Microsoft can't catch Google search; niche partnerships ahead?

It continues to seem that no company can catch Google Inc. (NASDAQ: GOOG) in the online advertising space. The company -- whose name is a verb now -- has a majority of the search market for web-based advertising and it will be nearly impossible for any company to make a dent in that system with the current business models used by the competitors. Yahoo! Inc.'s (NASDAQ: YHOO) new Project Panama won't do it and Microsoft Corp.'s (NASDAQ: MSFT) AdCenter will not either. Both of these competitors have basically duplicated the biggest pieces of Google's strategy, but great companies are not overthrown by copycats, but by market disruptors.

Microsoft is no spring chicken here -- the company has a very decent search advertising system to compete in the market with, but even the world's largest software company can't catch Google's huge and first-mover lead here. What can Microsoft do? Become more relevant in the field for niche information search requests, that's what.

Would Microsoft partner with high-traffic sites like job search property Monster.com or Technorati.com? If it can't start eking out more share against Google in the general Internet search market, it may have little choice other than to adopt a different strategy, since competing head-on with the Google folks isn't working. That kind of move would not be necessarily bad, either. I'm quite sure PepsiCo Inc. (NYSE: PEP) likes being a market follower to The Coca-Cola Co. (NYSE: KO), and Pepsi's niche approach to creating a whole universe of beverages for every need has won it sales accolades. Perhaps Microsoft (and Yahoo!) should be thinking up the same road here.