Sunday, May 25, 2008

Search = Frequent Flyer Miles?

Microsoft is going to start paying people to Search on their platform. Seems like Search may be moving towards an Airline Frequent Flyer Miles incentive system. I'm all for that as a consumer (except that it will be one more large barrier for an upstart search provider).

However, I remember reading a while ago that Miles Programs are actually not that great for airlines. Although they help with loyalty, they're really costly. Everyone has to offer them because all the other providers do too. One more cost that is strangling airlines. Search is such a ridiculously profitable business that it's hard to imagine this being cost prohibitive, but I think moves like this are how a categories profitability get's chipped away at over time.

By the way, don't you just love the competition between Google and MSFT? Google is developing an online Office Suite that they give away to hurt Microsoft's cash cow Office Suite. MSFT turns around and starts paying people to use their search platform, hoping to inflict another cost on Google and hurt Google's cash cow.

I love capitalism.

the chart is a reblog from James Siminoff.