"Microsoft will increase investments in MSN and its other online businesses to $1.6 billion next year as it escalates a battle with Google, its chief executive said Thursday." writes New York Times.
"Only two to three companies can really deliver the infrastructure that's required to keep pace with consumer demand and advertisers' needs." said Steve Ballmer in a speech to advertisers at Microsoft's headquarters. Those companies are, of course, Google, Yahoo and (maybe) Microsoft.
Ballmer also introduced Microsoft adCenter, Microsoft's answer to Google AdWords and Yahoo's Publisher Network, that brings a greater ability to target ads at specific user demographics.
"Our R&D spend just in our online MSN area has gone from a $500 million in our fiscal year '05, to a projected $1.1 billion in our fiscal year '07," Ballmer said. "We will invest as much in this online opportunity in R&D as any of the other big players in the market."
Bill Gates admitted that Google has done a "great job" in search and advertising, but said that Microsoft will show it was underestimated in these areas.
I wonder if doubling the budget is the key to obtain a better performance. Last year, Yahoo invested $547m in product development and Google invested only $484m in R&D, but Google had better financial results.
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