Microsoft Corp. (NASDAQ: MSFT) is set to release its Q4 and full fiscal year results this Thursday after the market closes, with an expected earnings per share figure of $0.35, which would be an increase over the year-ago quarter $0.31 figure. With the Q4 period being the first full quarter that the Windows Vista operating system has been for sale to all public channels, will Microsoft meet or best analyst estimates?

Stay tuned to BloggingStocks this Thursday after the market closes to find out, as I'll be live-blogging Microsoft's Q4 call right here. Until then, I'm of the belief that analysts will again grill Microsoft brass on its internet strategy -- specifically its AdCenter platform (competitor to Google Inc. (NASDAQ: GOOG) and Yahoo! Inc. (NASDAQ: YHOO)) and how performance there is shaping up. Also, the sparks may fly a little on Microsoft's billion-dollar commitment to extend the warranties on some Xbox 360 game consoles and the possible insider trades that happened right before the bad news broke.

On a lighter note, I'm interested to see how sales of Microsoft's newer Office 2007 productivity software are shaping up, since that is the single largest piece of Microsoft's revenue arsenal outside of the Windows franchise. Is Office 2007 selling, and well? We'll all see soon.

Google Inc. (Nasdaq: GOOG) has just taken another step on the road to ramping its ad revenue model (AdWords) with the opening of a new office in Ann Arbor, Michigan. The office launches with 20 people but is expected to employ 1,000 people within five years.

A purported $38 million in tax breaks over 20 years could be part of the incentive for Google to open the office in Michigan, but it makes sense to have the office located in Ann Arbor because it is in the same time zone as New York City (GMT -5:00), which has a proportionally high number of corporate headquarters. West Coast sales could likely be handled by a department within Google's Mountain View headquarters.

The other takeaway is that Google is planning on having 1,000 people within five years. Seeing as it has roughly 6,000 employees currently and the current staff dedicated to AdWords sales in Michigan is just 20 (of course the current sales team is probably part of the 6,000 and the 20 is in Michigan is focused on hiring), Google is clearly feeling very optimistic about future ad revenue and its own success.

Of course, Yahoo! and Microsoft are both just as optimistic about the ad revenue model pioneered by Google; having launched their own services earlier this year. And AOL has begun the transition from ISP service to content provider and portal focused around, what else, ad revenue.

It seems Google hitting the proverbial 'paydirt' with monetizing its business through AdSense has not gone unnoticed. 

Microsoft has unveiled plans for its AdCenter platform and Yahoo! has launched its Overture follow up, Context Match.

As we near the eve of Web 2.0 (or 1.5 -- however you like to slice it), the focus has been on the big three (Google, Yahoo! and Microsoft), who have been launching new products, revamping old ones, and snapping up new technology in an effort to one up each other.

As the big three move in to carve out their respective share of the established and highly lucrative advertising market, it's interesting to see the periphery players emerge who might well shake up the landscape of Web 2.0.

eBay, which has been residing in its owncomfortable niche, is making quite a play with the pending launch of its AdContext affiliate program, which was unvelied alongside many new strategies and programs at eBay's 2006 Developer's Conference.

The crux of the AdContext platform is the same as the aformentioned AdCenter, Context Match and AdSense programs -- placing context based ads on individual web pages. 

The twist is that contextual auction items will be listed instead of short text ads.  In the short text model (AdCenter, Context Match, AdSense) the affiliated web-site is paid per-click. In eBay's model, the affiliated web site will be paid a portion of the listed item's sale price (there is still no official word on whether this will be the revenue stream model as it seems like it could become awkward).

This is a deft move by eBay and should sound alarm bells for the Big three. Their incumbency in the new paradigm of web dominance may not be set.

In particular Yahoo!, which has just partnered with eBay to provide advertising solutions to the eBay family of sites, should take note.

Google's marketshare for overall U.S. web search activity increased from 47% in April 2005 to over 50% as of the end of April 2006, according to Nielsen/NetRatings. Consider how significant that marketshare figure is: Across the globe, billions of searches are occurring every year -- tens of billions. This happens across languages, countries and political barriers. Google has nearly half that market, and it's now even more than 50% in the U.S. search market.

While Microsoft's new AdCenter promises more finely-tuned customer targeting in it search ads, and Yahoo's Project Panama is still a ways away, Google will likely continue to rake in advertising co-op dollars for the foreseeable future.

Although Google, Yahoo! and Microsoft all saw increased search activity over the last year in the U.S., Google increased its lead at the same time, growing its search faster than anyone.

Did this come through more partnerships, better word-of-mouth, a more intuitive customer product and experience -- or all three? My guess is that all three contributed. If Google remains as dominant as it is now, few will be able to challenge this web search giant.

The long-anticipated search engine ad wars officially start today. The announcement will be made by Microsoft's Steve Ballmer during his address to the company's Strategic Account Summit.

Yahoo! search marketing ads will no longer appear on MSN or other Microsoft web properties. That's no big surprise.  Microsoft's been weaning itself of Yahoo!'s ads for a while now. The only thing new is the final date it will happen.

Advertisers who have been part of the test like the features of Microsoft's AdCenter, but don't like the traffic numbers. So AdCenter's only chance of success will come when Microsoft can increase the traffic to its web sites. AdCenter's unique features include the ability to pick the day of week, time of day, and geographic location for the ad being placed. AdCenter can also help advertisers target searches based on age, gender and income. Yahoo! and Google ad search engines can't do that.

While eventually these extra features might help Microsoft win the war, it won't have a chance of success until it increases the traffic to its Web sites dramatically. Right now Microsoft only gets 11% of that traffic with Google getting the lion's share of 49% and Yahoo getting 23%, according to Neilson/Net Ratings.

George Kepnick of search ad agency Dottedonline.com told Bloomberg that most companies put 70% of their search engine ad budgets into Google. Only 20% goes to Yahoo and MSN gets the remaining 10%.  

Can Microsoft turn that around?

With Google in clear command after Q1 earnings came in, Yahoo and MSN are launching initiatives to try and boost their search-advertising capabilities to compete with Google's wildly successful AdWords platform.

Yahoo's revamp centers on a technology revamp code-named "Panama" which focuses on bridging the gap between Yahoo! and Google with regards to the search-ad business. The new technology foundation is slated for roll out in May.

Microsoft's MSN service will launch its first search-ad network, called AdCenter, in early May as well.

According to eMarketer Inc. the revenues generated by search-advertising text ads were more than $10 billion in 2005 and they forecast that number to surpass $14 billion for 2006.

MSN's adCenter seems to gear the search-ad focus on allowing advertisers to target a specific audience/demographic type.

Yahoo! is still hush-hush about its plans but the guess is that they are trying to go head-to-head with Google in identifying user intent/patterns/psyche and having relevant ads displayed by analyzing the interplay of search queries, page content, browsing trends and patterns.