NEW YORK -- Media Summit -- At a keynote session today, Microsoft Corp. (Nasdaq: MSFT) CEO Steve Ballmer affirmed that the surface has barely been scratched in search technology and that the winner remains to be seen.
"Most innovation is still to come in search," Ballmer told BusinessWeek's editor in chief, Steve Adler, in the auditorium of the McGraw-Hill building in New York City. "Whether we manage to benefit or Google (Nasdaq: GOOG) does or something else happens, we have to see."
Perhaps dismissing Google's success in the space over the last 10 years, Ballmer remarked that advances have been fairly minimal.
"Search hasn't changed much in the last 10 years," he said. "The look of the page hasn't changed significantly; natural language technologies haven't been employed to capture user intent. We look and say, 'Hmm, there's a whole lot of usage, a good business model.' There's a lot of innovation yet to come."
Hmm... Owning only 10 percent of the search market, though, how exactly Microsoft intends to muscle its way into this space is still unclear.
"The table stakes are a lot bigger than maybe we knew before we got into it. We're making a large investment. On top of that, you've got to innovate. We've done a very good job of going from nowhere to having a very good product. But we still have a lot of work to do, no question."
Market rumors have Microsoft working on a new search engine, "Kumo" -- a name Ballmer affected to be unfamiliar with -- either as a rebranding of Live Search or as a break from it. But Ballmer was quiet on the details.
"We can expect something here in the next few months," he said. "How do you differentiate user experience, task orientation, help people find what they're looking for more quickly? How do you really ascertain user intent? Those kinds of things we're keying on as design philosophy."
Of course, there's still the looming purple elephant in the room, better known as Yahoo Inc. (Nasdaq: YHOO), whose search business Ballmer is still coveting.
"It's not about Yahoo's technology. It's really about getting the pooled volume, because you actually can improve the product faster if you have more users. The more users you have, the more advertisers you have, the more relevant you can make the ads."
Many assumed a deal would be easier for Ballmer once Carol Bartz came in as Yahoo's new CEO. But the two have only spoken briefly, and Ballmer expects she'll call when she's ready.
"Carol arrived in January. I had a discussion with her to say we want to chat. I'm sure when it's appropriate we'll have a chance to sit down and talk."
(Cough. Perhaps she's just not that into you?)
Other than search, said Ballmer, Microsoft is currently working on Windows 7; Windows Mobile 6.5; cloud computing; and products like the Zune, Microsoft's portable MP3 player, which Ballmer says the company will keep going with, despite the Apple Inc. (Nasdaq: AAPL) iPod's dominance of that market.
Perhaps prodded by the half-a-handful of people in the audience who sheepishly admitted to having a Zune in lieu of an iPod, Ballmer made his animosity toward Apple quite clear, affirming that no one in his family ("I don't, my sons don't, my wife doesn't...") owns any Apple products. Startling, that.
Nor does he think people will be as eager to purchase Apple computers during the recession.
"Paying $500 more to get a logo on it?" he sneered. "I think that's a more challenging proposition for the average person."
? Nicole Ferraro, Site Editor, Internet Evolution
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