Link Baiting Idea

One of the best and the far most the effective way to gain links to your website or blogs is link baiting idea.

What do you mean by Link Baiting?

This is a new idea born among webmasters to gain popularity for their blogs/web page. As you all know getting attention is an old trick, weather in real life or online. Politician uses this often to stay in limelight. This same rule applies to link baiting as well.

There are two different flavors in link baiting idea. Good and bad. Good ones are those to create news first like exposing scams and create news, which will surprise everyone. Bad ones are those you create a controversy or attach some leading personalities in your blogs. Think that you are trying to gain traffic not really hurt anyone. These kinds of tricks or ideas will bring in 1000's of website/blogs linking to your site.

Link baiting idea is a blackhat technique that's why most webmasters think it is not legitimate to use it. But the effects of link baiting have profound effect and gradually drive traffic to your blog or site. If implement properly it can draw huge links with minimum effort from your side. Some link expert's call that "hooks" has mentioned the 5 types of "hooks" as News, Contrary, attack resource and Humor.

Matt Cutts the Google Engineer in his blog about SEO advice has mentioned "LinkBait" as something interesting to catch people's attention. He say's Linkbaiting is not a bad idea.

So creating attention is the key to that also person should be creative in his thought to get that idea into place.

You might all have heard of Alex Tew of he created an idea to raise a Million $ to raise funds for his college education by selling 1 pixel for a $ on his website. After four months he accomplished the task. This is the kind of news you should create to get attention. His site was also mentioned in CNN News as well. After his idea there are 100 of sites mushroomed over the web like one cent pixels but they are not gaining to achieve the results Alex could drew to his website. So be first to create news before it gets crowded.

Actually the term "linkbait" was started by Aaron Wall of SEO book in his post way back in August 2005. He says in his post that if "you are in a field that can't build links naturally create linkbait". By creating something on your web site that's funny, controversial, informative, or creative, it will gain natural linkswhich is the key to top search engine rankings.

Andy Hagan's has come up with an idea to throw a contest to get links. The idea is simple give Andy a link baiting idea and if that works you will earn $1000 for that. He has posted that on BizNicheMedia.com blog. So his idea for a contest itself is an example of link baiting.

And generating information or ideas that people talk about is a surefire way to generate links.

Ethics Best Practices and SEO A Crisis in the Profession

There has been much debate recently on the practice of ethical Search Engine Optimization (SEO). The recent removal of a high profile SEO company from the Google results has plunged the industry into yet another debate on what is ethical and what is not in our profession.

I have been involved in the SEO industry for a few years now and the mention of the word ethics and best practices in what is still an unregulated industry creates a level of confusion the likes of which I have not observed in any other industry. Why does this reluctance to discuss ethics and best practices exist? After all, we call ourselves professionals and as professionals we should strive to be part of an industry which stands for best practices and quality of service.

The confusion seems to come from the way that search engines rank sites. Each search engine has an algorithm which is a complex method of giving a value to a site which will ensure that it is returned in the search results when a relevant keyword is typed into a search engine. These algorithms are kept secret by the search engines for obvious reasons. The SEO industry is highly focused on analyzing these algorithms and using any knowledge gained to modify and rank websites. Ask any two SEOs what they consider to be ethical in their pursuit of top results and you will most likely get two very different answers. Hence, the lack of agreement on what is ethical and what is not.

So where do we start? Our commitment must always start with the client and our responsibilities to them. An ethical company will always demonstrate loyalty and respect to their client. This is true whether they are an SEO, a doctor or an accountant.

Having sound business practices and a professional approach to all that you do then we can move onto the search engine guidelines. All the major search engines and directories publish their own guidelines of use for webmasters. This should be the minimum that any SEO practitioner complies with when working on a clients site. Search engines have a right to protect the integrity of their results and the SEO practitioners should respect those guidelines.

The confusion seems to arrive with the interpretation of the guidelines. One SEO will interpret the rules to mean one thing and another SEO will see it as completely different. The stakes are high and a top ranking in Google for your site is powerful branding and can lead to a major upswing in your business.

SEO practitioners have been classified as whitehat, and blackhat. Whitehat practitioners are the ones that try to stick to search engine guidelines while blackhat operate using more questionable techniques and view the search engines as the enemy. Unfortunately blackhat techniques can sometimes adversely affect the sites ranking and worse, get their clients sites banned.

Blackhats traditionally play to the emotional needs of their clients and often convince them to part with their money without giving clear and specific information on the changes they will make to their sites. If a client is fully aware of the risks and is prepared to buy into short term gain then that is their choice. However, many Blackhat SEOs do not disclose their tactics. Would you hire a CPA who submits your tax return including questionable practices and breaking all the IRS rules? You are the one who will get audited, prosecuted and have to pay huge fines.

Blackhat techniques are just plain bad business practice. They also do the search engines and the search users a huge disservice by contributing to poor quality of results. This adds nothing to the end user experience.

The search engines say that any type of manipulation to get a site ranked is a threat against them and the relevancy of their results. Whitehat practitioners will say that they are not manipulating sites but rather fixing search engine obstacles within a web site. The need for their services is great as many web site designers do not know how to integrate search engine friendly designs.

Last year a prospective customer contacted me after being burned by a rogue" SEO company who got their site (and others) banned from Google for spam tactics. A few weeks later they were contacted by the same rogue SEO company under a new name. Perhaps naively she almost fell for it again. She reasoned that if they had been banned once they would not do anything wrong again! This demonstrates the lack of knowledge that consumers have regarding our industry. They dont know the difference between good and bad SEO. People are being taken advantage of because of their lack of knowledge.

No matter what techniques your SEO uses; ethical , whitehat ,blackhat none at all it all boils down to one thing. Doing right by the client? Ethics is often viewed by many in the industry as hype.

I think the focus should be on serving users as opposed to manipulating the search engines. SEOs who concentrate of making the sites the best that they can be for the end user will create a much better longer term affect. The SEOs who chase algorithms and try to game the search engines get burned when there is an algorithm change. Following search engine updates involving an algorithm shift, the industry message boards abound with posts along the lines of I hate Google, they have killed my site If these posters had spent more time improving their site for their clients, and the search users, the algorithm updates would be much less stressful for them.

At this time there is no initiative within the industry to create a trade body which sets a code of best practices. It is down to the consumer to practice buyer beware and ensure that they practice due diligence in selecting an SEO. They need to use even more caution than they would use to select any other vendor. I also believe the industry has a responsibility to provide education and resources for consumers and help de-mystify the profession.

Great SEO companies share their knowledge willingly. They hide nothing to either clients or search engines. They know that they have a specialized skill and are proud of what they do. They get their results through hard work and perseverance. They also know that to do the job properly takes a lot of time. This is something which most business owners feel they do not have. They are confident that when it comes to hiring a professional, their honest and open approach to their trade will be acknowledged by organizations who only want to work with the best.

The following are some golden rules I have written on choosing an SEO. If the consumer sticks to these rules then they should avoid the practitioners in our industry who give the rest of us a bad name.

Only work with a company that follows search engine guidelines. (If I could only make one recommendation this would be it). The three main search engines are Google, MSN, and Yahoo. Look on their sites for their webmaster guidelines.

Only work with a company that documents the SEO process they will use to rank your site

Only work with a company that provides a written contract outlining their process and their costs

Get at least four proposals for your site and compare services before you make a decision

Do not work with a company that offers guarantees of top rankings. Nobody can offer these types of guarantees.

Do not lock yourself into a contract you cannot get out of if you are not getting results

Ask for references and follow up with them. If you still have any doubts ask for more. Ensure that references check out. Check that the suggested site is real and that the contact details given check out against the contact details on the site.

Do not allow any work to be carried out on your site without your approval.

Do not give the SEO carte blanche to do as they will with your site. It is your site not theirs. It is your responsibility to ensure that the SEO does not apply any techniques that would result in getting your site banned.

Check the companies BBB (Better Business Bureau) report. Check for membership of any other established trade bodies such as the AMA (American Marketing Association) Many companies claim that they are more reputable because they are part of SEMPO (Search Engine Marketing Professional Organization.) However this is not the case. All that is required to be a member of SEMPO is a $299 annual subscription.

Do not work with a company that engages in site wide link exchanges. Question their linking methods. Ensure that they only have a policy of linking with on-topic sites. Remember, your site is built for users not for search engines. If your site is about computers and your link to a site that sells childrens toys how useful do you think that link will be for your visitors.

Ask other companies doing well on the Internet who they use for SEO. Always ask about the quality of customer service that is offered. It is not much use having a great SEO if you can never get hold of them.

If it sounds too good to be true. IT IS!!!

In conclusion the SEO industry is a dynamic growing industry. This rapid growth has created some challenges for the industry. One of these challenges is the perception that outsiders have of SEO practitioners being unethical. To counteract this many SEOs are now promoting themselves as ethical SEO. However, as the industry is unregulated it is up to the consumer of the service to become informed and exercise caution when selecting a SEO vendor. As the demand for SEO continues to grow the number of unethical practitioners calling themselves SEOs will also grow. To protect yourself, take the vendor selection process seriously. Look for vendors who are willing to share knowledge and partner with you to provide the best possible outcome for you business.

Importance of Genuine SEO Techniques

TherearesomemethodsofSEO(SearchEngineOptimization)youshouldfollowforyourwebsite.SEOisveryimportantforallwebsitesoutthereinthetechniques,whicharegenuine,youcannotgetyourwebsitetobeknown,andgetanyprofitfromit.

1. ContentisKing:Everysearchengine,Googleincluded,looksforonlythecontent.Contentisthemostimportantthingtorankhighinsearchengines.Withoutcontent,yoursiteisjustanothersite,withoutmuchimportance.Socreategoodgenuinecontent.

2. Buildlinks:Buildinglinksisutmostimportantjustascontent.Forthis,thereareseveralmethods.OnesuchmethodiswritingtotherelatedWebmastersandlettingthemknowofyoursitesexistence.Iftheybelievethatyoursitehassomecontent,whichislinkable,theywilldefinitelylinktoyourcontent.Maybesomereciprocallinkingisrequired.Inthatcase,youcannegotiatewiththewebmasterandaskthemaboutthereciprocal.

3. Noonecanguaranteenumberoneinsearchengines:Googleisthemostimportantsearchengineoutthere,andevenGoogletopemployeescannotguaranteeyournumberonepositioninGooglesearch.ItistheresultofyourhardworkandgenuineSEOlinkbuildingthatwillpositionyouatthetopofthesearchresults.Otherwise,youcannotjustgettothetopofanysearchengines.

4. Linkbuildingyourselfisbetterthanconsulting:YoumaypromoteyourblogwithgenuineSEO,andthatwillrankyoursitehigherthananySEOfirmcando.So,itisextremelyimportantthatyoudoityourself.Setapartsometimeinyourdailyscheduletobuildlinkswithanynicheblogsyouknowof.Also,askyourfriendswhohaveblogsthemselvesinthesamesubjecttolinkintoyoursite.

5. DonottrustblackhatSEOfirms:BlackhatSEOtechniquesarethose,whichdonotdogenuineSEObutgobysuchmethodsasdoorwaypages,invisibletext,keywordstuffing,etc.SEOshouldbedonethroughWhitehatmethodsonly.Otherwise,youmaybepermanentlybannedbysearchengines.

6. Donotdorecklesslinkbuildings:ifyourblogistwodaysoldandhas1200incominglinks,thenGooglewillbanyouonthethirdday.So,recklesslinkbuildingisequaltolinkspamming.Donotdothat.

TheseandmoreofthetechniquestodogoodSEOareavailableintheresourcesmentionedbelow.SEOisaveryimportanttechniquetogetyoursitetothetopofsearchengines,therebybuildingyourbrand,gettingsales,andprofit.So,genuinenaturalSEOtechniqueisextremelyimportantforthesuccessofawebsite.

Link Baiting Idea

One of the best and the far most the effective way to gain links to your website or blogs is link baiting idea.

What do you mean by Link Baiting?

This is a new idea born among webmasters to gain popularity for their blogs/web page. As you all know getting attention is an old trick, weather in real life or online. Politician uses this often to stay in limelight. This same rule applies to link baiting as well.

There are two different flavors in link baiting idea. Good and bad. Good ones are those to create news first like exposing scams and create news, which will surprise everyone. Bad ones are those you create a controversy or attach some leading personalities in your blogs. Think that you are trying to gain traffic not really hurt anyone. These kinds of tricks or ideas will bring in 1000's of website/blogs linking to your site.

Link baiting idea is a blackhat technique that's why most webmasters think it is not legitimate to use it. But the effects of link baiting have profound effect and gradually drive traffic to your blog or site. If implement properly it can draw huge links with minimum effort from your side. Some link expert's call that "hooks" has mentioned the 5 types of "hooks" as News, Contrary, attack resource and Humor.

Matt Cutts the Google Engineer in his blog about SEO advice has mentioned "LinkBait" as something interesting to catch people's attention. He say's Linkbaiting is not a bad idea.

So creating attention is the key to that also person should be creative in his thought to get that idea into place.

You might all have heard of Alex Tew of he created an idea to raise a Million $ to raise funds for his college education by selling 1 pixel for a $ on his website. After four months he accomplished the task. This is the kind of news you should create to get attention. His site was also mentioned in CNN News as well. After his idea there are 100 of sites mushroomed over the web like one cent pixels but they are not gaining to achieve the results Alex could drew to his website. So be first to create news before it gets crowded.

Actually the term "linkbait" was started by Aaron Wall of SEO book in his post way back in August 2005. He says in his post that if "you are in a field that can't build links naturally create linkbait". By creating something on your web site that's funny, controversial, informative, or creative, it will gain natural linkswhich is the key to top search engine rankings.

Andy Hagan's has come up with an idea to throw a contest to get links. The idea is simple give Andy a link baiting idea and if that works you will earn $1000 for that. He has posted that on BizNicheMedia.com blog. So his idea for a contest itself is an example of link baiting.

And generating information or ideas that people talk about is a surefire way to generate links.

How Internet Marketing Gurus Get Rich From Affiliate Marketing

Have you ever wondered what exactly is up with Affiliate Marketing? This informative report can give you an insight into everything you've ever wanted to know about Affiliate Marketing.

If you've been involved with affiliate marketing for any length of time, then you're probably aware of the fact that affiliate marketing "gurus" have access to knowledge that you don't, and that bridging this "information gap" is the key to earning a solid income online.

Here are four ways top marketers are getting rich through affiliate marketing.

1. By marketing to affiliate marketers. This one becomes painfully obvious when you think about all of the infoproducts dedicated to helping affiliate marketers earn more money online.

As long as these infoproducts actually serve to help their readers, they can be a highly effective tool in assisting affiliate marketers in increasing their profits.

Unfortunately, the Internet is littered with scores of ebooks filled with worthless, rehashed information.

But if you've had some success with affiliate marketing, why not but together your own infoproduct that helps others to experience the same success?

Or, you could put together a 10-page ebook that presells a product and earns you affiliate commission. And, if you like, allow your readers to give it away and watch as your commissions skyrocket!

The information about Affiliate Marketing presented here will do one of two things: either it will reinforce what you know about Affiliate Marketing or it will teach you something new. Both are good outcomes.

2. By capturing e-mail addresses rather than sending prospects straight to a merchant site, and following up with them through long autoresponder series, as well as free giveaways that pre-sell their own products or the products of a third-party merchant.

By operating in this manner, these savvy marketers are creating actual "residual" income. A list of just 10,000 people can result in passive income of thousands of dollars a month. The good news is, that it isn't that difficult to build a list of this size, or that expensive either.

3. By brokering joint venture deals with other list owners. If you can leverage someone else's mailing list for an instant surge of profits, you stand to be highly profitable.

If you already have your own list, why not send out a mailing inquiring about brokering joint venture deals with your subscribers? Take the path of least resistance and use the power of network to your advantage.

4. By embedding affiliate links in free special reports and information products they are selling.

If you give me general details on how I can solve a pressing problem, and then tell me that product A, B, or C is the "ultimate solution" to solving that problem, your odds of selling me that product increase dramatically.

So use your free and for-sale items to boost your affiliate commissions, while exploring new ways to achieve greater returns on your efforts.

Those who only know one or two facts about Affiliate Marketing can be confused by misleading information. The best way to help those who are misled is to gently correct them with the truths you're learning here.

Affiliate Marketing - Make your Living Online

Affiliate marketing's been a staple of the internet marketing scene for many years now. It's highly touted as a money maker for newbies and experienced marketers alike. But does it really pay to be an affiliate marketer? Let's take a look to learn more...

Basically affiliate marketing's an agreement between a web site owner and a merchant. The web site owner's actually an advertiser for the merchant or product creator. The agreement is a contract between the two parties that stipulates that the site owner can use various methods including the space on his site to promote the merchants goods. The merchant meanwhile agrees to pay a percentage of each sale generated through the affiliates personalized link.

This benefits both sides because the product creator spends nothing to advertise their goods and the affiliate pays nothing to research and develop new products.

This creates a win-win situation.

The product creator wins by saving money on advertising, which is one of the most costly aspects of doing business, by passing this cost on to affiliates. Basically it's a pay-per-performance deal because the merchant doesn't accrue any costs until the sale's made and the merchant pays the specified commission.

The affiliate marketer wins by being able to sell an already developed product, thus saving the time and money on the front end by not having to deal with R&D and product creation. The product is already developed and proven by the merchant, and all you have to do as an affiliate is find as many prospects as you can that will bring in the profit for both the merchant and yourself.

Another benefit to the affiliate is that most programs are free to join and have pre-made sales material so your marketing experience doesn't have to be that of an expert.

Probably the biggest benefit to being an affiliate marketer on the internet's the internet itself.

Because of the global reach of the internet it's very easy to reach tens of thousands of prospects for almost any type of product line. It's also very easy to intensify your efforts as an affiliate marketer to exploit new and productive strategies such as viral marketing, ebooks, special reports and autoresponders.

Lastly, as an affiliate marketer you get to pick and choose between many different products to promote. You're not married to a specific product or even a specific product type. Your risks are minimal because there are no long term binding contracts so if one product doesn't bring in a profit you can quickly and easily replace it with another.

All in all affiliate marketing's still an excellent way to earn income from the internet. Perform your due diligence, find a hungry market, find a good product and go for it!

On Microsoft MSFT

Copyright 2006 Geoff Gannon

Microsoft is a difficult situation for me to evaluate. I think the company still has a lot of growth ahead in some areas. But, that depends on where management wants to take it.

There are three core businesses that are already well developed: Windows, Office, and Servers.

The moat in the first two are wide. The Windows moat is huge.

The business model in operating systems is great. You keep upgrading every few years; the hardware needn't progress for you to find things to tweak and get people to buy the next step up. It's insanely profitable.

I think the new launch (Vista) will be bigger than people expect (eventually) in how it allows for cross selling other Microsoft products (but we'll see about that). I expect the press to be very negative at least until well after the launch, because there will always be some bugs and delays.

Games

Eventually, video games will be a big business for Microsoft. I hate the economics of the console business, but love the economics of the publishing (and development) side of things.

I'm sorry to see that Microsoft didn't use its cash pile to buy up an established business here (publishers were cheap in the market a few years ago; an all cash deal would have worked well. Now, everyone thinks video games will be the next big thing).

The console wars are going well for Microsoft. The two keys to establishing a dominant console are launching first and getting good games on your platform. We'll see how Sony (SNE) does this round, but I expect them to be the big loser.

Nintendo may surprise here. I think the Xbox 360 and Nintendo's new console (Wii) will do very well. It'll be interesting to see the breakdown of the consoles in both the domestic and foreign markets. I think Sony may still be strong overseas, but could be in a much poorer position at the end of this round than they were with the PS2.

Search

Long-term I am optimistic about search. I think Google's position is much weaker than most people think. I don't think Microsoft will be the only one to benefit here.

Search is a very natural cross sell with Windows. That's the direction everything seems to be headed in (combining online and desktop search). For future growth in terms of market share I think Microsoft is in a better position than either Yahoo (YHOO) or Google (GOOG).

I also think we might see a couple other (largely unknown) search engines gain some share.

I think Google's strength is its brand. Its dominance helps with advertisers more than users. I don't think it has a lock on users. Also, I think Google has been poorly positioned for doing much of anything outside of keyword search.

I expect to see a lot more in the way of intelligent, social search inspired stuff. Years from now, much of search will have to be helping you find what you didn't know you wanted to find.

Google is dominant in a different business: helping you find what you know you want to find (but don't know the name / location). The two types of search are very different. Both will be important, but the growth in other forms of search will be coming off a smaller base and will likely integrate with keyword search. Google has the most to lose here.

Other Devices

Microsoft wants to perform well on mobile devices and on your TV. Compared to competitors it is very strong in these respects.

The strategy seems to be the one I would favor - to control the point of initial contact wherever software is used and then to only venture into the actual application or content side of the business where it is highly profitable to do so. In video games it will be highly profitable. In other areas it is less likely to be very profitable.

I expect to see more generic, web-based applications. These will be less profitable for everyone. Office should hold up well, but not as well as Windows. Basically, Microsoft needs to take what it has in PCs and import that to TVs, Handheld Devices, Consoles, and the Web.

That should be the strategy. I think that is the strategy. These aren't unrelated businesses that need to be broken up to unlock creativity (as some have suggested). Rather, the profit potential for each is greatly enhanced by being part of Microsoft. If you take these pieces apart they are worth very little. There would only be the three businesses I started off talking about and the console / games business.

Internationally, there is going to be natural growth for Microsoft's dominant businesses. It won't be a tremendous growth rate, but it will be strong and will require virtually no additional investment to secure.

Obsolescence Issues

Overall, I like the future for software a lot more than hardware, because the marginal gains in the quality of hardware will slow greatly in the years ahead.

The question isn't what can be done mathematically in terms of increasing specs; it's what that translates to for the user. We are reaching a point where the individual user will not directly see the benefits of increased hardware performance as clearly as he did in the past.

Much of the research that goes in to this area will only serve to bring down prices and benefit memory intensive businesses - it will not provide as much of a "wow" factor for the user anymore.

This is especially true in games. The situation in desktop applications is already such that improving the software design is where most gains will come from.

Computing power is simply not a scarce resource for most individuals sitting at home or in a cubicle. Advances will benefit some users a lot and will trickle down to the end user (often via the web) through fast responses and cheap services. But, that's a barely noticeable change.

You'll see something here akin to the kind of thing you see in the brokerage business. It won't be obvious, because price competition will never be as great in software.

Generally, you'll just see the prices for doing anything electronically come down. That's very different from what we've seen over the last few decades, where you also had advancements that attracted new users, because they allowed developers to do something differently, not just more cheaply.

This is a very long-term trend I'm worried about. It could weigh heavily on a business like Dell (DELL), because PCs are actually quite durable; once the rate of obsolescence slows, sales will have to slow as the cycle lengthens.

Management

I think Microsoft's management is absolutely the best in the business. In fact, I think it's one of the best in any business.

It would be hard for me to find more than a handful of people I'd rather have managing a business I was part owner of. I also think the current arrangement is a good one.

There is enough of a line between current operations and future investments in the Chairman / CEO split that investors will probably get the greatest benefit from the brilliance of the Chairman this way.

Everyone underestimates Bill Gates. It's easy, because his great triumph came some time ago now. But, he's interested in building something lasting. I trust him more than anyone in tech without a question. He always impresses me whether he's talking about his own industry or some other topic. He has exactly the right kind of mind for someone running a business where the long-run is such a concern.

Qualitatively, I think Microsoft scores close to perfectly. I could cite the profitability stats, but I won't, because you know they're better than almost any other business on the planet

On Microsoft

Microsoft is a difficult situation for me to evaluate. I think the company still has a lot of growth ahead in some areas. But, that depends on where management wants to take it.

There are three core businesses that are already well developed: Windows, Office, and Servers.

The moat in the first two are wide. The Windows moat is huge.

The business model in operating systems is great. You keep upgrading every few years; the hardware needn't progress for you to find things to tweak and get people to buy the next step up. It's insanely profitable.

I think the new launch (Vista) will be bigger than people expect (eventually) in how it allows for cross selling other Microsoft products (but we'll see about that). I expect the press to be very negative at least until well after the launch, because there will always be some bugs and delays.

Games

Eventually, video games will be a big business for Microsoft. I hate the economics of the console business, but love the economics of the publishing (and development) side of things.

I'm sorry to see that Microsoft didn't use its cash pile to buy up an established business here (publishers were cheap in the market a few years ago; an all cash deal would have worked well. Now, everyone thinks video games will be the next big thing).

The console wars are going well for Microsoft. The two keys to establishing a dominant console are launching first and getting good games on your platform. We'll see how Sony (SNE) does this round, but I expect them to be the big loser.

Nintendo may surprise here. I think the Xbox 360 and Nintendo's new console (Wii) will do very well. It'll be interesting to see the breakdown of the consoles in both the domestic and foreign markets. I think Sony may still be strong overseas, but could be in a much poorer position at the end of this round than they were with the PS2.

Search

Long-term I am optimistic about search. I think Google's position is much weaker than most people think. I don't think Microsoft will be the only one to benefit here.

Search is a very natural cross sell with Windows. That's the direction everything seems to be headed in (combining online and desktop search). For future growth in terms of market share I think Microsoft is in a better position than either Yahoo (YHOO) or Google (GOOG).

I also think we might see a couple other (largely unknown) search engines gain some share.

I think Google's strength is its brand. Its dominance helps with advertisers more than users. I don't think it has a lock on users. Also, I think Google has been poorly positioned for doing much of anything outside of keyword search.

I expect to see a lot more in the way of intelligent, social search inspired stuff. Years from now, much of search will have to be helping you find what you didn't know you wanted to find.

Google is dominant in a different business: helping you find what you know you want to find (but don't know the name / location). The two types of search are very different. Both will be important, but the growth in other forms of search will be coming off a smaller base and will likely integrate with keyword search. Google has the most to lose here.

Other Devices

Microsoft wants to perform well on mobile devices and on your TV. Compared to competitors it is very strong in these respects.

The strategy seems to be the one I would favor - to control the point of initial contact wherever software is used and then to only venture into the actual application or content side of the business where it is highly profitable to do so. In video games it will be highly profitable. In other areas it is less likely to be very profitable.

I expect to see more generic, web-based applications. These will be less profitable for everyone. Office should hold up well, but not as well as Windows. Basically, Microsoft needs to take what it has in PCs and import that to TVs, Handheld Devices, Consoles, and the Web.

That should be the strategy. I think that is the strategy. These aren't unrelated businesses that need to be broken up to unlock creativity (as some have suggested). Rather, the profit potential for each is greatly enhanced by being part of Microsoft. If you take these pieces apart they are worth very little. There would only be the three businesses I started off talking about and the console / games business.

Internationally, there is going to be natural growth for Microsoft's dominant businesses. It won't be a tremendous growth rate, but it will be strong and will require virtually no additional investment to secure.

Obsolescence Issues

Overall, I like the future for software a lot more than hardware, because the marginal gains in the quality of hardware will slow greatly in the years ahead.

The question isn't what can be done mathematically in terms of increasing specs; it's what that translates to for the user. We are reaching a point where the individual user will not directly see the benefits of increased hardware performance as clearly as he did in the past.

Much of the research that goes in to this area will only serve to bring down prices and benefit memory intensive businesses - it will not provide as much of a "wow" factor for the user anymore.

This is especially true in games. The situation in desktop applications is already such that improving the software design is where most gains will come from.

Computing power is simply not a scarce resource for most individuals sitting at home or in a cubicle. Advances will benefit some users a lot and will trickle down to the end user (often via the web) through fast responses and cheap services. But, that's a barely noticeable change.

You'll see something here akin to the kind of thing you see in the brokerage business. It won't be obvious, because price competition will never be as great in software.

Generally, you'll just see the prices for doing anything electronically come down. That's very different from what we've seen over the last few decades, where you also had advancements that attracted new users, because they allowed developers to do something differently, not just more cheaply.

This is a very long-term trend I'm worried about. It could weigh heavily on a business like Dell (DELL), because PCs are actually quite durable; once the rate of obsolescence slows, sales will have to slow as the cycle lengthens.

Management

I think Microsoft's management is absolutely the best in the business. In fact, I think it's one of the best in any business.

It would be hard for me to find more than a handful of people I'd rather have managing a business I was part owner of. I also think the current arrangement is a good one.

There is enough of a line between current operations and future investments in the Chairman / CEO split that investors will probably get the greatest benefit from the brilliance of the Chairman this way.

Everyone underestimates Bill Gates. It's easy, because his great triumph came some time ago now. But, he's interested in building something lasting. I trust him more than anyone in tech without a question. He always impresses me whether he's talking about his own industry or some other topic. He has exactly the right kind of mind for someone running a business where the long-run is such a concern.

Qualitatively, I think Microsoft scores close to perfectly. I could cite the profitability stats, but I won't, because you know they're better than almost any other business on the planet