Microsoft's CFO: Investment In Search Will Be Aggressive

search software attempt to takeover Yahoo.

Combining the forces of Microsoft and Yahoo would offer stiff competition to Google, currently the leader in search. Liddell said that Microsoft realizes that customers still want rich client experiences, as well as client and server experiences and services experiences.

"From my perspective," Liddell said, "the great benefit of Microsoft is we play and we'll be strong in all of those three experiences.

He noted that services was only part of what Microsoft was and would be offering. "There are going to be periods clearly where you're offline and you just don't have the ability, despite the increased ubiquity of broadbandwhere you simply don't have online capacity," Liddell said. "And, even if you do have the bandwidth for itdo you have the bandwidth at the economics that you want?"

For example, he pointed to gaming as an example of an application that may always be better on the client than via a service.

"So I think services are important, and clearly Google and Yahoo! through what they're doing are making a big impact, but from my point of view the important thing with Microsoft is to focus on all the experiences that a company might have," Liddell noted.

He added that Ad Center, Microsoft's branded search advertising, will provide the company with benefits in the long term.

"It's strategically important that we have control of our own destiny there, and we are investing very heavily there, even though it may have a short term earnings impact in terms of dropping our revenue for search relative to the Overture rates that we've been getting. So we will continue to do that," Liddell said. "We'll continue to build out our infrastructure, we'll continue to bridge the gap in relevancy, and we'll also continue to work on some of the new areas of search that we see coming up. We still have the view that search is very much in its infancy, so investing in the areas, some of the verticals that we are seeing, for example, around photos, investing in community questions and answers, some of the areas that we see as the potential future is something that you'll see from us as well."