We feel sorry for Microsoft at times. Really we do. I know this is a little off topic, but just check out the kind of mindless pasty-faced whingeing they have to put up with when something goes wrong in their supply chain. Some poor brat isn’t gonna get his shitty limited edition Fable 2 figurine. Oh no, the sky’s falling.

This is an off-topic list of items we’ve been reading about (we tune in to TechMeme for this stuff):

Valleywag is cutting staff by 60 percent – fuckin’ hell, the (assumed) hard times are hitting everyone. We aren’t entirely sure where the 60% figure comes from since the article itself refers to 19 from the 133 being cut. Whatever. It sucks. Microsoft on the other hand are still looking to grow.

Steve Jobs is fine thank you – rumours of a heart attack for the Apple CEO sent its stock price into a dive. The SEC is investigating.

Dustin Moskovitz is leaving Facebook – don’t worry if you haven’t a fucking clue who he is – we didn’t either – but we should have. He’s a co-founder of Facebook (which you may have heard of <g>) and he’s leaving, along with Justin Rosenstein, to start their own company. There’s a long, boring, marketing bullshit guff email from him about it.

Note, we don’t normally post about other non-Microsoft news, unless, like these it is reasonably interesting.

We stumbled across this research paper by Rufus Pollock where he investigates the growth of web search and advertising, and along the way asks the question of whether Google is the next Microsoft.

Here’s the abstract:

Abstract – Is Google the next Microsoft?

Internet search (or perhaps more accurately `web-search’) has grown exponentially over the last decade at an even more rapid rate than the Internet itself. Search engine providers such as Google and Yahoo! have become household names, and the use of a search engine, like use of the Web, is now a part of everyday life. The rapid growth of online search and its growing centrality to the ecology of the Internet raise a variety of questions for economists to answer. Why is the search engine market so concentrated and will it evolve towards monopoly? What are the implications of this concentration for different ‘participants’ (consumers, search engines, advertisers)? Does the fact that search engines act as ‘information gatekeepers’, determining, in effect, what can be found on the web, mean that search deserves particularly close attention from policy-makers? This paper supplies empirical and theoretical material with which to examine many of these questions. In particular, we (a) show that the already large levels of concentration are likely to continue (b) identify the consequences, negative and positive, of this outcome (c) discuss the possible regulatory interventions that policy-makers could utilize to address these.

It’s a deliberately provocative title of course, and in our opinion doesn’t really answer the question, but is still worth the read (you can safely skim read it).

You can skip the first 12 pages of preamble and history and pick up the theme from then on. Rufus reviews market share (on page 13) and it is interesting to see that Microsoft has almost 8% Search market share in the US as of September last year (we were under the impression it was much less). And interestingly Yahoo almost matches Google in Hong Kong. Elsewhere Google is creaming everyone. Also interesting to see is that Australia is included in the data but Europe is not (we’d have thought Australia was too small to be relevant).

The paper has lots of formulas, statistical deviations and other impressive looking shit, but we largely tuned out to these (apologies to any academics reading this, and admittedly it is a research paper so there needs to be heaps of substantive content!)

Section 4 of the paper (pages 15-22) covers an attempt to model the Search Engine Market. This is probably boring for most, but interesting to us, especially in terms of the capital required to support the R&D behind the engines as well as their hosting.

The market structure section (pages 22 onwards) continues with assumptions to do with the correlation between utility and quality, and then further to revenue it generates.

By page 38 we were losing our will to live due to all the formulas, but it was worth sticking with. Section 7 (p38 onwards) asks the question whether there should be regulation on the search engine industry. This is actually an important question because Rufus posits that there is good evidence to suggest that a monopoly position in Search (which is current and likely to increase), if left unregulated will cause problems. Here’s his closing statement (p42):

When monopoly, or near monopoly, does obtain it was shown that there is no guarantee that the private interests of a search engine and the interests of society as whole will coincide – and good reasons to think otherwise. It is therefore likely that search, if left entirely unregulated, will develop in ways that are not always to the bene?t of society as a whole. For this reason it is important that policy-makers start now on the process of developing their strategy in relation to this key area of the knowledge economy. The power rapidly accumulating in the hands of a few major search providers is a great one. It behoves to ensure that it is used in a way that brings the greatest bene?t to society as a whole.

Download the Rufus Pollock paper here. Check out his blog here.

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Winston Churchill named his experiences with major depression as his ‘black dog‘.

In a totally unrelated event Steve Ballmer was at the Churchill Club (in Silicon Valley) recently talking about his ‘red dog’ – Project Red Dog that is. Red Dog is basically EC2 for Windows, and is going to be given airtime at PDC in October (here’s Mary-Jo’s notes from April).

He also woffled on about Mobile devices, the threat of Google and how Apple is unlikely to increase market share in the personal computer space because they won’t license their software to others.

Steve rightly worries about Linux in the server space (Especially web servers) with Windows only having 40% of the share.

He has both a red dog and black one on his hands we suggest.

Why is this site called Microsoft Confidential?

First and foremost, we’re called Microsoft Confidential because it is a cool name and the domain wasn’t taken.

But there’s a second and perhaps more interesting reason. We’ve kept our names confidential. That’s right, we’re not planning on revealing our real names anytime soon. Of course, if this blog gets really famous and we need to ‘fess up in order to collect all the cash that’s another matter.

So, in terms of the content being confidential – probably not, although we will happily report breaking news. If you’ve got a cool rumour (that you can substantiate) let us know.