Bravado doesn't come often from the Microsoft (NASDAQ:MSFT) camp these days. After being slapped on the wrists both here and abroad for what some consider to be bullying tactics, the world's largest software company has lately been content to take its lumps, sign the checks, and move on.
It won't -- or perhaps I should say can't -- take that stance when it comes to Google (NASDAQ:GOOG). The world's most valuable Internet company has grown too powerful, and Microsoft knows better than to take it lightly. That's why it presented a special executive summit last year titled "The Google Challenge," and why Microsoft has been toiling furiously to follow Google into the paid-search space.
This brings us to yesterday's comments by Neil Holloway, Microsoft's president for Europe, the Middle East, and Africa. He said that in six months, Microsoft will be "more relevant in the U.S. marketplace than Google."
Those are strong fighting words, being delivered bravely from a continent away. Then again, distance can make you fonder of your own company. In an interview with Forbes Poland this week, Bill Gates said that IBM (NYSE:IBM) -- not Google -- is Microsoft's biggest competitor. It sounds good, though I doubt that Mr. Softy would have had much of a showing for an "IBM Challenge" summit.
I don't think Microsoft will be "more relevant" than Google in search this summer -- or even next summer. Even if Microsoft's search engine proves to pack the superior digging skills, that certainly won't be enough to make it the most popular. Show of hands: Who here thinks that McDonald's (NYSE:MCD) has the best burgers in town?
Then again, if might makes right, Microsoft does have $35 billion in the bank. That makes Google's $8 billion stash look like a mere pittance. It's unlikely to become a race to see who is willing to spend more, but at least Microsoft knows that it reigns supreme when it comes to cash.
Microsoft is trying. Earlier this week, it announced initiatives in everything from online classifieds to local search. I still prefer Google's search and mapping features, but Microsoft won't rest on its laurels as it has in the past. It realizes that it's been trailing Google and Yahoo! (NASDAQ:YHOO) in contextual marketing, so its AdCenter -- still in beta -- offers a few neat wrinkles to give advertisers more flexibility regarding who they want to reach and when.
I think Microsoft will be taken seriously in this battle when it decides to eradicate MSN.com, with all the slow-loading graphics that pepper its landing page, in favor a cleaner design like Yahoo!'s or Google's. Is Microsoft too proud for that to happen?
Microsoft is a Motley Fool Inside Value newsletter pick. It wasn't singled out in our more high-octane-growth research services, and with good reason: The stock has been stuck in the $20s for nearly four years now, and its valuation has contracted as earnings growth has slowed. That's what has made this great growth stock through the 1980s and 1990s a turnaround special here in 2006.
Mattering in the high-margin realm of online advertising may be just the ticket to ignite investor interest in Microsoft's shares again. But won't be easy. When Big Brother shows up to the schoolyard, he's going to realize how big the new bullies of cyberspace have become.
Longtime Fool contributor Rick Munarriz is a huge fan of Google, and it would be his home page if not for Fool.com. He does not own shares in any of the companies in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
