So here’s the picture. Sales of the Microsoft Zune digital media player have tanked big time. Nobody cares about the thing, and the market for such gear is saturated. Apple took that segment over long ago, and even their sales are falling slightly, with more and more people moving on to the iPhone.

When it comes to search, Microsoft has revised and refreshed the interface to a fare-thee-well. Their share of the market goes up and down within a narrow range, pretty much in the same fashion as their stock price. At the end of the day, they can’t make it click with the masses, who long ago learned that Googling was the be all and end all of online searching.

Just recently, the splashy interface of Bing graced the airwaves in a new set of spots from Microsoft. The name itself is either an indicator of a brilliant result, or someone at Microsoft recalling the name Bing as in the late crooner Bing Crosby, and somehow believing it’ll miraculously gain traction in the 21st century.

Remember, that Google remains decidedly minimalist. Bing is gorged with flashy graphics that take attention away from the main search field. That’s supposed to be an improvement?

So Microsoft, in its infinite wisdom (or lack thereof) has been busy courting another failed search provider, Yahoo! Last year, Yahoo!’s board rejected Microsoft’s offer to buy the company outright for billions of dollars. That precipitated a internal revolt, and ultimately new leadership took over the venerable search company. So, desperate for a survival strategy, they decided to talk to Microsoft yet again. This time they reached a 10-year deal that will substitute Bing for Yahoo!’s search engine, but I hope without the trashy interface elements.

That’s only a part of the deal that includes Yahoo!’s advertising business as well. What’s really peculiar is that, at one time, Microsoft’s own search feature was powered by Yahoo!

In any case, all of these corporate shenanigans have to be approved by antitrust regulators. Watching the competition for search reduced from three to two major players may threaten to make this deal a non-starter. While the Bush administration would likely have allowed this deal to complete after a token review, the Obama administration is supposedly taking a far more rigid approach to matters of corporate deals of this magnitude, so all bets are off.

In the end, will any of these financial dealings mean anything to regular people? Probably not. Bing doesn’t deliver major advances to Internet searches, but works good enough I suppose. Grafting Bing into Yahoo!’s search screen probably won’t make a significant difference. In other words, at best you might expect the status quo.

When the original Microsoft/Yahoo! proposals were announced, I suggested that you can’t take two failing companies and somehow combine them to create a single success. Sure, the combined Microsoft and Yahoo! search share will probably be similar to what it is now. But Google has two thirds of the market, buttressed by AOL, which uses their search engine. Sure, it’s possible AOL, freed from its corporate ties with Time Warner, could sign a deal with Ya-Bing instead for search. A pact of that sort would put Google’s aggregate share a few points lower, but that isn’t going to make a significant impact on the industry either.

The real question here is whether Microsoft can compensate for its numerous flaws by buying companies and/or technology to fill the gaps. Over the years, Microsoft has acquired lots of companies. Sometimes the entire technology vanishes, at other times it appears in an inferior form under the Microsoft brand name.

In the end, I feel for Microsoft’s stockholders, who have endured its flatlined stock price for years, and watched the company taking the same tact as it did in the 80s and 90s, and that is to perpetuate the myth of an innovator, while at the same time struggling hard to deliver 80% perfect imitations of someone else’s product or services. I have to wonder how long it’ll take for wider numbers of customers to get off this aging freight train and embrace something that really works without all the downsides.

In any case, I doubt that Google’s executives are losing sleep over Ya-Bing. They have better fish to fry, one of which is their forthcoming Chrome operating system. I don’t expect that initiative to take the world by storm, but it has the potential to provide serious competition to Windows in the netbook space. Microsoft is already dumping Windows at sharply reduced prices to take over the market of those cheap, disposable note-book computers. How much are they willing to sacrifice with no guarantee of future returns?

Then again, the same can be said for Microsoft’s failed consumer electronics efforts. In any case, there’s no evidence whatever that their forthcoming tie-up with Yahoo! is going to turn around either company in any meaningful way.

This article was posted on Thursday, July 30th, 2009 at 6:00 PM and is filed under News and tagged with: advertising, Aol, Bing, Bush Administration, Chrome, Chrome operating system, digital media player, Google, Iphone, Microsoft, Microsoft Windows, Obama administration, Operating System, search engine, Search Feature, Search Screen, Time Warner, Yahoo.