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...but may be moving in Microsofts favor. While Hitwise shows Microsofts Live Search down over 20% in 2007, and Compete shows it barely up (from 8.8% to 9.1%, after a brief flirtation with 10%), Nielsen/Netratings has Live Search on a tear, going from 8.4% in December 2006 to 10.1% in March, 13.3% in June, and 13.8% in December.

Meanwhile, no one is disputing the failure of Yahoo. Hitwise again shows little change (which makes me question their accuracy), with Yahoo falling from 21.6% to 20.88%, but Nielsen and Compete have nearly identical numbers, with Yahoo starting at 23.6% and 23.2%, respectively, and plummeting to 17.7% and 17%.

If you only go with Nielsens numbers, Yahoo and Microsoft are seperated by just 3.2%, and thats after a year where Yahoo fell 5.9% and Microsoft gained 5.4%. Things are a little less spectacular (for Microsoft) at Compete, where Yahoo still fell 6.2%, but Microsoft gained a meager 0.3%.

Considering that Yahoos fall as a company is just getting started (barring some brilliant save from Jerry Yang or Sue Decker), Id only expect their search share to fall even faster in 2008. In theory, by this time next year, Windows Live Search could be the number two player in the search industry. Even without catching Google, making number two would make Microsofts Live effort and unqualified success, and would push a lot of advertisers from Yahoos search ads over to Microsofts.

Could this actually happen? Werent people calling Live Search a failure? Better go back and re-think that. Microsoft appears poised to take the number two spot from Yahoo in the next twelve months, possibly in the next six, and when it does, the landscape of this industry will shift significantly.

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