Ballmer on Net search

I'm over here on the Redmond campus this morning for the second day of the MSN Strategic Account Summit. On tap today are speeches by Yahoo CEO Terry Semel, advertising guru Donny Deutsch, and Microsoft's Bill Gates. Slate founding editor Michael Kinsley will also moderate a panel discussion.

The highlight yesterday was a speech by Microsoft CEO Steve Ballmer. One of the most interesting parts came not during his official remarks but during a question-and-answer session afterward. Someone in the audience asked him to talk about the company's effort to develop its own search technology, a hot topic because it promises to pit Microsoft vs. Google.

We led our story this morning with part of his comments, but here's everything he said on the subject. (And yes, to anticipate your question, he really did use four "verys" in succession. He's an enthusiastic guy.)

"Search obviously is an important area. It's an area where we had for a long time essentially built a search strategy based upon components that were to some large degree outsourced. It’s probably the thing that I feel worst about over the last several years -- us not making the R&D investment ourselves up front, but rather outsourcing. It’s funny, people sometimes say Microsoft wants to do it all. This is a case where we actually didn’t do it all. Shoot, I wish we had done it all.

"It turns out, we have a lot of guys who are really smart about search. In our research group there were tons of PhDs and computer scientists who'd really thought about the problem. So we have a ton of talent there. We built a great development team to complement them. And we have set our goal out to be absolutely the best from a user perspective and from an advertiser perspective in terms of search with technology over time that we build internally, largely, as opposed to outsourced from vendors, largely.

"There's no magic in a sense about search. I just looked at the cover of this most recent Newsweek with the picture of the Google guys and you would think there was some magic looking at the cover of Newsweek, but there's no magic here. It's good, hard, go-get-em, do the best R&D, have the most relevant results, have the best customizability of the advertiser-type stuff. With the kind of stuff we have in this company – hardcore software developers – we’ll be able to do very, very, very, very well, and we are committed to doing very, very, very well. I think you’ll see a lot of really good competition in the search area. The competition will be good for all involved. It’ll certainly be really good for us right now, and we want to make it really good for those other guys, too."