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Tearing a strip off Microsoft's Brazilian: That's no way to attract mates

Envy Amazon and eBay, sure, but leave it there

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Analysis It would appear that the Not Invented Here philosophy is still going strong inside Microsoft, with Redmond apparently considering unleashing into the market a rival to mega online shopping juggernauts Amazon and eBay.

The Wall Street Journal reports Microsoft had been briefing unnamed people about an effort called “Brazil” – Amazon flows into Brazil, geddit? - an online market giving merchants their own unified shopping cart and also shipping options.

Microsoft had hoped to lure shoppers with the temptation of low-priced goods and services subsidised using money spent by merchants on its Bing search engine service, an insider told the WSJ.

The project has since been canned.

In a rare statement on an unannounced project, Microsoft told the WSJ Brazil had been an “incubation to enable a more direct commerce model between customers and brands and merchants".

Microsoft has a solid track record of bringing to market products and services already offered by others, allowing its competitors to test consumers' appetite for the new kit - even should they have a prototype to hand prior to rivals' entry into the fray, as was the case with tablets.

It should therefore come as little surprise that somebody somewhere deep inside Microsoft has postulated a Microsoft online marketplace. The question is why Microsoft would even bother - even going as far as trying to recruit merchants - when it has plenty of problems to tackle in its home markets of Windows and high-growth areas of tablets and smartphones where it shows little sign of catching up to rivals.

Following the trends

The wait-and-see how competitors do philosophy dates from a time in the 1980s and 1990s, when Microsoft needed to sell applications to customers that went beyond just its operating system. These added-value apps helped its sales bods offer justification for buying Windows to potential business customers. For starters, it developed its own desktop productivity suite on the PC and a relational database and groupware on the server. In most cases, it wasn’t just a case of just “needing” the software, it was a also matter of making Microsoft’s version run better on Windows than those of its rivals.

In more recent years, Microsoft's move to build its own version of rivals' products has seemed more like a flag-planting exercise rather than a serious attempt to offer an alternative. We’ve had Bing Search, Bing Ads and Bing Maps – all loss-making - to counter Google's market-leading offerings in the three sectors; we've had Silverlight against Adobe's Flash (now cancelled); as well as a rash of Web 2.0 properties which have since been abandoned.

The spirit of all of these ideas was the same: a Microsoft version tied into Microsoft APIs plus – now – tied to the search and ads engine. But the openness of web development plus the the dynamics of the market have seen Microsoft’s once-winning strategy falter.

Why would Microsoft build its own marketplace? Amazon and eBay are already there with massive market and mind share – just like Google had in search and in ads. Microsoft also has more pressing development, strategic and execution problems.

The idea is, presumably, to give Bing something to search for and fling ads at, and also to give Windows Phone and Windows tablet devices and something to tie onto if Microsoft ever makes any gains in the fondleslab and smartphone space. Also, Brazil would serve as the market for front-room shoppers using XBox One.

But what an uphill struggle Brazil faces, a quest of truly, er, Amazonian proportions, one that would take massive financial commitment - not only to build the system but to advertise and to subsidise it over a long period of time.

Microsoft's online business would presumably house Brazil as it's the corporate home to Bing, but the online business is already a massive loss-maker despite the supposedly glorious Yahoo! deal. Moreover, Brazil's end points - the Windows smartphones, tablets and XBox One - do not exist in great enough numbers to attract merchants or customers.

Further, Microsoft's thinking is way off: subsidies were used to promote Bing, but whatever money Microsoft offered was a drop in the ocean - not to mention a bit of a waste for Microsoft when you consider the amount of money Bing ended up making. Subsidies would serve to only make Bing lose even more money for an unknown period of time.

So is now really the time to create a new online shopping system? Such are the levels of saturation that eBay is now seeking its growth in the offline world by offering retail payment systems that span both the web and the High Street.

Microsoft has dropped the ball twice on tablets and smartphones but these are hurdles from which it could potentially recover given the company's heritage and experience. But web has never been something Microsoft has done well and now is no time to start trying... unless it really does enjoy burning money and losing strategic and tactical focus. ®

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