In its ongoing challenge to industry leader Google, Microsoft is throwing even more resources into its highly touted Bing search engine. The boys in Redmond have long tried to achieve some sort of traction in the search market, and Bing has done just that. It’s now 3rd in the market, behind Google and Yahoo. Of course, most other competitors are in the low single digits in terms of popularity. And Microsoft has thrown huge resources behind its effort to unseat Google.

Bing is being portrayed as a “decision” engine rather than a “search” tool. The basic idea is that people shouldn’t get a bunch of irrelevant data back from a search term. Instead, they should get truly relevant information. Search for airline flights, and most search sites will give you everything from links to travel sites to someone’s blog about how bad Airline X was on their flight to LA.

As a result, Microsoft “introduced several changes Wednesday aimed at answering people’s questions without sending them to an outside page.” From a user’s perspective, this is a two-edged sword. On one hand, keeping them localized to Bing’s data might give them even better results when searching for specific data. Search engines are all about the concept of “relevance” when returning data.

On the other hand, keeping the user trapped on Bing means Microsoft — and their customers — get to control the user experience even further. This sounds an awful lot like Old Microsoft’s attitude of “we control everything, and if you try to use someone else’s product we’ll find ways to make it difficult.” Whatever happened to the “New” more open company that’s allegedly starting to support Open Source and Linux-based apps?

One thing is for certain: Yahoo’s deal with the devil probably will kill the company in a few years. I suspect the terms of the agreement that lets Microsoft run their search engine also says that all assets devolve to Redmond’s control if Yahoo goes under. That effectively gives Bing (in some form) Yahoo’s percentage of the search market. Right now it appears Google has about 64% of the market. Yahoo has 16%, Bing has 10%. That means that eventually Bing might have 26-27%.

Maybe the folks at Google should start looking over their collective shoulder.

Cloud computing, “information on demand,” or “application service providers” — it doesn’t matter what name you use. The basic concept behind all these ideas is that networking should enable people to stop buying and installing applications locally on their PCs. In 2000-01, the “ASP” model intended to move most (if not all) applications to central providers, like Jamcracker and other startups. Data would live locally, while applications ran over the net. It succeeded…somewhat.

Then, a few years later, “on demand” computing became the new buzzword. This was the idea of moving not only applications, but also computing horsepower (i.e. CPU cycles and so forth) to the network. IBM and others got into this model, and are still pushing it today. Overall it’s a good idea. Why go buy a bunch of big iron (i.e. servers, computing systems, and storage) if you only need it now and then? It’s really just a newfangled way of doing what we called “timesharing” in decades past.

Then the “cloud” idea popped up. That moved not only applications and compute cycles, but also your data to the service provider’s systems. Under this model, you basically need only PCs with browsers and email (and maybe not even the latter) in house. The rest lives on virtual servers at your provider’s location. You use that horsepower as needed, and pay the bill at the end of the month.

However, Microsoft is behind the curve in terms of Cloud implementation…and it threatens their business model. So they’ve attempted to introduce some FUD to “warn” people about possible shortcomings of this new computing model. They’re trying to introduce some privacy concerns, which are definitely justified, in order to warn people away.

Of course, keeping the current “buy your software and you own it” model works just fine for the folks at Redmond. So they’re correct in saying that “privacy protections are essential to building the customer trust needed for cloud computing and the Internet to reach their full potential.” But behind that noble-sounding statement is the company’s worry that customers will rent, not buy, software and systems in the future.

Caveat emptor.

High tech, along with the auto and home construction industries, has seen a significant impact from the economic downturn. PC orders plummeted, software sales tanked, and networks stopped expanding. It was sort of like 2001-02 all over again, with companies taking a serious breather from major capital expenditures. Lots of companies laid off staff, retooled in different directions, and generally kept their heads down.

Now, however, some light is appearing at the end of the tunnel. Stocks are rising slowly, some folks are spending money again, and various companies are reporting gains in sales. In a fairly major piece of news, Cisco Systems is seeing a rise in network gear sales for the first time in over a year. Cisco is one of the biggest players in networking, supplying routers and other gear to huge corporations and ISPs. Having them report an uptick in the market is very good news indeed.

The company’s CEO said that “it will start to hire more employees after laying off workers over the past year. Cisco’s work force has shrunk by about 3,500 over the past four quarters to about 63,800, mostly from layoffs but also from early retirement offers and attrition.” Now, some belt tightening was expected but 3500 out of 64000 is just under 5% of their total work force. That’s still a lot of people who lost jobs.

On the other side of the coin, Intel’s rosy forecasts may not be entirely honest. Some are suggesting the chip market itself could be in a “long, drawn out recovery” period. It’s entirely possible certain segments of the market will rebound before others. I suspect corporate networks will start expanding, for example, before everyone starts queuing up to buy new PCs. The former represents critical infrastructure, while the latter have become commodities. And PCs are easier to upgrade or refurbish.

Of course, the current uptick in the markets and job outlook may not last. We could easily have several false starts before the downturn is truly over, but at least the steady stream of bad news has largely ceased.

Last year at about this time, I was writing a piece about how abysmal PC sales (and the technology market as a whole) were causing concern for the holidays. At that time, with the world economy heading down the spiral into the worst recession in decades, no one was buying new hardware. Everyone was taking a wait-and-see attitude, and it was hurting PC vendors badly.

Here, a full year later and with increasingly sunny predictions that the recession is behind us, I’m going to predict that the PC market this holiday season won’t be much brighter than in 2008. People are still holding onto their money while hunting for bargains, and while the economy has improved it still lacks one thing: jobs. Hiring is starting to pick up somewhat, but employers are apparently waiting for a few consecutive bright quarters before adding significantly to their workforces. So I suspect many people will continue to avoid upgrades or new machines through the 2009 holiday season.

Despite this somewhat gloomy situation, things seem to be improving. Q3 (3rd quarter, for non business types) PC sales improved somewhat, by around 2.3%, over last year’s numbers. Analysts have called this “a promising sign for the industry as it heads into the holiday shopping season.” And it is, but it doesn’t mean the industry is out of the woods yet.

The good news about this is that it bodes well for consumers who are searching for bargains or special deals (especially on financing) this holiday season. Suppliers would be less likely to offer such incentives if the market jumped suddenly.

My own expectation is that the market, as well as the unemployment figures overall, will start improving dramatically in the first two quarters of 2010…unless some other economic disaster causes things to slump yet again. Once the real recovery begins, I expect a dramatic increase in PC shipments. This is in line with the street, where “analysts expect to see more businesses replacing aging PCs in the middle of next year.” We’ll hit another wave of upgrade mania, and sales will jump accordingly for some period of time.

The object lesson is this: if you’re planning to upgrade, this holiday season is probably a good time to do it. This season may represent the last opportunity to buy cheap systems in a buyers’ market for some time to come.

Come back next year, and we’ll see how well my crystal ball was working.

It had to happen at some point, but no one was sure quite when. The US FTC (Federal Trade Commission) has set forth new laws governing how bloggers and other authors need to handle their relationship with vendors. According to the new rulings, the “FTC will require that writers on the Web clearly disclose any freebies or payments they get from companies for reviewing their products. The commission also said advertisers featuring testimonials that claim dramatic results cannot hide behind disclaimers that the results aren’t typical.”

In other words, your testimonial can’t say you lost 150 lbs using a diet drink if the typically expected result of use is a loss of 20-30 lbs. And now, if you write a glowing article about MacBooks or Windows 7, then receive a free notebook or licensed copy of the OS as yours to keep, those “gifts” have to be disclosed. There are several reasons for this latter ruling, in fact. First,there are tax and ethical implications to accepting “professional gifts” from people whose products you regularly help sell in the marketplace. Second, there’s the perception that the blogger or writer is simply being paid for their services…fewer people are aware they can get expensive toys by recommending product.

Basically, the transaction needs to be honest. The company is up front about selling the product, so you the blogger need to be equally upfront regarding the pay and “considerations” you received in your role as a spokesperson. That’s just fair, above-board advertising.

The problem that elicited these laws is clear: “what some consumers might not know is that many companies pay reviewers for their write-ups or give them free products such as toys or computers or trips to Disneyland. In contrast, at traditional journalism outlets, products borrowed for reviews generally have to be returned.” This makes bloggers much less honest brokers of information and reviews than traditional journalists, who must follow established practice regarding gifts and other honoraria.

Many bloggers have already stepped up to the plate, and are disclosing such situations already. This is the way it should be, after all. The Internet is supposed to be all about providing accurate information to product seekers and researchers. Bogus reviews written in order to obtain a gratuity of some type disrupt the honesty of the system. Disclosure clears the air, helping the system as a whole retain its credibility.

Good for the FTC for laying out the rules in an unambiguous manner.

Nearly everyone has been affected in some way by the global economic downturn. Unemployment has risen to 9+% while markets have stagnated and housing prices have plummeted in many areas. As I’ve noted before, high tech suffered a pretty significant hit as well: layoffs, pay cuts, benefits cuts, and other bad news has hit the industry hard in the last year.

Surprisingly though, it appears the industry wasn’t hit as hard as many others were. The loss of high tech jobs, by comparison with auto workers, retail, and other industries, was relatively minor. This might not be very comforting if you’re a laid-off techie now looking for work, but things could probably be a whole lot worse.

According to some recent statistics, job losses declined in the June-July period and tech actually gained somewhat. The analysis suggests that “despite an uptick in jobs in June, the high-tech industry overall employs fewer people than in 2008. The industry as of June 2009 employed some 5.81 million workers, a decline of 224,100 jobs (3.7%) since June 2008.”

The per-sector numbers mirror industry trends, with more jobs lost in networking (45,000), engineering/tech services (21,500) and communications (13,000) than in the more lucrative services & consulting areas (10,500). None of these numbers are surprising. And if you’re in the industry, you probably know that “customer-facing” positions — consulting, professional services, and even customer support — are where the jobs are.

The good news is that the economy seems to be on the mend…somewhat. There are no guarantees, but we may start seeing a better job market starting later this year. Many companies held off on upgrades, purchases, and new projects during the deepest portion of the downturn. They should start buying again soon, as the next round of major upgrades becomes unavoidable.

If you’re out of work and looking, brush up your skills. If you’ve managed to retain your job so far, keep learning new technologies and don’t let yours become “stale.” Engineers have a shelf life, just like any other product. What does your sell-by date look like?

Numbers don’t lie, though of course the people who use them certainly can (and do). For instance, Microsoft has consistently claimed that Vista has been a rousing success despite the word on the street and numerous articles to the contrary. But the percentages just don’t add up. Two years after its release, Vista is installed on less than 30% of all PCs worldwide. And even worse, it seems few people actually bought it. Instead, they got it pre-installed on a new machine.

The numbers say it all: “those that [run Vista] are almost exclusively the Home Premium version, meaning that Vista is employed mainly by home users who likely got Vista preinstalled on a new PC.” Now that’s probably the lowest adoption rate for a Windows release since, oh, maybe Windows ME back in the late 1990s. The boys in Redmond have to be sweating bullets over the impending Windows 7 release. If it also flops, Microsoft is in trouble. At least in terms of OS sales.

Those folks have other worries as well. Despite a relatively good showing (so far) for IE8, the Pulse pages show Firefox gaining ground in the browser wars, with around 50% of all PCs running it. Of course, IE still has a huge lead since it’s present on all Windows PCs by default…but only a few years back, Firefox was to be found on 5-10% of all running systems. 50% is a pretty big jump.

Other statistics are very interesting. Office 2007 is the biggest Office release at present, and Word is (as might be expected) the most popular of all Office applications in terms of actual use. Poor Visio barely shows on the graph, and even Access isn’t that high on the food chain.

These numbers are also useful if you’re buying a new system or considering an upgrade. For instance, most Windows PCs now have between 2 and 3GB of RAM installed, so you probably don’t want to buy a machine with less than that. 4GB is overkill unless you’re running memory-intensive applications or just want to buy ahead of the curve (a practice I support). And as would be expected, Intel and Dell are the biggest names in CPUs and hardware, respectively.

Now, these numbers are just samplings so they shouldn’t be taken as the last word. Statistics can be difficult to interpret, and there are certainly under-represented configurations (for instance, Linux users and others who prefer not to offer data to the Pulse information-gathering effort). What will the market look like in a year? In five? Come back and see!

Microsoft has been barraging the market with ads for its new “Bing” search service. As anyone who hasn’t been living under a rock probably knows, Redmond is trying to steal thunder from Google and Yahoo in the lucrative search market.

As such, they’re billing Bing as a “decision engine” that can, among other things, help you figure out when the best time is to buy plane tickets and find the best deals on various other retail products. But after all that hype, not to mention millions in development and promotional costs, they’ve gained less than 1 percent in the marketplace. Was that gain worth the cost?

The other big question is how long the increase will last. In politics, candidates can expect what’s known as a “post-convention bounce” following their party’s national convention — their approval and expected-vote numbers jump a few percent. This is mainly due to all the convention hype, media coverage, and other hullabaloo. Is Bing’s .9 percent rise a similar phenomenon? Is it solely due to the media barrage and users testing the waters to see if they like the product? Or will it translate into real, long term gains? We’ll find out in a few months, once more people try it out.

Hype is a fine thing, and can help get any new venture off the ground. The real test comes when the hype wears off, the advertising budget shrinks, and customers get a serious taste of the product. Some people show up just for the novelty of the experience or product. Others, who are far more important from a business standpoint, actually decide they like it and come back for repeat business.

The proof in Bing’s pudding is whether those repeat customers start coming back. If they do, Google and Yahoo will lose some market share (along with other, small search engines like Ask). If not…if the numbers drop back to their pre-Bing level over time, then the service is yet another bust for Redmond. I expect we’ll know for certain by the end of 2009. If it fails, expect yet another offering with a different spin in a year or two. This market is too important to Microsoft…they won’t just walk away.

As reported last week, Microsoft is slated to become the functional search engine provider for Yahoo’s long-running and highly popular service (presuming the deal is sanctioned by the government). Under the terms of the ten-year agreement, Redmond will provide all the back-end horsepower and results. They’ll get 12% of the revenue generated during this period. The Yahoo name will (at least for now) remain on the masthead and is what users will see.

Is this the beginning of the end for Yahoo?

According to executives, Yahoo wants to “refocus” on newer products now in development. Why they want to do so while their search service is one of the top three in the marketplace is unknown. Search is the company’s bread and butter, like Google. And they’ve now opened the door to the Trojan Horse that is Microsoft. The end result could be a better Yahoo…or total fragmentation of the company into virtual nothingness after Redmond “negotiates” a more favorable deal for themselves a few years down the line. Only time will tell.

The strange thing about all this is Microsoft’s addiction to becoming a “search leader” in the market. They’ve tried for years, and have failed consistently to capture more than 1/3 of the market. Google is firmly on top, is constantly improving their core product, and its users are unlikely to change. Somehow, Microsoft believes that if it can get “more data” about user behavior from its deal with Yahoo, it’ll cause users to abandon Google in favor of its services. That’s not likely to happen. Once a user becomes comfortable with a given interface, they’re unlikely to abandon it without a very good reason.

This is, in fact, the primary factor behind the popularity of many of Microsoft’s own products — especially Windows-supplied tools like Internet Explorer and Outlook. Get an application in front of a user’s eyes first, and they’re not likely to look for another one. So the chance of Microsoft pulling business away from Google is probably very low.

I think the executives in Redmond are just obsessed with Google. It’s their own personal Great White Whale, and they’re determined to harpoon it no matter what. But we all know how that story turned out. And Yahoo might just be the Pequod that ends up being sunk as a result.

Finally, after a year or more of wrangling and corporate soul-searching, Yahoo and Microsoft have inked a deal. Given, it’s not a done deal yet since it has to pass government anti-trust scrutiny. But the final outcome, if it’s approved, will probably be a major change in the search landscape.

Search has been around since the early days of the Web. Once sites started proliferating, various people established “link lists” and published them on their own home pages. The lists grew. Other people started asking to be included, in order to increase the visibility of their own site (which, at that point, was probably little more than a personal page and maybe some research papers they’d written). Then it all mushroomed once someone wrote the first web crawler (spider). This is just software that starts at a given page, finds embedded links on that page, then follows them. It feeds its results into a database, and voila! the search engine was born.

Over the years, search companies have sometimes relied on outside vendors to manage their actual search function. This is due to the serious increase in volume and the number of sites that need indexing; it’s difficult, if not impossible, to index everything on the web by yourself. In fact Yahoo outsourced some of their work in this area to these geeky Google guys back in 2000, and to Inktomi later on. Lot of good either did them. Most people just moved off to Google and didn’t come back.

Now this latest deal will put Yahoo in Microsoft’s tender little hands in terms of search experience and management. It also puts most of Yahoo’s assets under Microsoft’s control. Redmond wants blood. Blood in the form of biting off a big hunk of Yahoo’s user base that might help it compete with Google in terms of market share. It might work. It really might. The problem is, Microsoft has never had a successful search product. Their online ventures have never really panned out all that well (witness Windows Live). They’re better in the traditional boxed software market space.

So, will the new alliance bring in more search users? Will the presence of Microsoft drive off die-hard Yahoo users (probably into Google’s arms), thus destroying the whole objective of the deal? Or will it actually work…can the new alliance offer some product that will both work properly and lure users away from Google? I doubt the latter will happen. Bing has some cool features, but Google has been doing this a long time and is probably already ahead of the Bing curve. If they’re not, give them six months. Tops.

One thing’s for sure. The game just changed, and might get exciting again for a while. Will we see Yahoo go belly-up after making a deal with the devil? Will Microsoft be driven from the market completely, in favor of any other search engine on the planet? Can their service even deliver at high volume, i.e. millions of searches per minute? Let’s wait and see.