Microsoft online chief: Heading the wrong way

New Microsoft President of Online Services Qi Lu has given his first public interview, and it shows that the division may be headed in the wrong direction. Lu is taking dead aim at Google search, when he should instead be focusing on creating new services focused around Office and other Microsoft products. Microsoft will never catch Google, but it has a considerable lead it can build on when it comes to applications.

Lu was interviewed in a friendly forum --- on the Microsoft PressPass site. The interview is mostly innocuous, but toward the end, Lu reveals that he believes that Microsoft's success online is directly tied to catching Google in search.

Toward the end of the interview, he is asked, "Where do you see the opportunities for Microsoft in the search and online space?" This is the kind of open-ended question that allows him to reveal his vision for the future. But the vision, instead, looks to the past --- trying to improve search. Here's his answer:

First, I think there is a genuine opportunity to take our search products to the next level. I see that Microsoft's search product quality is improving at a very, very fast rate, that there are great foundations there. And with the technology base, the talent base, the computing infrastructures, I'm confident that we will be in a position to produce a differentiated and compelling search experience.

The second opportunity is to continue building a very powerful advertising platform. Microsoft has made a series of strategic acquisitions, and also built a bunch of internal technologies and products. The key is to put all those assets together to build powerful, highly scalable advertising platforms. The advertising we see today will be very different in the future because of new platforms for it. Ads will be truly relevant and useful, and the experience will be compelling.

In other words, build better search and then monetize it. There's no mention anywhere about bringing Office online, or innovative new online services and applications. The focus is squarely on catching Google. But it's this simple: Microsoft will never catch up to Google when it comes to search. It's not just that Google's search results are far superior, but the company has gained so much of a lead and market share, that when it comes to search, the game is over.

In my blog, New Microsoft online chief: Right person, wrong job, I've said that Lu is an extremely accomplished technologist with a superb engineering background, but that he doesn't have enough background in business strategy to turn around Microsoft's struggling online efforts. I think that his interview only emphasizes that point.

On the other hand, Stephen Elop, president of Microsoft's business division, has said that Microsoft will be introducing for-pay and free versions of Office available on the Web. In my blog Microsoft: Expect free online versions of Office, I explain why that's the future of Microsoft's online efforts, not trying to catch Google.

It may be that overseeing Office's online expansion isn't one of Lu's responsibilities, and that he's been told to focus on search. If that's the case, though, it means that Microsoft's online strategy is divided among several different people, which doesn't bode well, either.

Copyright © 2008 IDG Communications, Inc.

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