Ballmer

Microsoft chief executive Steve Ballmer told the Financial Times that Microsoft's next big challenge, after the launch of Vista, is to address the threat posed by advertising-supported business models such as Google's.

"Really getting a clear direction on how we embrace, compete, extend advertising as a business model - that is a primary issue for me and it extends across the product line," he said.

Ballmer said the first three products to focus on after Vista were: search, search, and search. Says Ballmer, "There may be blockbuster [deals], but the number-one thing for us is our own development and let's call them technology acquisitions."

According to Nielsen/NetRatings, Microsoft's market share of search continues to fall; it accounts for 8 percent of US searchs versus Google's 51 percent.

Microsoft has failed to build up a powerful network of advertisers to feed the traffic generated by its engine, and has also failed to sufficiently invest in its own search technology.