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Redmond Won't Be Google's Waterloo

This column was originally published on RealMoney on Dec. 1 at 2:35 p.m. EST. It's being republished as a bonus for TheStreet.com readers.

While going against the honorable Mr. Kass may be a dangerous game, I have to firmly disagree with his opinion that Microsoft (MSFT - Get Report) will provide the first real challenge to Google (GOOG).

If Google falls from grace, it will be because of a decline in the online-advertising market, not inroads from Gates & Co.

He and I are on the same page as far as innovation goes. If innovation led to success, Xerox (XRX - Get Report) would rule the world. And to date, Microsoft has succeeded by copying successful products and bundling applications at lower prices to drive out competition.

But the game has changed.

Search is a free product for consumers, so by definition it can't be undercut in price. (Google does have enterprise products for which it charges.) Therefore, innovation actually counts for something. Google was revolutionary in its simplicity. It stood out because it was uncluttered, easy to use and fast. Microsoft has done absolutely nothing to differentiate its search engine. The MSN search page even looks like Google's.

Vista is not a major factor in the search wars. Microsoft already has dropped numerous major features from the product, and as of yet there is no sign it will launch on time. I doubt we'll see it before 2007, and even then it will take some time to get into wide use. Even though Vista has a search function built in, that does not mean anyone, let alone everyone, will use it. People associate Google with search and convenience, and they associate Microsoft with blue screens and hassle.

Technologywise, consumers don't see the science behind search engines. No one knows what makes one better than the other, but people do know brands, and Google is quite obviously the biggest brand in search. And, of course, Microsoft hasn't even caught up to Yahoo! (YHOO - Get Report) yet, let alone Google.

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