The internet giants are in disarray, and all are choosing to talk up their mobile plans as some of their online strategies founder. At its annual financial analysts’ day last Friday, Microsoft had to play down the disappointment of the failure of its Yahoo bids, and convince us all that it can go it alone on the internet, with mobile advertising and services a significant boost. This came just days after Google disappointed Wall Street with second quarter growth that fell short of the 50% that its investors have grown to expect, and the search giant was also focusing on the promise of the mobile market to cheer everybody up a little.
One of Microsoft’s key messages, as set out by CEO Steve Ballmer, was that internet connections will be in virtually all portable digital devices within a few years, and this would become the main means of delivering content as well as communications. It would also lead to ‘significant transformation’ of Microsoft’s own priorities ‘ note that the former open source-hater has now chosen to invest in Apache, the most liberal of the open software foundations and one with important mobile plans. Ballmer said: “As we go out five, 10 years from ‘ literally, within 10 years ‘ you’ll have digital screens that are this light and this thin [waving a sheet of paper] and connected to the internet. Every surface we walk up to and touch will be a window to the world of digital information … the question is what companies are really going to invest in the big opportunities around this?” He added: “I think there’s really only two companies on the planet that have the capability and the staying power ‘ Google and Microsoft.”
Microsoft argued that pervasive mobile search would become the primary way to navigate the web, and that it had innovations up its sleeve that would enable it to leap ahead in offering users next generation search capabilities. However, it failed to detail these, at a time when the natural search leader, Google, and the mobile innovator, Nokia, are both sharing more insights into what the handset search experience will look like early next decade (and the keys, of course, are awareness of location and contacts, and new dynamic and personalized interfaces). The main news from Microsoft in this area was that it has inked an exclusive search distribution deal with social networking site Facebook, on PC and mobile platforms, and geared to creating a ‘rich search experience’ supporting Live Search results and Microsoft search advertising.
The Windows giant was less vague when it came to its mobile advertising ambitions, and demonstrated the systems it acquired with Aquantive and Screen Tonic, claiming it is now generating over 400m ad impressions per month in eight markets worldwide.
Meanwhile, its arch-rival Google issued a second quarter earnings report that failed to match expectations. Google reported Q2 earnings of $5.37bn, a 39% year-on-year increase and a 3% jump over Q1 totals; but the growth was insufficient to investors spoiled by the firm’s traditional 50% quarterly growth. Google execs blamed the slowdown on a decline in AdSense revenue and co-founder Sergey Brin tried to deflect attention to the promise of the mobile ad market: “We’ve substantially increased the size of our index … Now our users get much fresher and faster results across a greater range of sources,” he said.