Microsoft Corp. will aim to strike more agreements for its Web-search software to be included on computers and mobile phones, even though the deals may not always make money, Chief Executive Officer Steve Ballmer said.
“It might still be a good marketing investment for us to make,” Ballmer said today in an interview in New York. The deals may not make “economic sense” at the outset, he said.
Microsoft, Google Inc. and Yahoo! Inc. form partnerships to make their search engines the default setting on computers and mobile phones to attract new users. Google can pay more for the deals without losing money, Ballmer said.
Google, the most-popular search engine, gets an estimated 9.5 cents to 10 cents on average in ad sales from each search, while Microsoft and Yahoo get 4 cents to 5 cents, Ballmer said. That means Google can give its partners 8 cents from each search, while Microsoft may have to lose money, he said.
“Google can bid them to a point where we are not economical,” said Ballmer, 52. Microsoft will probably do a “bit of investment” in those agreements as existing partnerships that companies have with Google and Yahoo expire, he said.
Microsoft handled about 8 percent of search queries in the U.S. in February, compared with Google’s 63 percent and Yahoo’s 21 percent, according to researcher ComScore Inc. Outside the U.S., Microsoft’s market share is even smaller.
Kim Rubey, a spokeswoman for Sunnyvale, California-based Yahoo, declined to comment on how much revenue the company makes per search. Google, based in Mountain View, California, didn’t have an immediate comment.
Microsoft struck partnerships to put its search software on Dell Inc. computers and Verizon Wireless mobile phones this year, beating out Google for the deals. Last year, Microsoft reached agreements with Hewlett-Packard Co., Sun Microsystems Inc. and Facebook Inc. Hewlett-Packard, the world’s biggest personal-computer maker, had a deal with Yahoo.
The agreements mean that new computers come preloaded with a toolbar that lets them use Microsoft’s Live Search. The search engine also appears on the home screen of some Verizon handsets and is included when customers download Sun’s Java software.
Ballmer reiterated that he’s interested in a search partnership with Yahoo because it “makes all the sense in the world.”
Ballmer said earlier today at a conference that he has spoken with Yahoo CEO Carol Bartz and that they will talk when it’s appropriate.
“What’s she been there now -- all of a month and a half, two months?,” Ballmer said in the interview. The Web-search industry has been harder for him and other executives to learn than most businesses, Ballmer said.
Microsoft, based in Redmond, Washington, rose 18 cents to $17.14 today in Nasdaq Stock Market trading. The shares have lost 12 percent this year.