All across the Continent, west of the old Berlin Wall, economies are stagnant, GDP growth is anemic, and the powers that be persecute successful companies with malice aforethought. One wonders whether there’s a connection there.

But it’s more than just a little affection for socialism:

Now, these companies all have a couple things in common — both with each other and with the major card providers as well. First, they’ve all been targeted for criticism by European authorities in recent years — Coke for out-competing other pop vendors for shelf space, Intel for controlling too much market share, eBay for failing to do the European Community’s tax collecting for it, Google for getting too inventive with its advertising, and Microsoft seemingly for every single thing it does.

And the second thing they have in common: They’re all American companies.

Correlation doesn’t prove causation, but the artifact does seem rather glaring. Read the full argument by following the link, but at the heart, it’s no different that dealing with China or any other government jurisdiction - Microsoft has to reach a modus vivendi or get out. All we are seeing is the haggling.