Microsoft increases investment in advertising and search technology

Microsoft’s chief executive, Steven A. Ballmer, in a speech last Thursday said that company is planning to boost its investments in MSN and other online ventures like windows-live initiatives to $1.6 billion next year in a bid to catch Google, which currently dominates the search market.

Capital spending and research outlays will rise 60 percent in the year that starts July 1 from a projected $1 billion this year, Ballmer indicated in his speech to many advertisers at the company’s headquarters here.

“It’s important for you to understand our deep commitment,” Mr. Ballmer said. “Only two to three companies can really deliver the infrastructure that’s required to keep pace with consumer demand and advertisers’ needs.”

microsoft-ceo.jpgMicrosoft, currently facing terribly difficult time to match Google’s rapid growth and market spread, is believed to be heavily investing in advertising and internet search technology and is building many computer centers across the world to manage these online business services.

Microsoft’s chairman, Bill Gates, did not shy away from prasing Google achivement in search and advertising space, but added: “We will keep them honest. I think this is a rare case where we are being underestimated.”

Microsoft said capital spending on MSN would reach $500 million in the next fiscal year, from the $300 million projected this year.MSN research and development spending will rise to $1.1 billion.

In the same period, Google’s capital spending in 2005 was $838 million, an increase from $319 million in 2004. Research and development spending at Google rose to $599.5 million.

Microsoft opened its new Internet search advertising service, AdCenter, for all advertisers to use starting Thursday. It had been testing the service with 7,000 advertisers.