Bungled branding of the new Windows Live Internet services has hurt Microsoft and could affect its chance to play catch-up with Google, analysts said on Friday.
On Thursday, Microsoft lowered its sales forecast for its Internet services business for the full year from 11 percent to between 3 percent and 8 percent. It also acknowledged that its search market share has dropped. Windows Live Search saw its searches drop nearly 10 percent from a year ago, while Google's rose more than 22 percent, according to figures released this week from Nielsen/NetRatings. Google has 50.8 percent market share, followed by Yahoo at 23.6 percent and Microsoft with only 8.4 percent.
While it's too early to write the obituary for Windows Live, things aren't looking good in its first year, analysts said.
"There are concerns that there has been some slippage or (Microsoft) has moved backwards" with regard to its push to better compete against Google in the market for consumer software that is supported by ads, said Michael Cherry, lead Windows analyst at Directions on Microsoft. "This is a long-term thing, so I'm not sure how to measure it on a quarter-by-quarter basis."