Mike Nichols has a poster on his office wall. It shows the young Muhammad Ali glaring down at a fallen Sonny Liston, the bruising heavyweight who had seemed invincible - until Ali beat him, in 1964, in one of the biggest upsets in sports history, and then beat him again a year later.
"The triumphant underdog," Nichols says, nodding toward the wall.
The inspirational fight poster is fitting, because Nichols, a general manager at Microsoft, is a lieutenant in an underdog corporate army here. Its daunting mission is to take on the Google juggernaut.
Microsoft's assault on Google in Internet search and search advertising may be the steepest competitive challenge in business today. It is certainly among the most costly. Trying to go head-to-head with Google costs Microsoft upward of $5 billion a year, industry executives and analysts estimate.
As the overwhelming search leader, Google has advantages that tend to reinforce one another. It has the most people typing in searches - billions a day - and that generates more data for Google's algorithms to mine to improve its search results. All those users attract advertisers. And there is the huge behavioral advantage: "Google" is synonymous with search, the habitual choice.
Once it starts, this cycle of prosperity snowballs - more users, more data, and more ad dollars. Economists call the phenomenon "network effects"; business executives just call it momentum. In search, Google has it in spades, and Microsoft, against the odds, wants to reverse it.
Microsoft has gained some ground. Its Bing search site has steadily picked up traffic since its introduction two years ago, accounting for more than 14 per cent of searches in the US market, according to comScore. Add the searches that Microsoft handles for Yahoo, in a partnership begun last year, and Microsoft's search technology fields 30 per cent of the total.
Yet those gains have not come at the expense of Google. Its two-thirds share of the market in the United States - Google claims an even higher share in many foreign markets - has remained unchanged in the past two years. The share losers have beenYahoo and smaller search players.
The costs for Microsoft, meanwhile, keep mounting. In the latest fiscal year, ended in June, the online services division - mainly the search business - lost $2.56 billion. The unit's revenue rose 15 per cent, to $2.53 billion, but the losses still exceeded the revenue.
Microsoft is a big, rich company. But investors are growing restless at the cost of its search campaign. In May, when David Einhorn, the hedge fund manager, called for Steven A. Ballmer, Microsoft's CEO, to be replaced, he pointed to the online unit as a particular sore spot.
Qi Lu, president of Microsoft's online services division, sees the situation this way: "To break through, we have to change the game. But this is a long-term journey."
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