AllThingsD » Satya Nadella

Mr. Ballmer's Wild Ride! Microsoft Execs Will Address Wall Street Suits Today.

Kara Swisher — Wed, 14 Sep 2011 14:17:32 +0000

Later this morning, I will scramble the private ATD jet to make my way down south to Anaheim for Microsoft’s annual Financial Analyst Meeting.

That’s right: A bunch of Wall Street types, asking not very challenging questions of top Microsoft execs in a ballroom perilously close to Disneyland.

Taking place this afternoon, starting at 1 pm PT, the confab will include appearances by its top execs, including CEO Steve Ballmer, CFO Peter Klein, COO Kevin Turner, Online Services President Qi Lu and Satya Nadella, who helms the Servers & Tools division of the software giant.

There will be lots to discuss at the confab, including: What is up with Microsoft’s search and advertising partnership now that Yahoo CEO Carol Bartz — who struck the deal — was ousted, and whether it is involved in a possible bid for the Silicon Valley Internet giant again; an update on the Windows Phone business; prospects for Windows 8, which the company just highlighted at its huge developers conference there; questions about its nascent tablet business; comments on Google’s recent moves, including its purchase of Motorola Mobility; and, of course, how Ballmer sees his own tenure at Microsoft, given its longtime lackluster stock performance (paging investor David Einhorn!).

In other words: Mr. Ballmer’s Wild Wall Street Ride!

Look for my live blog from the event later today.

Cloudy With a Chance of Transformation: New Microsoft Server and Tools Head Satya Nadella Speaks!

Kara Swisher — Thu, 10 Feb 2011 16:40:49 +0000

After he was appointed the new president of Microsoft’s important Server and Tools Division from his top engineering post at its come-from-behind Bing search unit, Satya Nadella now finds himself a leader of a business that also needs to keep catching up.

In a wide-ranging interview with BoomTown yesterday, Nadella talked about both his four-year stint at Bing and how he looked forward to the challenges of his new job.

Nadella got the nod, he said, after CEO Steve Ballmer went through a process of what was Microsoft’s “position in this business and a certain set [of ideas] about who should come in next.”

Interestingly, almost 20 years earlier, after working at Sun Microsystems, Nadella had started in the same area of Microsoft he will now lead.

Quoting the famous T.S. Eliot lines–”We shall not cease from exploration, and the end of all our exploring will be to arrive where we started and know the place for the first time”–Nadella was an evangelist for Windows NT.

Eventually, his career brought him to the search arena, most recently to the most aggressive and expensive effort yet by Microsoft with Bing to try to eat into the massive and lucrative lead of Google.

“Those were fairly dark days for us,” noted Nadella, pointing out that any market share gains by Microsoft seemed impossible.

But, according to numerous surveys, it has been only uphill for Bing, especially after it started to really spend and also inked its search and online advertising deal with Yahoo, a partnership that Nadella was a key player in striking.

“We have, depending on which one you look at, grown five share points,” he said. “But behind that, I am most proud of launching a brand and a product that is delivering.”

Of the recent controversy in which Google accused Bing of lifting its results, Nadella borrows another quote, this time from Gandhi.

“‘First they ignore you, then they ridicule you, then they fight you, then you win,’” he said, noting Bing has always said it uses toolbar and other public user data. “The real debate is whether we are better.”

In any case, as Nadella sees it, the Bing experience has helped him prepare for his new job, noting he was in charge of building a 200,000-machine grid to serve the various online services at Microsoft.

“I have been CIO of a cloud platform where there are only two of that size,” he said. “So, I know what it is like to be a customer of those services.”

His hope for his next job, he said, is to make it the next-generation cloud platform, while also serving the needs of current customers with its current product.

‘We have a product and brand that are really foundational, but there is a threshold to it,” Nadella said. “We have to serve the needs of our existing customers, while also moving them to the cloud and building a next-generation offering.”

At Bing, he said, “every day is upside, since we came from so far behind, whereas in server and tools, we are the leader.”

Big competitors are different and the same too, when it comes to the cloud.

“Amazon has done a good job, but not in the same game as us,” said Nadella, ticking off Google, Oracle and VMware as rivals in different ways too. “It’s a nascent marketplace.”

Acquisitions, he said, will also be important. “We are always looking at what opportunities there are,” he said.

His overall view?

“I think that the challenge is how to operate in a space where we have a $15-plus-billion-dollar business and we know the paradigm is shifting and managing that shift where we are the disruptors and also the leaders at the same time.”

In other words, between a rock and a hard place, a place Nadella knows well from Bing.

“We can’t be stuck in current paradigm,” he said. “And we can’t shoot too far ahead of ourselves either.”

To get a good sense of his style as he moves from consumers to enterprise, here’s a video interview I did with Nadella back in mid-2009, just after the Microsoft search deal, and another I did this past summer at one of his regular search updates for the media.

Ripples in Microsoft's Cloud as Amitabh Srivastava Leaves

Arik Hesseldahl — Wed, 09 Feb 2011 18:51:01 +0000

The ripple effects at Microsoft in the wake of the pending departure of Microsoft Server and Tools head Bob Muglia continued today. First Satya Nadella, as reported by BoomTown’s Kara Swisher, was promoted from head of the Bing search effort to the helm of STB.

Second, Amitabh Srivastava, head of Microsoft’s Azure cloud platform business, announced that he’s leaving the company. Srivastava, who joined Microsoft in 1997, was widely considered to be a possible successor to Muglia, but lost out to Nadella.

One of the few ever to be named a Distinguished Engineer at Microsoft–an honor now known as Technical Fellow–he was tapped, along with Brian Valentine, by then Windows chief Jim Allchin to take over the Windows engineering efforts in 2003 at a time when the operating system was being widely derided as plagued with security and other problems. Srivastava had his team draw up a map depicting how all the various pieces of the Windows source fit together. It was eight feet tall, 11 feet wide, and was described in a 2005 Wall Street Journal story as looking like a “haphazard train map with hundreds of tracks crisscrossing each other.”

Srivastava and Valentine are credited with the 2004 proposal to streamline how all those pieces functioned, a plan that would allow various features to be added or removed without disrupting the whole operating system. The idea was a partial response to the looming threat from Google, which that year had launched Gmail. The problem was their plan required throwing out a lot of legacy source code that had been in Windows for years, and starting fresh.

Srivastava’s changes included automating testing on features that had for years been done by hand. Code with too many bugs were sent to “code jail.” Over time, code flowing into what was to become Windows Vista improved.

We all know what happened with Vista–it too was widely panned. But the engineering processes put in place had a lot to do with the many improvements that appeared in Windows 7.

Srivastava then moved on to a new Microsoft project in 2006, code named Red Dog, now known as Azure, which launched in 2008. From this he pivoted to running the server and cloud division, overseeing Microsoft’s relationships with enterprise and data center customers.

People I’ve been talking to who tend to know a lot about the internal politics at Microsoft say this isn’t the last of the changes. Now that Muglia’s replacement has been announced, Nadella is going to want to name key members for his team, which means that those not tapped will probably choose to leave as well. The management shake-up at Microsoft is not over yet.

Srivastava has a Ph.D. in computer science from Penn State, and was invited to deliver the commencement address at the school’s College of Engineering in 2008, which is in the video below. Key quote: “In the end, it’s all about execution.”

Bing Overlord Satya Nadella Promoted to President of Server and Tools at Microsoft

Kara Swisher — Wed, 09 Feb 2011 16:24:56 +0000

Satya Nadella (pictured here), the Microsoft exec who has been in charge of its Bing search effort, has been promoted to president of its Server and Tools Business.

He replaces Bob Muglia, a longtime exec who was ousted recently in CEO Steve Ballmer’s effort to shake things up at the company and stress the company’s technical expertise.

A 19-year Microsoft veteran, Nadella has most recently led the engineering efforts as an SVP in the Online Services Division, which includes Bing, the MSN portal and online advertising efforts.

“Nadella brings deep engineering and online services knowledge to $15 billion business,” said a Microsoft press release just issued.

In related news, Amitabh Srivastava, the SVP in the Server and Cloud Division who runs its Windows Azure cloud and Windows Server efforts, will leave the company. He was considered a leading internal candidate for the top job in the Server and Tools Business that Nadella got.

Both internal and external execs were eyed for the job, but it’s likely Nadella got it because of his early career in the server arena at Microsoft, as well as his experience running one of the biggest and most complex cloud efforts on the Web at Bing.

Indeed, though his efforts were costly and perhaps even futile, Nadella has had some success in innovating search for Microsoft with Bing, including delivering a well-regarded and quickly evolving product and improving market share.

He also was key in striking Microsoft’s advertising and search partnership with Yahoo.

He will have his hands full running the Server and Tools Business, which is critical to the company’s future and its cloud computing aspirations.

Microsoft said Nadella will be in charge of strategy, engineering, marketing and product development for Microsoft’s server, tools and cloud platform efforts.

“This includes developing the technology road map and vision to drive adoption of the company’s products, tools and services, and delivering the company’s next generation of cloud solutions for business customers,” Microsoft said.

Delivering such cloudtastic results will be a tall order, of course.

According to a recent post by New Enterprise’s Arik Hesseldahl:

“The Server and Tools Business is at $14.9 billion in annual revenue (fiscal 2010) Microsoft’s third largest division behind the Windows/Windows Live Division and and the Microsoft Business Division, both of which reported revenues north of $18 billion in 2010. On Muglia’s watch sales at STB grew more than 12 percent, and its operating margins went from 31 percent in 2008 to 37 percent in 2010. However, STB is nowhere near as profitable as the other two divisions: Business Division reported operating margins of 63 percent in 2010 while Windows saw 70 percent. Ballmer says in his memo that he’s eager to see stronger growth from STB.”

Here is the official press release, but more to come:

Microsoft Appoints Satya Nadella as President of Server and Tools Business

Nadella brings deep engineering and online services knowledge to $15 billion business.

REDMOND, Wash.–Feb. 9, 2011–Microsoft Corp. today promoted Senior Vice President Satya Nadella to president of Microsoft’s Server and Tools Business.

“We’re already making strong traction across our Server and Tools Business by embracing cloud services,” said Microsoft Chief Executive Officer Steve Ballmer. “Satya has deep experience in both our server business and online services, which will help accelerate our momentum while setting the course to deliver the cloud computing scenarios of the future.”

As president of the Server and Tools Business, Nadella will oversee the overall strategy, engineering, marketing and product development for Microsoft’s server, tools and cloud platform efforts. This includes developing the technology road map and vision to drive adoption of the company’s products, tools and services, and delivering the company’s next generation of cloud solutions for business customers.

“Our server and tools business is one of the fastest growing and most profitable businesses at Microsoft,” Nadella said. “I see great opportunity for Microsoft to grow the business and also lead the way in the transformation of enterprise IT. I’m excited to work with such a high-caliber team to chart the path for our continued success today and growth in the future.”

Nadella, 43, has been with the company for 19 years and most recently led the engineering efforts in the Online Services Division, which includes overseeing the technical strategy for one of the largest cloud infrastructures in the world, spanning the company’s Search, Portal and Advertising platforms.

Nadella joined the Online Services Division in April 2007, and was instrumental in leading the technical efforts for several critical milestones such as the launch of Bing, new releases of MSN, and the integration of Yahoo! across Bing and adCenter. Under his leadership, the Online Services Division has also built a strong engineering organization by attracting some of the most experienced technical minds from within Microsoft and across the industry.

Before joining the Online Services Division, Nadella led Microsoft Business Solutions, which focuses on the Microsoft Dynamics line of enterprise resource planning and customer relationship management products, and spent several years leading engineering efforts in Microsoft’s Server Group.

As announced in January 2011, Bob Muglia, previously president of the Server and Tools Business, will leave the company this summer. Muglia will work with Nadella as he transitions to his new role leading the Server and Tools Business.

Microsoft and Some Big Thinking Heads at Farsight 2011: "Beyond the Search Box"

Kara Swisher — Tue, 01 Feb 2011 16:15:47 +0000

Oh dear, BoomTown is still jetlagged from my recent trip to China and now Microsoft Bing is offering up a head-requiring event later this morning in San Francisco to explore the future of search.

There better be donuts.

A lot and with sprinkles, since speakers include the lugubrious investor and hedge fund philosophizer Peter Thiel and skunk-at-a-Web-garden-party author Malcolm Gladwell.

Here’s Microsoft Bing exec Satya Nadella’s blog post on the event, as well as one pre-video of what to expect from the sessions.

In it, Gladwell, noting the richness in search has yet to cure cancer, has a good point, which should be interesting with the backdrop of the protests going on in Egypt and elsewhere.

As in: If governments can block search, does it really matter?

I will be posting if someone comes up with a good answer to that one.

Bing and Big Think present Farsight 2011: “Beyond the Search Box” Event and Webcast

In the past ten years, search has transformed the way we experience the web even as the web itself has changed. New user interfaces, mobile devices, and interactive services are evolving beyond text pages intertwining the ‘web’ into all aspects of our lives and thus we expect to be able to do more online with less friction. Along with the innovation has come an explosion of information and services that are compounding at an exponential rate. Trying to get things done on the web is becoming more complex and fragmented every day. In short, unlike many consumer products, the problems facing the search industry are getting harder–not easier.

In order for us to truly realize the science-fiction dream of so many of us kids, of that ubiquitous intelligent agent, we want to elevate the discussion in search beyond next quarter’s technology. To begin to do that Bing has teamed with Big Think to bring the best minds from inside and outside the industry together for a series of spirited conversations, panels, and demos examining the “Future of Search.”

The group we’ve assembled includes Hedge Fund Manager and PayPal co-founder Peter Thiel, Recorded Future co-founder and CEO Chris Ahlberg, journalist entrepreneur Esther Dyson, contrarian journalist and “Tipping Point” author Malcolm Gladwell among others.

In addition, Farsight 2011 will include a search industry roundtable featuring Matt Cutts from Google, Rich Skrenta from Blekko and our very own Harry Shum from Bing. The panel and much of the day will be moderated by the entrepreneur and technologist, Vivek Wadhwa.

You are invited to take part in the discussion, by submitting your questions for the experts in advance at BigThink.com. Then return on February 1 to watch the conference streaming LIVE from 10:00am to 2:00pm PST on Big Think.com.

I encourage you to tune and be a part of the conversation to help all of us realize the potential that this most powerful technology can bring.

Satya Nadella–Senior Vice President, Online Services

Binging in the Holidays (With Donuts!)

Ina Fried — Wed, 15 Dec 2010 17:42:33 +0000

Microsoft is having a little Bing gathering in San Francisco. I’m told there will be some mobile stuff, plus I’m still having withdrawal symptoms after seven years on the Redmond beat, so I’ll be providing live coverage starting at about 10 am PT.

We’ll also see what they have to say about the Yahoo search partnership and its efforts to catch up with Google (and trip them up with antitrust headaches).

Liveblog

Okay. I’m onsite and nearly caffeinated. Yes, there are donuts, but Mobilized is going for the savory option.

10:03 am: Still waiting for things to get started here.

10:04 am: Microsoft search engineering head Satya Nadella comes out. “Okay, let’s get this thing underway.”

10:06 am: First up, some momentum stuff. Share is at 11.8 percent per comScore numbers released yesterday, up another 0.2 percent from October. Overall up 48 percent since launch. “We’re very, very happy with that growth.” Now over 90 million users, but the big deal, he says, is more heavy searchers. “We never had the fans of Bing and the heavy users,” Nadella says.

10:08 am: Nadella says Bing is still getting a larger percentage of 18- to 24-year-olds than its share of searchers as a whole.

10:09 am: “These are footholds that we have in the marketplace,” Nadella says.

10:11 am: Continued focus on specialized verticals (like travel, music, health, image search etc). Overall, such searches account for five percent of all queries, but specialized search makes up of 10 percent of Bing’s searches.

10:12 am: Partnerships: Yahoo is obviously the big one, but Nadella shows slide with Facebook, Twitter, Verizon., BlackBerry, Apple, Android, Foursquare and other logos.

There ave been 5.5 million downloads of the iPhone app.

Nadella says the toolbar deals are also important: They just give us a shot at acquiring the users. They have another one coming with Conduit. Also, they are now at least an option on iPhone and Firefox.

10:16 am: Nadella says the engineering team is focused on three areas, beyond the “arms race” of overall search quality–increasing the visual organization, task-centered nature and social elements of search.

“We’re neck and neck in terms of search quality and we are able to maintain it,” Nadella says.

10:18 am: Lots of talk about the ins and outs of search tech. Nadella says Microsoft has moved from a “neural net” approach to “boosted decision trees.” (No idea what that means.)

10:22 am: Effort to make search more social is important, but just beginning. “This is a journey we are at the very beginnings of,” Nadella says, but says social will change search in terms of how results are discovered, formulated and answered.

10:24 am: Nadella is talking about the importance of visual highlighting to call out various results as well as boosting interactivity, such as including forms within results so users can take action.

Still waiting for any new stuff, but we’re told it’s coming.

Nadella says the company has broken down a list of the tasks people are trying to do when they are trying to do more than just navigate to a particular site.

“We have a pretty granular understanding just looking at the query stream of what people are trying to get done.”

Microsoft has broken it down to some 150 categories, but here are some of the top ones: 4.6 percent of searches are music related, 1.8 percent clothing and shoes, 1.6 percent consumer electronics, 1.1 recipes, 1.3 percent home furnishings.

10:29 am: On to some new stuff.

New image search launching today, but first Microsoft is talking about visual search for things like finding movies and giving direct answers for some new types of queries.

10:31 am: Microsoft is talking about any sort of non-search result as “answers.”

In one case, an “answer” for the query “let’s make a deal” would be video episodes of the game show.

But Microsoft says that automatically putting it at the top is not necessarily best. What the company says it should do instead is put it below the first two results, such as the show’s homepage, which get more clicks than the video.

10:35 am: Also when a user searches flights from Denver to Las Vegas in June, Microsoft pre-populates the fields in a flight search with a guess at the dates, in this case the first weekend in June.

10:38 am: New image search represents first major changes in a year. Biggest shift is white space is gone with just a ton of tiles of images, with some categories at the top.

For example, search “Casablanca” and you get an option for the city in Morocco, another for the movie, a third for the style of wedding dress and another for the Casablanca Lily flower.

10:40 am: On to shopping. Quadrupled the number of products in its database.

10:43 am: Bing is adding a new focus on places as “destinations” with all the potential content from booking a flight or hotel to maps and attractions.

Which is nice, because I’m ready to go on a vacation right about now.

They use weather data to show times to go to and times to avoid a particular place.

10:45 am: Microsoft is beefing up event listings with partnership from FanSnap and other partners. You get ticket info, diagram of stadium, etc.

10:50 am: Back to social. Nadella says search can change by using one’s social graph to influence search results.

First example, you will start to see when your Facebook friends “Like” a page that is in search results.

For now, such results will only come up fairly infrequently, but Nadella says it will be a big deal when you do see pages that your friends have liked.

Search allows the data your friends share on Facebook to come to you when you actually want the information.

“In a way you are taking your friends with you,” says Microsoft’s Paul Yiu.

An example is when you are shopping for a product or going to visit a place–that’s a time when you really want to know what your friends think.

(Seems pretty cool, but wondering just how infrequently this will show up.)

10:57 am: Another example Yiu gives is a search one might do at 3 am for what will make your baby stop crying. There are lots of results, but one that your friend likes might be worth trying first.

11:00 am: Bing is also using one’s Facebook social circle to rank results in people search–i.e., if you have a friend in common, it will rank that “John Doe” higher than one you don’t know.

11:01 am: Nadella is back to talk about local and maps and how that integrates with mobile. Behind him Blaise Aguera y Arcas is pulling out several phones to do a demo. (And they look like iPhones.)

11:03 am: Aguera y Arcas takes the stage to show some changes coming to maps, first on the desktop. He notes the recent shift away from putting its most powerful map features on a Silverlight-powered site. Now it is moving that all to an HTML5-based site that needs no plug-ins.

11:07 am: Bing is bringing the “tasks” concept to searches within maps. A search for a restaurant now brings up not just a map, but more info on the eatery and also the ability to make reservations via OpenTable.

11:09 am: Aguera y Arcas switches to the iPhone. Shows how people can add their own panoramas to maps using a cellphone.

11:13 am: iPhone demo over 3G is going really slow. Aguera y Arcas asks how many of the reporters in the room are using 3G.

11:15 am: Although its going painfully slow, looks like Bing app starts to recognize a restaurant search and pops up options like types of cuisine and price. The goal is to save keystrokes.

Other options are things like get a map, make a reservation, menus, etc.

Still R-E-A-L-L-Y S-L-O-W.

“This bandwidth situation is really going to suck for what I have to demo next.”

He switches to a first-person StreetSide view, but all we see are dots.

“This is so sad,” Aguera y Arcas says, lamenting that we aren’t able to see all the cool stuff. There does seem to be some new StreetSide view stuff on the iPhone app that could be neat, assuming it runs faster on the street than inside this demo room.

11:23 am: We’ve reached a new low. “Close your eyes and imagine….” Aguera y Arcas says, and then describes what the app would do if we could see it.

11:23 am: And they have switched to Wi-Fi. “This is so exciting,” Aguera y Arcas says. Now he’s going back to StreetSide. “That’s so much nicer.”

As for directions, Bing now has bus directions with schedule info in addition to driving and walking directions. “It’s about time,” he says. “I’ve been waiting for this one myself.”

Another feature reminds you to do something when you reach a certain place, like call someone or check-in to FourSquare or Facebook.

11:29 am: Aguera says we are in Search 2.0–where you do more than just search and get results.

Image search is an example. Shows the coming ability to search for something by using a camera to start a search. Basically you can shoot a picture of a page and use any of the terms there to start searching (It uses character recognition in the background).

Questions and Answers

11:32 am: How big a deal is Google Instant?

“We are absolutely studying Google Instant,” Nadella says. Says they could match it. It’s a question of whether it makes task completion easier. “Is it a value or a distraction?” Doing studies and so far Microsoft’s research says it is mixed at best.

“It’s not a game changer. It’s a nice feature at best.”

He hedges a bit on whether it is something Microsoft needs to match.

11:39 am: Mobile features were demoed on iPhone. So when will they come to Windows Phone 7 and other platforms?

Nadella says they now have software for most major phone operating systems, including Android.

“The different devices have different schedules,” he says.

11:42 am: And we’re out of here….Thanks for tuning in.

Exclusive: Exec Changes at MSN–Jorgensen to Mobile, Cahall to MSN

Kara Swisher — Tue, 17 Aug 2010 21:06:29 +0000

Here is a memo just put out by Microsoft SVP Satya Nadella about big management changes at MSN, obtained by BoomTown.

Current MSN head Erik Jorgensen will move over full-time to focus on mobile efforts, and his replacement will be Ted Cahall, who most recently headed tech efforts at AOL (AOL).

In another move, Marc Davis has joined Microsoft as Partner Architect to the Online Services Division, working for Nadella on strategy. He comes from a stint as chief scientist at Invention Arts and before that worked at the MIT Media Lab, Interval Research, UC Berkeley, and Yahoo (YHOO).

But why listen to BoomTown yammer on–here’s the internal memo from Microsoft (MSFT):

From: Satya Nadella
Sent: Tuesday, August 17, 2010 1:26 PM
To: XXX
Cc: XXX
Subject: OSD R&D Leadership Announcement

I wanted to share some changes we are making in OSD R&D team to better align and focus our leadership on key priorities across MSN and Mobile.

As you know, mobile is a top priority for OSD. Over the past year, it’s become increasingly clear that driving innovation in mobile presents an opportunity to rethink search. Specifically, we have an opportunity to build mobile search into an indispensible service for completing tasks and making decisions by weaving in geo-spatial & personal context.

To capitalize on the mobile opportunity we need to deliver innovation that consumers love and is competitively differentiated. To this end, I have asked Erik Jorgensen to focus fully on this opportunity. Erik will continue to drive our product strategy and execution across mobile devices, as well as building the cutting-edge location & mapping services.

Erik’s leadership across the MSN and mobile businesses over the past few years has been invaluable to the team. Asking him to double-down and focus on mobile and mapping is the right thing for our business, and I want to thank him for his leadership in the past, and for all the contributions he will make driving our mobile and location-based services efforts forward.

We have built strong momentum on MSN, and fully expect this to continue. MSN is a critical part of our online strategy, creating personally and socially relevant content experiences that drive massive amounts of traffic to Bing while maintaining a successful display advertising business. Over the past year the team has done great work–releasing a new homepage with a new design and feature set that is resonating with customers. MSN has also delivered new video experiences across Bing and MSN, Content Studio, a rich social platform, and UCP migration in all international markets. In addition, the team has driven innovative content partnerships in 46 countries, which give MSN a differentiated set of services to offer to our customers and keep our audience growing and engaged.

I am very excited to announce that Ted Cahall will join Microsoft as Corporate Vice President, MSN, reporting to me. It’s critically important to keep our MSN momentum going, and getting Ted is a big win for us. Ted brings a strong command of technical, operational and business details from his years of experience in the online world, including senior leadership roles at AOL, United Online, Bank of America and CNET Networks. Ted will move out here to Seattle, and will start on September 7th. Erik will be working closely with Ted and the MSN leadership team over the coming month to make this a smooth transition.

The MSN leadership team of Scott Moore, Geoff Sutton, John Skovron, Anil Mehra and Erik Zigman, will report to Ted and continue the great work and momentum we have seen in MSN over the past year.

This is exciting news for OSD. With our increasing investments in mobile and location-based services and our great momentum with MSN, putting such strong leaders against our biggest challenges will enable deeper focus on the things that will drive our business forward.

He Thinks Bing Can: Microsoft Search Head Satya Nadella a Year Later

Kara Swisher — Wed, 14 Jul 2010 15:00:08 +0000

Yesterday, Microsoft Online Service SVP Satya Nadella–also known as the search-dude-in-chief–presided over the Search Summit, to update the media on the progress of the Bing service.

Since it launched Bing a year ago, the software giant has been aggressively–and with some interesting innovations–trying to make a dent in the market dominance of Google (GOOG), which has a share of upwards of 70 percent.

Bing has just broken into the double digits, which is impressive, but it’s still fighting an uphill battle. It’s essentially the little search engine that could.

Here’s a video interview I did with Nadella at the Microsoft office in San Francisco, where we talk about a lot of stuff, including Bing’s progress over the last year and when it might make some money.

I also added my interview with him from right after Microsoft struck its search partnership deal with Yahoo (YHOO) last August, just below it.

Speaking of money shot, check out the lovely donuts and cream puffs:

[ See post to watch video ]

Liveblogging Microsoft Bing's Search Summit 2010: There Will Be Donuts (and Also Cream Puffs!)

Kara Swisher — Tue, 13 Jul 2010 17:41:01 +0000

After BoomTown complained at December’s search summit held by Bing about the lack of the finest pastry known to man–namely, donuts!–minions were dispatched by top Microsoft geek general Satya Nadella to fix the dire situation.

And, happily, at Search Summit 2010, there on the lovely snack table were a small pile of them–which looked like Krispy Kreme to me.

There were lacking the key sprinkles feature, but carb crisis averted!

Speaking of features, top Bing execs were on hand in San Francisco to show off all the work they have been doing over the last year in the software giant’s efforts to topple mean old Google (GOOG) via an innovative offering.

Even the plain-speaking Nadella acknowledged in his opening it was still a bit of a children’s crusade, since Bing had barely broken into double digits in search market share and Google was hovering around 70 percent.

But the most recent report released this week by comScore (SCOR) showed continued promise, so Microsoft (MSFT) presses on its long and pricey road!

Here’s my liveblog of this morning’s event at the software giant’s San Francisco office:

10 am PT: Nadella opened with the donuts news. Nice move.

Then, it was onto some promising stats of growth, which have surely been promising, despite the high price tag (Microsoft’s online division lost $700 million in the last quarter, to give you an idea of the sticker shock).

Still, as search exec Brian MacDonald said, as he was presenting all the many new features–such as cards–added over the last year: “We’re in it to win it.”

At the end of his presentation, in a slide title “Future,” he said reporters could not take pictures or video. Sure, hop us up on sugar and then tell us something interesting and bar us from taking snaps!

But MacDonald clicked through the images so fast, it was hard to tell what Bing would be up to. Essentially, it looks like a more blocky, image-heavy design, with more differing fonts and contextual info.

10:40 am PT: A smart search geek Harry Shum was then on with a lecture about search intent and all kinds of insider tweakery that made me confused, since I do not understand terms such as “page-level dialog.” There is also apparently “session-level dialog.”

Harry knows what it all means, which is pretty much all that counts.

My take: It has to do with some sort of digital conversation Bing search dudes are having with the users that users have no idea is actually going on.

Simply put: They’re watching you.

11 am PT: Next search guy talked about search intent and such.

That means adding features such as a link to search history or instant weather on the opening page. It’s the little touches that count.

In fact, they do, as Bing tries to differentiate itself from what Google offers, via a series of neat tricks and clever design.

That includes, for example, easy access to lyrics and song classifiers, when searching in music.

Lady Gaga’s “Poker Face” was used as an example, since Lady Gaga seems to be the go-to gal on seeming cool these days.

(But is it time to check Bing search trends to see if she is peaked?)

11:19 am: Next, top Online Services Division exec Erik Jorgensen came on to discuss mobile and mapping. He compared himself with “Edward Scissorhands” when talking about how hard it is to have a good experience on a small device.

“Type less, do more,” is the internal mantra at Bing, he said. Coincidentally, my mantra is type more, do less.

Jorgensen showed off Bing mobile stats: 23 million users, 160 percent growth and four million downloads of its iPhone app. Yes, it has come to this–Microsoft using Apple (AAPL) to tout its success.

Then it was onto mapping, which is a pretty good arena for Bing. Stats: 41 percent growth in U.S. unique users, 43 percent rise in searches using enhanced maps, a huge boost in map apps.

11:29 am: Bing Maps guru Blaise Aguera y Arcas–who has the single most sexy name in all of geekdom–said the focus is now on social location.

As in Foursquare!

In fact, he showed off a map in which Foursquare check-ins pour in and pop up in a bit of a freaky way, as in: You can stalk in real-time.

Then it was onto cool mapping eye-candy, which I always fall for since the whole zoom-in-zoom-out thing is mesmerizing. Aguera y Arcas showed off clickable geographic names and embedded maps within maps from, in this case, a zoo or a museum.

11:50 am: Q&A Time!

The first question is about gaming. It’s hot said Nadella, and Bing wants to provide discovery and search more than games themselves.

I asked a question about the status of the Yahoo (YHOO) search partnership deal, which is in process. It is a very complex process, in fact.

And, though they were supposed to be in tandem, Nadella said that algorithm would move faster than advertising technology handover.

“If there were a drop of of advertisers [due to the new deal], that would be problematic,” he said.

Yes, which segued into the next obvious topic: When would Bing make some dough?

Thus. I asked about the high costs of competing in the search space, which Nadella said would continue, including distribution deals and in the aggressive marketing of Bing.

“For sure, we had to ante up,” he said. “But the product has to be able to stand on its own…ultimately, the product has to carry the day.”

More questions about distribution, social search, churn, product differentiation and whether Bing is growing from a more passive user to building a “fan base.”

BoomTown brainstorm: If they handed out delicious donuts with each search, I’d leave Google in a New York minute.

But, like a skunk at a garden party, I asked another question about when Bing is going to break even.

Nadella was too smart to answer this digital hot potato.

“It’s a big market where money can we made, and we are making progress,” he said, saying I should ask his bosses about specifics.

I shall!

In this vein, someone then asked a question about whether Bing would ever become a verb as Google has become.

Shum joked that in the future six letters would be too many for people to say, so things were looking up for four-letter search brands!

More questions included whether Google was tweaked by Bing yet (yep!), and whether Bing should try to win in an international market to show some muscle (U.S. is still top focus).

Finally, it was “time to deploy the cream puffs,” said a Microsoft PR honcho.

Long past time, I’d say.

Microsoft to Newspaper Publishers: Seriously. We're Not Bailing You Out.

Peter Kafka — Wed, 02 Dec 2009 22:56:27 +0000

Just in case newspaper publishers are still fantasizing about cashing big Bill Gates checks in exchange for bailing on Google, Microsoft wants to be clear: Don’t count on us.

Yes, there could be some kind of deal between Microsoft (MSFT) and some publishers. And yes, that might involve some kind of payment. But the company is signaling, loud and clear, that it’s not going to pay the huge sums necessary to fund a real Google (GOOG) boycott.

That’s what All Things Digital reported last week. And that’s what the Associated Press echoed in a subsequent story this week. And that’s what Microsoft said today, more or less. Except this time it was on the record.

Here’s Satya Nadella, who heads up R&D for Microsoft’s Online Services Division–i.e., Bing–at a San Francisco press conference, per Kara Swisher’s account:

Then comes a question about premium, or “non-Google,” content. Nadella avoids the question, and instead focuses on “scaffolding” the data.

“We’re not as focused on getting exclusive content,” he says flatly. Uh-oh, publishers! As I reported, Microsoft is not forking over the dough.

…Nadella gets another question about paying to de-index Google.

“There is no real intent here that is focused on getting a whole bunch of content that is de-indexed from Google,” he said.

Nadella went on to say that Microsoft is happy to feature different kinds of content, as a way of differentiating itself from Google. Like the work it already does with the Mayo Clinic on health searches: Plug in “swine flu” and you’ll see information from the clinic prominently featured, via a licensing deal.

But that’s a far cry from handing over a sack of cash in exchange for abandoning Google altogether.

Obligatory “to be sure” graf: Say Microsoft was interested in handing over sacks of cash to publishers like News Corp. (NWS), which owns The Wall Street Journal (as well as this site). You wouldn’t hear Redmond bellowing that out loud, anyway.

That’s certainly what the News Corp. folks hope. Or alternately, they’re hoping that all this talk of a Microsoft-publisher alliance spooks Google. But, as the tough guys like to say, hope is not a plan.

Liveblogging Bing Demo: No Donuts, Unlikely to Pay for De-Indexing Google, but Cool New Maps

Kara Swisher — Wed, 02 Dec 2009 18:10:33 +0000

Earlier today, BoomTown posted about a visit this morning from a passel of top Microsoft search execs rolling into downtown San Francisco to show off even more new features for Bing.

I am here, but the donuts are not. Um, Google always has organic donuts!

In any case, the lineup included: Satya Nadella, SVP for research and development for the Online Services Division; Harry Shum, a corporate VP who is leading core search development; and Brian MacDonald, corporate VP for Core Search Program Management.

As I previously wrote:

“The rolling-stone-gathers-no-moss team at the software giant–which has been seeing some promising progress in its quest to raise its search market share with its snappy new service–has announced an ongoing series of features since Bing was launched earlier this year.”

It’s 10:07 am PT and I await new wisdom from Microsoft (MSFT).

10:10 am: Nadella, the point man on Bing technology, begins.

He kicks off the show with some stats and a main point: Microsoft’s search share has, as his first slide reads: “Still a long way to go.”

At 9.9 percent versus Google’s (GOOG) share of more than 70 percent, Nadella is correct. But that is up from eight percent in a short time, so not bad.

Unique monthly visitors are also up from 71.7 million to 83.3 million. And perception, which was low, is now 48 percent.

In other words, more consumers seem to know what Bing is.

Personally, if I were Microsoft, I would declare victory and quit now!

10:19 am: A demo dude arrives to show “task” pages, which cluster around intent of searchers.

These are cool, and he’s showing a John Mayer page, which includes concerts and more. I hate that whiny singing dude, demo dude. He was mean to Jennifer Aniston, so he is dead to me.

Phew, the demo dude moves on to Miami. I love Miami. Trying to gauge intent, there is a slideshow available, better weather (rainy but 82 degrees!) and flight info. Plus no John Mayer!

Next, demo dude does movies. He shows times for the freaky “Paranormal Activity” and then offers hi-def trailers. Demo dude’s wife wants him to see it. I advise against it, unless he wants to be looking under the bed for the rest of his life.

Now the cheeky Softies, showing off how good Bing’s info is about Apple, (AAPL); display financial info and even the customer service number. I contemplate ordering a Mac.

This is followed by moves through universities and diseases (with related drug cards).

10:30 am: The demo dude moves on to an early look-see of Bing’s its upcoming Facebook deployment, using its already-announced Visual Search.

It’s apparently going to be very easy to be a stalker on Bing!

On to Twitter, with access to tweets in a variety of ways, from the most tweeted to most popular. Ashton Kutcher pops up like an inevitable Twitter weed, of course.

Nadella comes back and explains that this is being done to “browse to your intent.”

And now it is time for a mobile search update.

Guess what? Intent and search completion in a mobile context is time-sensitive! Who knew?

Actually, I did know and so did the whole world. Here is my typical mobile search: “Where the *&%# is that restaurant/kid party/gas station?”

10:38 am: A new demo dude (let’s call him demo dude #2) is showing off the recent mobile app for Bing, which came out a few weeks ago.

Lots of maps, although he says, “it’s more than just finding something on a map.”

Demo dude #2 types a “T,” which stands for AT&T, and stock info pops up.

He talks into the phone now for weather in Redmond, Wash., where Microsoft has its HQ. Cold and rainy! Which is a shocker for the Seattle area this time of year.

Demo dude #2 does movies and sports, showing a lot of what is on the Web. This is not much different than many mobile apps, but it works nicely.

Nadella seems to be promising an iPhone app soon too, noting that Microsoft will have them for all platforms, but he does not say it outright.

10:47 am: Now, Nadella is onto spatial search, which I like to call “oooh-that’s-pretty search.”

Therefore, we need a third demo dude. Demo dude #3 has a beard!

But he has a real new feature! A new mapping technology, powered by Microsoft’s Silverlight video technology, in beta within minutes. You can see it in action here.

It includes a Google competitor that has been called “streetside” before, with several new twists, which demo dude #3 is calling a “mash-in” (compared to a mashup, which is done a lot with Google by third-party folks).

The demo appears very seamless in comparison, using 3-D modeling and photorealism by integrating its Photosynth research work.

He shows a cool look at a museum and then the French American International School in San Francisco.

In this demo, demo dude #3 was looking at restaurants, which shows reviews and also the whole scene around it, including info on the parking garage you can see.

There is now a Map App gallery, most of which made by Microsoft right now.

11:07 am: A Twitter dude is brought up to show how the microblogger is part of this new mapping stuff from Microsoft, which he calls an “ecosystem.”

Using new geolocating tools on the microblogging service, it shows all kinds of geospatial information of tweets.

Twitter recently signed a data-mining deal with Microsoft, as well as Google.

So, it looks like Microsoft and Google are really going to be duking it out in the online mapping of everyone’s lives. And I look forward to this fight and the eventuality that they will want to map my every move. Bing it on!

11:10 am: Nadella wraps up, essentially trying to keep differentiating Bing from Google.

“We do hundreds of experiments a day,” he says, releasing as many features as possible.

It’s a good stance for a lesser competitor to have: Bing, We Try Harder!

Big words for Microsoft: Intent versus query. Whole page versus blue links. Minimizing time versus task completing. Search hit-or-miss versus dialog.

11:16 am: Q&A!

A question about human versus technology in perfecting this intent goal.

MacDonald and Nadella note that humans are important, but Bing is built around the big computing systems that do this automatically.

Will the structured page be indexable? Meaning Google? No real answer! But I would love to see Microsoft go all Rupert Murdoch on the search giant!

Then comes a question about premium or “non-Google” content. Nadella avoids the question and instead focuses on the “scaffolding” the data.

“We’re not as focused on getting exclusive content,” he says flatly. Uh-oh, publishers! As I reported, Microsoft is not forking over the dough.

MacDonald also tries to stress that Google wants folks off its site and onto the query result and that Bing is focusing on delivering that result right.

Everything is not a command line, declares MacDonald.

On a question of openness and the need to use Microsoft Silverlight technology for some of the rich visual mapping, versus Ajax, Nadella points out the service is too small not to be. Good point!

But Microsoft execs, who often shove their tech right down consumers’ throats, are nearly apologetic about having to use Silverlight (except they add, of course, that it is better!).

Nadella gets another question about paying to de-index Google.

“There is no real intent here that is focused on getting a whole bunch of content that is de-indexed from Google,” he said.

Some more questions about Bing monetization (it had better make money!) and global share.

Since Google is cleaning the clocks of everyone even worse abroad, Bing is focusing on the U.S.

I ask about how the Yahoo (YHOO) deal is going. “Well!”

And while Yahoo seems to be losing some search share to Microsoft, Nadella said his company would provide any “core” technology Yahoo wants to use given that Microsoft will be providing the search platform.

It would have been nice if Yahoo search had done this itself, of course, but Nadella said Yahoo could use the mapping and even task pages.

Bing Keeps Up the New Features Rollouts–BoomTown Will Liveblog a Microsoft Showcase at 10 am PT!

Kara Swisher — Wed, 02 Dec 2009 11:12:03 +0000

This morning, a passel of top Microsoft search execs is rolling into downtown San Francisco to show off even more new features for Bing.

They include: Satya Nadella, SVP for research and development for the Online Services Division; Harry Shum, a corporate VP who is leading core search development; MSN Corporate VP Erik Jorgensen; and Brian MacDonald, corporate VP for Core Search Program Management.

The rolling-stone-gathers-no-moss team at the software giant–which has been seeing some promising progress in its quest to raise its search market share with its snappy new service–has announced an ongoing series of features since Bing was launched earlier this year.

Besides the joy of driving the Google (GOOG) search bigfoots nuts–said one exec at the search giant to me recently in an indignant tone: “You know, we have all those features ready and could add them anytime!”–it’s probably fun to crow about being innovative at Microsoft (MSFT), not exactly the company that would pop to mind when that Silicon Valley prayer word is invoked.

So, what’s next? BoomTown has no idea, but I will be letting you know as soon as I do, via liveblogging the event, which starts at 10 am!

UPDATE: Tom Warren at Neowin.net speculates that the features could include a “Bing Explorer,” which “aims to seamlessly search and browse to find, re-find and discover.” Would that this event were that interesting!

Until then, here is the lovely invite I got from the Softies or Bingies or whatever:

Hi Kara,

You are cordially invited to join us for a Bing news event, Wednesday, December 2 from 10:00-11:00 a.m. at the Microsoft San Francisco offices. Microsoft executives Satya Nadella, Harry Shum, Erik Jorgensen, Brian MacDonald and others will showcase and demo several new Bing features. We will begin promptly at 10 a.m. Please feel free to join us if you can spare the time!

Microsoft San Francisco
835 Market Street
San Francisco, CA 94103

Please let me know if you’re interested in attending. Hope to see you there!

Until he speaks later today, here is a video interview I did with Nadella right after Microsoft struck its search and advertising partnership with Yahoo (YHOO) this summer:

[ See post to watch video ]

Former Yahoo Tech Star Eric Boyd to Microsoft (via Mochi Media)

Kara Swisher — Tue, 08 Sep 2009 19:44:52 +0000

Eric Boyd (pictured here), a high-profile techie from Yahoo who left the company for a start-up last year, is now headed to Microsoft to work for its digital group, now run by another ex-Yahoo, Qi Lu.

UPDATE: Microsoft confirmed the hiring, although declined to provide further details.

Boyd, who is well-known for his card-counting team exploits while at MIT (which were later made into the movie, “21”) had been VP of platform engineering at Yahoo (YHOO) and worked on a variety of projects there.

With the addition of Boyd, sources said, Microsoft has acquired a huge swath of the top tech talent of Yahoo, many of whom came to the software giant because of Lu and to escape the turmoil at Yahoo.

At a recent tech offsite at Microsoft held by Satya Nadella, SVP of Research and Development at its Online Services division, in fact, one person remarked that a full 10 percent of the techies were former Yahoo execs.

There will be more to come, up to 400 or more, if the search partnership the pair recently struck passes regulatory muster, although Boyd is not part of that deal.

He had worked at Yahoo for a decade, but left last spring to take over as VP of engineering at Mochi Media, a San Francisco-based gaming-related start-up backed $14 million in funding by Shasta Ventures and Accel Partners.

He will be working for Microsoft (MSFT) in Silicon Valley, in its group related to search and advertising, sources said.

Weekend Update 8.08.09–The Lolcats Edition

Beth Callaghan — Sun, 09 Aug 2009 00:48:22 +0000

It’s been a long time between weekend updates, and a long week without Peter Kafka, All Things D’s intrepid MediaMemo reporter. He returns Monday, and just in time, too, since John Paczkowski and Digital Daily will be out all next week. Must be August–do Europeans still take the whole month off? Or is that an urban legend? No matter; it definitely has not been sleepy around here. To wit:

On a trip to Seattle, BoomTown visited the headquarters of the Pet Holdings empire, which includes Lolcats (icanhascheezburger.com), Fail Blog and now, Emails From Crazy People. While there, Kara filmed a video with Ben Huh, CEO of the (profitable!) company. There is obviously a method to Huh’s wackiness.

Elsewhere in Seattle, BoomTown got some of the lowdown on the machinations in the wake of the Yahoo-Microsoft deal. Satya Nadella and Yusuf Mehdi are just two of the Microsoft (MSFT) execs charged with leveraging the deal to knock Google (GOOG) out of its number one spot. They each sat down in front of the Flip camera to share their thoughts.

BoomTown also noted the beginning of the Yahoo-Microsoft regulatory filings this week and provided the full document of Yahoo’s (YHOO) 8-K to the Securities and Exchange Commission about the deal. To think: this is only the tip of the MicroHoo iceberg.

If you were one of the many wondering about Twitter’s high-profile outage this week, don’t worry–Kara provided a handy translation of the co-founder Biz Stone’s blog post about the whole matter. If you weren’t wondering at all, you’re not alone–Kara’s mother and older son, Louie, think the whole thing is a waste of time.

Google CEO Eric Schmidt’s resignation from Apple’s (AAPL) board of directors was just some of the news on Digital Daily this week. In some of the other news, the FTC responded with a “nice try, but we’ll continue our investigation anyway.” Better news for Apple, then, that it claims 32 percent of operating profits in the handset industry, even though it’s only the fifth-largest handset vendor.

In the not-so-good department on Digital Daily this week, NewsCorp. (NWS) (which owns the Wall Street Journal and this Web site) reported a 32.5 percent drop in fiscal-year-adjusted operating income–largely because of its “red-hot” social network, MySpace. Elsewhere, Cisco (CSCO) reported a 46 percent drop in quarterly profit while still beating the Street’s estimates, and Vonage (VG) recorded a second-quarter profit of $2.3 million while losing 89,000 net subscribers in the same quarter.

On Personal Tech, Walt Mossberg reviewed a new netbook from Toshiba this week great battery life and a winning keyboard, among other things. On the Mossberg Solution, Katie Boehret reviewed the Wii MotionPlus remote accessory, an add-on to the Wii remote that includes a gyroscope and allows for more precision and sensitivity in gameplay. Walt responded to readers on Mossberg’s Mailbox, answering emails about buying a new no-frills laptop, switching ISPs and moving contacts emails without too much pain, and discerning the minimum system requirements for Windows 7.

Walt went into a little more detail about Windows 7 on his MossBlog. Unfortunately, he discovered that more detail does not equal more clarity when it comes to a Windows 7 upgrade. At his request, Microsoft sent along a handy chart meant to simplify all aspects of the matter for readers. It is an astoundingly, even comically, complicated document. The company has promised to send a newer, simpler one. Stay tuned.

More next week.

Microsoft's Point Man on Search–Satya Nadella–Speaks: "It's a Game of Scale"

Kara Swisher — Tue, 04 Aug 2009 07:33:31 +0000

Another Microsoft exec BoomTown spoke to–while in Seattle last week–was Satya Nadella, SVP of Research and Development at its Online Services division, also known as the man in charge of search and online advertising technology for the just-struck partnership with Yahoo.

Nadella came to Microsoft in 1992 from Sun Microsystems (JAVA)–much like another company lifer and key dealmaker in the Yahoo partnership, Yusuf Mehdi, whom I also interviewed via video here.

After all that time, though, Nadella is probably facing his biggest challenge yet.

Because how the search business of Microsoft (MSFT) evolves, improves and, most of all, out-innovates–especially in the face of heretofore withering competition from search behemoth Google (GOOG)–is going to be a big factor in the success of the deal with Yahoo (YHOO).

In fact, the Silicon Valley Internet giant has essentially put its search technology eggs in the software company’s work-in-progress basket.

Now the Microsoft team must make a series of innovative tech leaps in order to grab more market share beyond what the pair bring to the table together.

Nadella, who was one of the key execs involved in the deal, has to make sure the companies hold onto top talent until the partnership is approved, while continuing to keep up the momentum of its new Bing search offering.

No pressure, Satya!

Nadella does acknowledge in the video interview here that Microsoft has has not been able to catch up with Google and talks about how that might now be possible.

Watch:

[ See post to watch video ]

Yahoo Search Ad Deal With Microsoft "Down to the Short Strokes"–But Caution Also Advised

Kara Swisher — Fri, 17 Jul 2009 02:49:29 +0000

Unless there is some major glitch, there might finally be a search and online advertising deal struck between Yahoo and Microsoft at long last.

Top executives at Microsoft–including SVP of the Online Audience Business Group Yusuf Mehdi, search head Satya Nadella and top digital exec Qi Lu, as well as others–have all flown down to Silicon Valley from their Redmond, Wash., HQ today to iron out the remaining issues, which seem to have to do with the deployment of technology.

“It is an entourage,” joked one exec.

Microsoft CEO Steve Ballmer is also deeply involved in the talks, although he is not with the group.

If all goes well, the deal could be announced within the next week, sources at both companies said.

The most recent talks have been unusually close to the vest at both companies, and spokespeople for both Yahoo (YHOO) and Microsoft (MSFT) declined to comment on the issue.

And, of course, they should not, since there is no certainty any deal will be struck at all, especially since the pair have been down this road before, unsuccessfully.

In those cases, both sides have thought they were close, too, with fingers quickly pointing at each other for the failure of the discussions.

While BoomTown has gotten several different versions of terms of the latest deal, they all include Microsoft (MSFT) paying Yahoo (YHOO) several billion dollars upfront to take over its search advertising business and guarantee certain payments back to Yahoo.

There is also a display advertising element to the deal, which would likely have Yahoo take the lead in selling premium advertising for the companies.

That they are so close is a good sign, although sources on both sides of the deal cautioned that it could just as easily come apart.

And, indeed, Microsoft and Yahoo have long argued the particulars of this deal, including over the rate for traffic-acquisition costs, the ability of Yahoo to have control over data and the simple fact that such an arrangement is exceedingly complex.

But, said one person close to the situation, “It is down to the short strokes, for sure, it is just a question if we can finally close this.”

That’s a good question, given the push-me-pull-you relationship between Yahoo and Microsoft over the last two years.

But both need each other, especially since they lag so far behind search market leader Google (GOOG).

Yahoo was even ready to strike a similar deal with Google in the midst of Microsoft’s hostile takeover attempt last year. That partnership failed due to regulatory concerns.

Talks between Microsoft and Yahoo have waxed and waned too, as I reported earlier this week.

When last we checked in, Yahoo CEO Carol Bartz and Microsoft’s Ballmer had a little private tete-a-tete about the deal, when both were attending the seventh D: All Things Digital conference in Southern California in late May.

Bartz and Ballmer also both acknowledged discussions in onstage interviews at D7, with Bartz even boldly stating that she was open to the deal if good and reliable data and “big boatloads of money” were forthcoming from Ballmer.

(You can see the video of her saying that here, while Ballmer is less colorful here.)

Since then, Microsoft did an aggressive launch of its new Bing search service, which has been an initial success.

The company has become more confident with the early success of Bing, which has garnered good reviews and small improvements in market share in surveys.

Sources at the software giant maintain that the improvement–via innovation and a huge marketing spend–has given Microsoft a bit of leverage against Yahoo, although the bets are still out on exactly how much sustained share Bing can garner.

Yahoo is aware, of course, that is can ill afford to lose search market share, although Bartz has been focused on beefing up Yahoo management and marketing.

Still, the companies have never given up on the talks, which began in March, although all the back and forth underscores a very real debate by both sides about whether joining together will benefit them both or not.

The possible pluses are clear: Huge technology cost-savings and cash for Yahoo and another weapon to fight archrival Google for Microsoft.

It needs as much firepower as it can get. A recent comScore (SCOR) report for June showed Google with a 65 percent share, Yahoo at 19.5 percent and Microsoft at just 8.4 percent.

The deal, if struck, could give a big boost to shares of both companies, which have been up a lot since the beginning of the year.

While sources at both sides stressed that this was in no way a merger, a deal would bind their fates together rather strongly.

There was a report earlier today by 24/7 Wall Street that a deal was “imminent.”

One source advised caution when asked about that word, although this person was more confident than ever.

In any case, if it does not work out, the source said, “this will be it…we will all finally go our separate ways and be done with it.”

A Sneak Peek Look at Microsoft's New Kumo: A Spidery Cloud? A Cloudy Spider?

Kara Swisher — Tue, 03 Mar 2009 01:07:50 +0000

Here below are three screenshots of Microsoft’s internal test of a new search product called Kumo.

The long expected upgrade to the Live Search product from Microsoft (MSFT) is being tested for a public rollout later this year.

The blogosphere was a-twitter, literally, after a Twitter post by Powerset co-founder Barney Pell this past weekend, about a rebranding and updating of the search offering. (Microsoft acquired Powerset last year and Pell works on search strategy.)

Sources at Microsoft said the company has not yet decided whether it will keep the Kumo name, which sounds a little too much like that crazy dog from the Stephen King novel.

Maybe that’s the point, at least related to Google. (Chomp!)

In Japanese, actually, Kumo has two definitions–cloud and spider.

Microsoft has been trying to catch up in the search game by spending big-time after it failed to acquire Yahoo (YHOO) last year.

And it still wants to do a search deal with Yahoo, in order to make a dent in the market dominance of Google (GOOG).

Until then, of course, Microsoft must innovate. And, so far, Kumo seems to be an interesting effort with a clean and spare look.

But what do you think? Let me know in the comments.

Also, here is the memo from Microsoft search head Satya Nadella about it, urging all company employees to try it out and send feedback:

From: Satya Nadella
Sent: Monday, March 02, 2009 4:18 PM
To: Microsoft–All Employees (QBDG)
Subject: Announcement: Internal Search Test Experience

The Search team needs you. We’ve been working hard to improve our search service and want to share the progress we are making with you. We are launching a new test program called kumo.com for employees to try and provide feedback. Kumo.com exists only inside the corporate network, and in order to get enough feedback we will be redirecting internal live.com traffic over to the test site in the coming days. Kumo is the codename we have chosen for the internal test.

In spite of the progress made by search engines, 40% of queries go unanswered; half of queries are about searchers returning to previous tasks; and 46% of search sessions are longer than 20 minutes. These and many other learnings suggest that customers often don’t find what they need from search today.

We believe we can provide a better and more useful search experience that helps you not just search but accomplish tasks. During the test, features will vary by country, but you’ll see results organized in a way that saves you more time. An explorer pane on the left side of results pages will give you access to tools that help you with your tasks. Other features like single session history and hover preview help accomplish more in search sessions.

Your Next Search…

To get started, visit kumo.com or click one of the samples below to see how it’s possible to find the right results more easily:

· Audi S8
· Taylor Swift
. Bose Lifestyle 48

You can also set your search defaults to test site using the instructions here.

Your Feedback is Critical

As employees, you are some of our most informed users and our toughest critics, and we highly value your input and feedback to help us build a better service. You have been an important voice in our efforts, and the feedback you’ve sent us since the company meeting has been amazing.

When you visit kumo.com, at the bottom right corner of the each page you’ll see a feedback badge. We ask that each time you use the test site, click the feedback badge and take a moment to answer four quick and simple questions. Feel free to reach out to give us extra feedback directly on our blog and by mailing sfeed. For answers to common questions make sure to see our FAQ.

We are committed to rapid innovation and improvement. Please give the test site a try, rate the results and let us know what you think.

Satya

Here are the three screenshots too (click on the images twice to make them larger):

Taylor Swift

Audi S8

Bose Lifestyle 48

What the (Larry) Heck Is Happening to Yahoo Search? Another Defection to Microsoft, That's What!

Kara Swisher — Thu, 12 Feb 2009 05:08:35 +0000

It seems that since Yahoo CEO Carol Bartz is playing it coy about whether she wants to do a massive search deal with Microsoft or not, the software giant is just going to keep hiring her search tech team out from under her.

Today, Microsoft (MSFT) said it had hired Larry Heck, VP of search & advertising sciences at Yahoo Labs, who will work in its online unit.

It’s like the rapture, except geekier.

Said a Microsoft spokeswoman: “We are happy to confirm that Larry Heck has accepted a job at Microsoft. He will be working for Satya Nadella, SVP, research and development, online services division, and he will start in a few weeks time. We look forward to welcoming him to the team.”

[UPDATE: Yahoo sources said Heck was laid off in December, so it is not quite the daring raid that it seems.]

Nonetheless, it is the third big hire from Yahoo’s search tech team by Microsoft. The first was Sean Suchter, followed by Qi Lu, who now heads Microsoft online services team.

Lu is a big draw for search engineers and was close to Heck, and sources said there are several other Yahoo tech execs likely to move too.

The boatloads of money Microsoft has been spending in the arena to catch leader Google is certainly a draw. Microsoft is No. 3 behind both Google (GOOG) and Yahoo (YHOO).

In addition, MSN recently nabbed Yahoo media head Scott Moore to run its U.S. programming, along with Yahoo marketing exec Eric Hadley.

MSN Changes Afoot?

Kara Swisher — Thu, 22 Jan 2009 13:49:33 +0000

According to several sources, more restructuring is about to hit Microsoft’s online division, as various departments are moved among and between its top execs, with changes to be announced as early as today.

While BoomTown is still gathering information, it looks like longtime Microsoft exec Yusuf Mehdi (pictured here), who is now in charge of marketing, online audience business development and product management for MSN and the search properties, will get more added to his portfolio, including overall business development for the online properties.

Mehdi, whose current title is SVP of the Online Audience Business, could also eventually get purview over programming for MSN too, said several sources.

Both those business units currently (and somewhat inexplicably) report to Satya Nadella, the SVP who heads engineering for Microsoft’s search, portal and advertising platform group.

Nadella and Mehdi are the two key execs who report to Qi Lu, a former Yahoo tech star who was recently hired as president of Microsoft’s online services group

What that means for MSN’s Corporate VP Erik Jorgensen and the GM of its Global Media Group, Greg Nelson, who report to Nadella, is unclear.

But it appears that the Microsoft (MSFT) online group is essentially being split into two clear parts: Engineering, and business and content operations.

Advertising sales, which had previously been under now-departed Microsoft exec Brian McAndrews, has been moved to Microsoft’s centralized Sales, Marketing and Services Group, led by chief operating officer Kevin Turner.

The changes are interesting, given all the behind-the-scenes talks that are now going on between Microsoft and Yahoo (YHOO) and Time Warner (TWX) online unit AOL over their search and search advertising businesses.

Microsoft has been seeking to take over search for both Yahoo and AOL, with its CEO Steve Ballmer recently in talks with both companies, in order to give it a decent market share in its ongoing quest to compete with Google (GOOG) in search.

Right now, Google dominates that market with an over 70 percent share, while Microsoft has just under 10 percent.

Microsoft is announcing its second-quarter earnings today, and many expect it to also announce layoffs, due to the tough economic environment.

The Entire Internal Microsoft Memo on New Dell and Verizon Deal

Kara Swisher — Thu, 08 Jan 2009 21:29:14 +0000

BoomTown loves a good memo and here’s one that two of Microsoft’s top online execs, Yusuf Mehdi and Satya Nadella sent out about the deal the tech giant signed with Dell (DELL) and Verizon (VZ) to distribute its search and other products.

Microsoft (MSFT) is opening its fat wallet to do such a deal and try to best archrival Google (GOOG). It was announced last night at Microsoft CEO Steve Ballmer’s keynote kickoff for the Consumer Electronics Show in Las Vegas.

Here’s the memo:

From: Yusuf Mehdi
Sent: Wednesday, January 07, 2009 6:29 PM
To: OSD R&D FTE World Wide; Online Audience Business Group FTE; APSP FTE–Adv & Pub Solutions Platform
Cc: Yusuf Mehdi; Satya Nadella; Qi Lu
Subject: Announcing Dell and Verizon Strategic Partnerships!

Team,

This evening, in his keynote address at the Consumer Electronics Show in Las Vegas, Steve Ballmer announced two major new distribution partnerships that will significantly increase the reach of our Online businesses to end users.

Starting in February, Dell–the number one PC manufacturer in the US and number two worldwide – will begin to distribute Live Search and Windows Live Essentials on a majority of consumer and small business PCs shipped globally. Under the terms of the agreement, Live Search will be the default search engine in the Web browser, as well as including a Live Search-powered toolbar on all new PCs over the next several years.

Steve also announced a five-year partnership with Verizon–the number one wireless carrier in the US–that covers mobile search and display advertising. The deal will provide more than 70 million subscribers in the U.S the ability to use Live Search to find local business and shopping information, access maps and directions, find ringtones and other online mobile products and services.

Partnering with the #1 PC manufacturer and the #1 wireless carrier in the US is a huge win for our Online Services business. More importantly, the partnerships will benefit our mutual customers as we make it easier to access their email, IM, homepage, and Search services from their PC and Phone.

As you know, these are just two–albeit big ones!–examples of our partnering to grow our audience through distribution and bring our services to new users. Our momentum is building from previous and existing partnerships with Sun Microsystems, Facebook, Lenovo, and most recently HP for all their PCs in North America.

A big thanks to the many individuals across the company that helped secure these partnerships. Now onward to executing very well on our product offerings and marketing to make the most of our investment!

Satya and Yusuf

Microsoft Officially Confirms Qi Lu Hired as Digital Chief; McAndrews Out

Kara Swisher — Thu, 04 Dec 2008 21:36:38 +0000

Microsoft moved up its official announcement of former Yahoo (YHOO) tech star Qi Lu to be the head of its Online Services Group.

BoomTown reported on the selection earlier this morning.

As part of the changes, Microsoft digital ad head Brian McAndrews, who had also wanted the job, is leaving.

Here’s the full announcement from Microsoft (MSFT):

For Immediate Release
Dec. 4, 2008
Microsoft Appoints Dr. Qi Lu to Run Online Services Group
Yahoo! veteran to oversee Internet offerings for consumers, advertisers and publishers.

REDMOND, Wash.–Dec. 4, 2008–Microsoft Corp. today announced that Dr. Qi Lu will join the company as president of the Online Services Group. Dr. Lu will lead Microsoft’s efforts in search and online advertising and all the company’s online information and communications services. Dr. Lu will report to Microsoft Chief Executive Officer Steve Ballmer.

Lu most recently served as executive vice president of Engineering for the Search and Advertising Technology Group at Yahoo!, where he was responsible for development efforts around Yahoo!’s Web search and monetization platforms. Dr. Lu left Yahoo! in August 2008 after 10 years of service.

“I am tremendously excited to welcome Qi to Microsoft,” Ballmer said. “Dr. Lu’s deep technical expertise, leadership capabilities and hard-working mentality are well-known in the technology industry, and Microsoft will benefit from his addition to our executive management team.”

“I am genuinely excited about the opportunities ahead for Microsoft to make an enormous impact on the online industry,” Dr. Lu said. “Microsoft has built a great foundation for its search and advertising technologies and put an amazing team of researchers and engineers in place to drive the next wave of innovation in online services. I’m looking forward to working with them to help transform the way people and businesses use the Internet to find and share information.”

Before his most recent role at Yahoo!, Lu was vice president of engineering responsible for the technology development of Yahoo!’s Search and Marketplace business unit, which includes the company’s search, e-commerce, and local listings of businesses and products.

Before joining Yahoo! in 1998, Dr. Lu was a Research Staff Member at IBM Almaden Research Center. Before IBM, Dr. Lu worked at Carnegie Mellon University as a Research Associate, and at Fudan University in China as a faculty member. Dr. Lu holds 20 U.S. patents, and received his bachelor of science and master of science in computer science from Fudan University and his Ph.D. in computer science from Carnegie Mellon University.

Lu’s first day at Microsoft will be Jan. 5, 2009. In his role running the Online Services Group, he will oversee several groups including the Advertiser & Publisher Solutions business, managed by Scott Howe who was promoted to corporate vice president; the Online Audience business, managed by Senior Vice President Yusuf Mehdi; OSG Research & Development, managed by Senior Vice President Satya Nadella; and OSG Finance, managed by Rik van der Kooi who was promoted to corporate vice president.

With the successful integration of aQuantive now complete, Brian McAndrews, former CEO of aQuantive and senior vice president of Microsoft’s Advertiser & Publisher Solutions Group, has decided to transition out of Microsoft, and will do so over the next several months, serving in a consultative capacity to Steve Ballmer and Qi Lu during that time.

“Brian McAndrews built a world-class business for advertisers and publishers and led the successful integration of aQuantive into Microsoft, setting the foundation for our next phase of growth,” Ballmer said. “While I am sorry to see Brian leave the company, I respect and understand his decision and wish him nothing but the best in the future.”

“I also want to congratulate Scott and Rik on their well-deserved promotions and look forward to their leadership in the Online Services Group alongside Qi, Yusuf and Satya,” Ballmer said.

As part of today’s announcement, several teams will move to further align resources. The field sales organizations in the Online Services Group will move to Microsoft’s centralized Sales, Marketing and Services Group led by chief operating officer Kevin Turner. This group, called Consumer & Online, will be led by Corporate Vice President Darren Huston and will include the Global Advertising Sales and Services organization, led by vice president Bill Shaughnessy.

Former Yahoo Tech Star Qi Lu Likely to Be Named Microsoft's Digital Head by Next Week

Kara Swisher — Thu, 04 Dec 2008 13:01:18 +0000

Former Yahoo tech star Qi Lu (pictured here) is poised to take on the big job of being Microsoft’s top digital executive, according to several sources inside and outside the company.

The appointment could be announced by Microsoft as early as next Monday.

A variety of details is still being ironed out, though, including whether the well-regarded techie Lu will be “paired” with another executive at Microsoft (MSFT) with more general business experience.

While Lu has managed large teams while at Yahoo (YHOO) and also huge projects, he does not have advertising sales and media experience that will be a big part of his purview at Microsoft.

In that job, he will be the boss of three strong digital execs at the software giant: Satya Nadella, the SVP who heads engineering for Microsoft’s search, portal and advertising platform group; Yusuf Mehdi, whose online services portfolio includes marketing, online audience business development and product management for MSN and the search properties; and Brian McAndrews, the SVP for the advertiser and publisher solutions group.

That executive partner could be some higher-ranking Microsoft exec or even CEO Steve Ballmer himself.

Elevating McAndrews is also a possibility, as he has also wanted the digital chief job and could decide to leave after not getting it. (He also would not be a bad choice for Yahoo’s new CEO.)

McAndrews was the CEO of aQuantive, an ad company bought by Microsoft for $6 billion last year.

As I have previously written, Lu would be a different choice for the post than many had expected.

In picking a serious tech-oriented executive over a more media-centric one, a dichotomy that Ballmer has been puzzling over, according to several people with whom he has spoken, he is clearly staking out an even more head-on fight with Google (GOOG).

But since a lot of Microsoft’s future rests on winning in the search and search-advertising space and trying to catch up with its techtastic Silicon Valley archrival from way back in the race, Lu is also well suited for the position.

Lu was EVP of engineering for the Search and Advertising Technology Group at Yahoo, where he ran all development initiatives for its search and monetization platforms. He was at Yahoo for a decade.

Importantly, Lu will definitely be a draw in bringing in top talent to Microsoft, especially from Yahoo.

Microsoft already grabbed another top Yahoo search exec, Sean Suchter recently.

And it is reportedly in a competitive bidding war with Google right now for yet another top Yahoo engineer.

Ballmer (pictured here), who led the now-defunct takeover bid for Yahoo and who has indicated a strong interest in buying only Yahoo’s search assets, could almost be seen as bypassing it all by sucking the talent right out of the place instead.

That might be a good move, since Yahoo’s board, while under intense Wall Street pressure to do so, is still debating whether to strike a deal with Microsoft to sell off its search and search ad business for massive guaranteed ad revenues.

While board member Carl Icahn has been pushing that deal, others on the board are still dubious that decoupling search from Yahoo is the right strategic move and believe it could leave the company at the mercy of Microsoft.

Yahoo might already be, especially if it keeps losing critical engineering talent to Microsoft. Being able to convince talent like Suchter and Lu to switch is a very bad sign.

Before he left Yahoo earlier this year, Lu was on the staff of the IBM Almaden Research Center, and worked at both Carnegie Mellon University and Fudan University in China (he also got degrees from both places).

And, in the kind of cred Microsoft likes, Lu holds 20 U.S. patents.

He left Yahoo after becoming dissatisfied with all the turmoil there, quitting in June, without another job lined up.

There has also been speculation that Lu would take a position as CTO of Facebook or even return to China for a tech job.

The well-respected Lu certainly has a multitude of choices, but the chance to lead money-laden Microsoft’s digital efforts–as it suits up for battle with Google–has been perhaps too hard to resist.

BoomTown has been poking around to try to figure out who Ballmer would choose for the digital head, ever since the man who used to be in charge, Kevin Johnson, departed in July for Juniper Networks (JNPR), after the software giant’s takeover bid to buy Yahoo failed.

I raised Lu’s name in a post several weeks ago as Ballmer’s top choice.

Several people close to the situation say the aggressive CEO has been keeping the deliberations close to the vest.

On an interesting side note, another one of Lu’s reports at Microsoft would be Harry Shum, corporate vice president of Search Product Development, who was his classmate and friend at Carnegie Mellon.

Please see this disclosure related to me and Google.

Musical Chairs at MSN: Here's a Partial Scorecard of What's What

Kara Swisher — Tue, 25 Nov 2008 09:13:21 +0000

Here’s part of an internal memo BoomTown obtained about some small, but interesting, changes at Microsoft’s MSN unit, sent out by the GM of its Global Media Group, Greg Nelson, which is under the leadership of–well, frankly–a confusing panoply of execs.

Essentially, Nelson now reports to Satya Nadella, SVP of the Search, Platform and Advertising Group (think engineering and search) and Erik Jorgensen, Corporate VP of MSN (think business and other stuff).

In addition and apropos of nothing, Yusuf Mehdi serves as SVP of the Online Audience Business and Brian McAndrews is SVP of the Advertiser & Publisher Group.

Also, there is a Windows Live group that does mail, communications and groups too, and a lot of other digital bosses too numerous to mention.

You can see why I have been haranguing Microsoft (MSFT) CEO Steve Ballmer for a little digital clarity, especially around its consumer digital businesses and brands. But Microsoft–like a lot of tech-born businesses–loves to overdesign!

Ballmer has been searching for an overall head of that business to sort it all out since Kevin Johnson left in July, whose massive duties were divvied up.

While he has looked at a lot of execs from inside and outside the company, I recently posted that Ballmer’s latest quarry is former Yahoo tech star Qi Lu.

Only Ballmer knows for sure, many have told me, keeping his decision-making on the issue close to the vest.

But, as many insiders and outsiders familiar with the business have noted to me, whoever takes that role as its digital guru has some very hard decisions to make in all its arenas, from search to advertising to content.

There has been no share growth in search for Microsoft, for example, where archrival Google (GOOG) dominates, even as there have been billions of dollars of investment in data centers and engineers.

And it will fall to the person Ballmer ultimately selects as digital head to figure out what to do next.

Microsoft’s failed attempt to buy Yahoo (YHOO) was one way of dealing with the many issues Microsoft is facing, as well as its current interest in buying Yahoo’s search business.

In any case, here are some new changes at MSN, in Nelson’s words:

· Network Programming, led by Rob Bennett–This group will prioritize investments against Network priorities, shape audience strategy, set Network standards, and sponsor cross-network initiatives.

· Network Entry Points, led by Steve Cvengros–This group will focus on increasing exposure, distribution and discoverability of assets by optimizing and expanding entry points to the Network.

· Vertical Programming, led by Sandy Henson–This group will create content experiences to deeply engage the audience and grow Network value in vertical areas. All channels will move into this group.

· Monetization and Analytics, led by Dell Wilkinson–This group will focus on improving yield by making MSN easier for advertisers to buy and APS to sell through inventory insights and APS engagement.

· Chief of Staff, Eva Corets–This role is responsible for driving team processes and business rhythm, and assisting with prioritization of network projects and interaction with cross-division and cross-Microsoft teams.

It's Official: Yahoo Search Exec Suchter to Microsoft

Kara Swisher — Thu, 20 Nov 2008 20:45:12 +0000

Yesterday, based on sources, BoomTown reported, that Yahoo search exec Sean Suchter was headed to Microsoft.

Now it’s official. Here’s a Microsoft (MSFT) statement on the hiring of Suchter (pictured here), an important tech leader at Yahoo (YHOO), from Satya Nadella, SVP for Search, Portal and Advertising:

“We are very pleased to confirm that Sean Suchter will be joining Microsoft as the GM of our Silicon Valley Search Technology Center, working on Live Search. Sean will report into Harry Shum when he starts work on December 22. We look forward to welcoming him to Microsoft at that time.”

The talent grab from Yahoo is an interesting one, given that Microsoft has also tried to to buy Yahoo’s search and search ad business many times, to little success.

Microsoft CEO Steve Ballmer reiterated that desire yesterday at the software giant’s annual meeting, although he discounted the possibility that Microsoft would rebid for all of Yahoo after it abandoned a takeover attempt earlier this year.

His statement sent Yahoo’s stock further into the basement.

Losing important execs like Suchter, who was the VP of Search Technology at Yahoo, will also not help the company’s prospects. Suchter was deeply involved in Yahoo’s efforts to open up its search platform, initiatives the company has touted aggressively as a bright spot in its not-so-lustrous landscape.

Suchter–who came to Yahoo almost six years ago after it acquired Inktomi (the company that got Yahoo into the search business) in early 2003–has been talking with Microsoft for a while and his leaving was not linked to this week’s announcement that Yahoo CEO Jerry Yang will be stepping down.

But it could be linked to the possibility that another former major Yahoo search exec could also be going to Microsoft. I wrote a post earlier today that I thought the Ballmer was looking at Qi Lu–the well-regarded Search and Advertising Technology group EVP at Yahoo, who left earlier this year–to be its digital head.

All this muscling up in search by Microsoft is troubling for Yahoo. There are big questions, now that Yang is stepping down, whether Yahoo will stay in the search business or sell it off. Yang has been a big proponent of doubling down in search, considering it integral to the entire Yahoo ecosystem.

But others make the very persuasive argument that Yahoo will be increasingly outspent by both Google (GOOG) and Microsoft, in what is turning into a very vicious and expensive arms race.

If it sold off its No. 2 search business to Microsoft–ironically, Yahoo used to deliver Microsoft’s search results–many think it could have huge costs savings and garner guaranteed revenues.

News of Suchter’s departure from Yahoo, including the internal memo announcing it, appeared in Valleywag yesterday.

Please see this disclosure related to me and Google.

BoomTown Pick for Microsoft Digital Head: Qi Lu (Yes, the Former Yahoo Search Guru)

Kara Swisher — Thu, 20 Nov 2008 09:01:32 +0000

Yesterday, BoomTown opined that Microsoft was nearing a decision on who would become the head of its digital efforts.

And, according to several sources and some puzzling by me–if an agreement can be reached–I think that Microsoft (MSFT) CEO Steve Ballmer’s top choice is former Yahoo tech star Qi Lu.

While this is by no means a done deal, Lu is just the kind of top tech exec that Ballmer and Microsoft would warm to over a more media-centric choice like former Yahoo COO Dan Rosensweig or former AOL head Jon Miller.

Lu was EVP of engineering for the Search and Advertising Technology Group at Yahoo (YHOO), where he ran all development initiatives for its search and monetization platforms. He was at Yahoo for a decade.

If Ballmer manages to pull off the hire of Lu–on the heels of already grabbing another top Yahoo search exec, Sean Suchter, which I reported on yesterday–the aggressive exec could almost be bypassing a Yahoo search partnership he has long sought by sucking the talent right out of the place instead.

Ballmer is like Edward in “Twilight,” attracting top-notch search execs to Microsoft’s Redmond HQ, as if they were geek versions of Bella.

Lu would be a different choice for the post than many had expected, with a much more technical background than one in online media or advertising sales.

But since all of Microsoft’s future rests on winning in the search and search advertising space and trying to catch up with its archrival Google (GOOG) from way back in the race, Lu is also well suited for the position.

If Lu takes the job, he will be the boss of three strong digital execs at Microsoft: Satya Nadella, the SVP who heads engineering for Microsoft’s search, portal and advertising platform group; Yusuf Mehdi, whose online services portfolio includes marketing, online audience business development and product management for MSN and the search properties; and Brian McAndrews, the SVP for the advertiser and publisher solutions group.

Lu is known as as solid manager, but he is also called a very nice man and unusually humble for a tech star by many, which could be a good influence on Microsoft.

Before Yahoo, Lu was on the staff of the IBM Almaden Research Center, and worked at both Carnegie Mellon University and Fudan University in China (he also got degrees from both places).

And, in the kind of cred Microsoft likes, Lu holds 20 U.S. patents.

He left Yahoo after becoming dissatisfied with all the turmoil there, quitting in June, without another job lined up.

Since he left Yahoo, there have been rumors that he might be headed to Microsoft, but not in such a prominent job.

There has also been speculation that Lu would take a position at Facebook or even return to China for a tech job.

The well-respected Lu certainly has a multitude of choices, but the chance to lead money-laden Microsoft’s digital efforts–as it suits up for battle with Google–is compelling.

BoomTown has been poking around to try to figure out who Ballmer would choose for the digital head, ever since the man who used to be in charge, Kevin Johnson, quit in July, after the software giant’s takeover bid to buy Yahoo failed.

Several people close to the situation say Microsoft’s Ballmer has been keeping the deliberations close to the vest–perhaps because so many of those he has targeted have declined to consider the job.

But this week, many sources both inside and outside the company have told me that Ballmer is close to announcing his choice.

Annoyingly, one source has decided to play a digital version of “The Da Vinci Code” with me, dribbling out clues–more technical than media, very well liked in Silicon Valley, humble–about the candidate, which he wanted me to solve as if I were Robert Langdon and on the hunt for the progeny of Jesus.

Well, my solution is in: Microsoft’s most promising digital Holy Grail is Lu.

On a related note, bizarrely, the day after this column broke the story about Lu’s leaving Yahoo, I caught him by accident in the background of a video I was doing at a Harvard Business School event honoring Facebook’s Mark Zuckerberg.

You can see him at 4:14 minutes in the video, laughing at me, as I bother Greylock Partners VC David Sze and make a bad pun related to former Yahoo exec Jeff Weiner’s departure from Yahoo.

Here’s that video:

Please see this disclosure related to me and Google.

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