Brilliant move by Microsoft…unless Google has any spare cash around to fight back.

Update: I checked, seems that they have a shilling or two.

Poor Microsoft.

This move makes them seem like that tragic kid in high school who would try to bribe other kids to attend their parties. Only to find that kids would show up to partake in the promised festivites before continuing on to cooler, more familiar destinations.

While I am a big fan of discounts when shopping, I am not a fan of feeling bribed. The thought that Microsoft thinks that I-and others like me are “buyable” does not make me feel warm and fuzzy towards microsoft or their services. Even if it did, I like google, I get google, its going to take more than the potiential of 2% back to persuade me to ungoogle myself from google.

Microsoft should instead look to something to create “shock and awe” if it wants to win over users. This seems like a much better bet to establish long term competition with Google than what equates to a bribery contest that Google-with or without participating, likely, could easily win.

I think that this will result in minimum to moderate short term gains but I can’t see this being a successful long term strategy.

First, to play devil’s advocate, I don’t really see this as a bribe. Yes a customer will receive a rebate/discount on their purchase, but these funds don’t come from Microsoft, they in essence come from the company whose product was just purchased. It does cost MS to do this, but it’s more as if they’ve forgone their old per-per-click ad revenues rather than incurring a cost to bribe someone.

I see this incentive as being more analogous to turning Live Search into a discount store, a No Frills/Walmart of the online search world if you will. This will encourage the most cost conscious consumers to use Live Search to make their purchases, and I suspect that with the US economy as it is, there are increasingly going to be a lot of people who fit this bill. But the real question is, how often do these cost conscious consumers make big purchases anyways? Personally I feel like Microsoft will succeed in attracting SOME of these people, but that they don’t necessarily represent a large segment of the market in spending dollars. In addition, without trying to make an uninformed guess, I suspect that this demographic may be less technologically savvy that other more affluent demographics – which is to say that they may never even learn about the incentive system in the first place.

My other thought is that this obviously can’t last – Microsoft is essentially running a ‘free’ service to put customers in touch with discounted products. They aren’t receiving revenues and incur costs, so what happens when the MS no longer passes on those discounts to the people using their services? Maybe some will stay, but I wouldn’t count on it. Using again the analogy of a discount store that sends out coupons in a weekly flyer – when the discounts don’t flow, cost conscious customers are the least loyal business patrons and will go elsewhere. Which is to say that once MS puts the brakes on their program, where do you think these people are going to go back to for their search needs… it starts with a G and rhymes with moogle.

The irony is that I usually do product research before I buy something online, and if I were ever going to use Live Search for the discount (doubtful), I would use Google right up until the time I had made my choice, and then use Live to buy it – not exactly a successful behavioural shift to using Live.