Microsoft on aQuantive: Think merger, not acquisition

Summary:Microsoft views its aQuantive purchase as more of a merger than an acquisition, according to Steve Berkowitz, the Microsoft Senior Vice President of Online Services. Berkowitz discussed Microsoft's $6 billion aQuantive buy, among other topics, during his May 22 presentation at the JP Morgan Technology conference. Here's what I gleaned from the Webcast of his talk.

Microsoft views its aQuantive purchase as more of a merger than an acquisition, according to Steve Berkowitz, the Microsoft Senior Vice President of Online Services.

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Berkowitz discussed Microsoft's $6 billion aQuantive buy, among other topics, during his May 22 presentation at the JP Morgan Technology conference. (I listened to the Webcast of his talk.)

"I would call the aQuantive acquisition more of a merger" than an acquisition, Berkowitz said. He said that he told Microsoft employees the same during an internal Town Meeting on the deal on May 18.

Berkowitz characterized the aQuantive buy as an "additive." "It puts us in places where we weren't before," he said.

The former Ask CEO, who has been with Microsoft for about a year, spoke plainly of Microsoft's aspirations in the digital advertising market.

"There's an opportunity to develop a new source of revenue for the company, which is advertising," Berkowitz told JP Morgan conference attendees. He added that Microsoft is "growing faster than the industry on the ad side," though not on the search side, of the market.

Berkowitz said that advertising, services and software are all platforms upon which Microsoft is hoping to capitalize. He said Microsoft is focused on building a set of common back-end platforms that will provide the infrastructure needed to support all three businesses. Those core platforms include adCenter, its digital-advertising platform; business intelligence; search; mail; portal;and points, he said.

(Berkowitz, like other Microsoft executives who've spoken about Microsoft's plans to merge aQuantive's tools and technologies with Microsoft's existing infrastructure, didn't discuss any specifics regarding how/when/if Microsoft intends to integrate aQuantive's Atlas platform with Microsoft's adCenter.)

"These business models will scale tremendously" when you get to a certain point, Berkowitz said, though he added that he wasn't sure "when that will be."

Berkowitz reiterated Microsoft's belief that it will have better luck gaining a foothold in the "convenience search" market, rather than the "destination search market." Convenience search is about searching from where you are -- inside of an application or a Web page, as contrasted with destination search, which involves going to a search-specific page to pose a query.

Microsoft's share of the desination search market is low and dropping, according to the latest Nielsen/NetRatings data released this week.

To improve its convenience search share, Microsoft is working to add Live Search boxes to the bottom of every MSN page, Berkowitz said. It also is focused on integrating Live Search into all of its Windows Live properties. Microsoft's online team also is looking for ways to better integrate Windows Live Spaces, the company's blogging tool, with other next-generation Live properties, he added.

Berkowitz noted that getting default search placement in operating systems and other Web sites doesn't provide as much of a search-share advantage as it used to.

"It's too easy for (customers) to switch" the defaults, Berkowitz said.

Instead, Microsoft is focusing on improving its search results, interface/experience, stickiness and "emotional attachment" to help build up its hare, Berkowitz said.

Update: Todd Bishop at the Seattle Post-Intelligencer has more Berkowitz sound bites.

Topics: Microsoft, Windows

About

Mary Jo Foley has covered the tech industry for 30 years for a variety of publications, including ZDNet, eWeek and Baseline. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008). She also is the cohost of the "Windows Weekly" podcast on the TWiT network. Got a tip? Se... Full Bio

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