Microsoft wants to grab a bigger slice of the online advertising market within 5 years!

Steve Balmer has just been quoted at a Silicon Valley business lunch saying that he wants within 5 years to gain a bigger slice of the lucrative online advertising market currently dominated by Google and Yahoo.

No wonder Google and Yahoo are getting back to basics and re-focusing on search and advertising!

Microsoft is not only chucking billions at playing catch up in online advertising based software and services both via MSN and Windows Live! but they are also betting the strategic shop and careers of their senior folk on winning this race most likely by 2010.

And this is one massive role of the dice. And when Microsoft make such huge rolls - they generally squash those in front of them. And they will leverage every single piece of synergy they can from their Redmond colossus - including the ever contentious Windows franchise.

But, this time round they will need to roll big time - for they have never had to come from so far behind and re-invent themselves to such a great degree. And the current leaders of the space, Google and Yahoo are massive and powerful organisations with huge influence and clout.

The one that should be most concerned of course is the number 2 Yahoo, but they should also not make the mistake of getting too intimidated by the usual Microsoft press bluster. Google and Yahoo both have enough of a head start and enough resoyurces that if they are truly nimble, innovative and smart they can prevail. Which is why Balmer has given his time 5 years just to grab more market share and not dominate the space.

But Google and Yahoo will also need to take the fight to Microsoft and not just defend their turf. Both of them should hit Microsoft where it hurts most and go after their consumer applications software franchise and MS Office in particular. Office software on-demand is the way to go. They should not wait too long to launch.

To be a successful fighter one has to attack and defend in near equal proportions (preferably attacking a little more than defending). Microsoft is a master at it - Google and Yahoo need to learn a little more about the attacking part I feel - which includes hitting below the belt every so often!

If not Balmer will in another year or so be predicting when Microsoft will be dominating the space - ahead of Google and Yahoo!