It has been assumed for some time that Microsoft’s (MSFT) search business would remain a distant third in the race for search share. But, new numbers from comScore indicate that Redmond is the only operator gaining momentum in the desktop search market.
In June, Microsoft’s search share rose almost 3% from the previous month from 10.3% to 13.2%. Both Google (GOOG) and Yahoo! (YHOO) lost share. The No. 2 search company watched its piece of the action fall from 26.4% to 25.1%. Google still has a commanding lead at 49.5%.
If Yahoo! continues to lose ground to Microsoft, the impact on the smaller company’s revenue could be severe. Yahoo! has counted on its new Panama search-based advertising system to help pull the company, and its stock, out of the mud. If the number of search queries its delivers begins to fall, so will the associated revenue.
Search also brings people to the Yahoo! portal, where they do a number of other things from check e-mail to watch movie trailers. Having customers in such a key category migrate to Microsoft could also affect the display advertising Yahoo! sells on other sections of its site.
Microsoft, on the other hand, has been embarrased by its online efforts. The unit of the company that covers its internet business has lost money for several years. Based on the company’s latest 10-Q, online services lost $205 million on $622 million in revenue.
The improvement of Microsoft could extend from the adoption of Vista. The default search engine on the Internet Explorer part of the OS is Microsoft Live Search.
If Microsoft Vista helps push its search operation, Yahoo! has another problem.
Douglas A. McIntyre can be reached at [email protected].
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