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Microsoft's Online Chief 'Not Just Anybody'

Qi Lu
Former Yahoo executive Qi Lu
Photo source: Microsoft
When he starts his new job as head of Microsoft's online services on January 5, Qi Lu will have his hands full. Chances are, his pockets are a bit fuller too.

Microsoft announced Thursday it has hired Qi as president of Microsoft's (NASDAQ: MSFT) online services group (OSG).

Until August he was Yahoo's executive vice president of engineering for the search and advertising technology group.

Qi brings ten years of experience at Yahoo to the new gig, which should serve him well. He will be in charge of search and online advertising as well as the company's online information and communications services and will report directly to Microsoft CEO Steve Ballmer.

Much of the weight of Microsoft's online aspirations will fall on his shoulders. "Qi will oversee all efforts in search, our online advertising platform, and all of our online information and communications services," Ballmer told employees in an all company memo on Thursday afternoon, which InternetNews.com obtained.

That's a tall order. But at least one analyst who watches the search sector thinks it was a smart move.

"They didn't hire just anybody -- they hired the guy who built Yahoo Search and he also built their monetization technology," Charlene Li, industry analyst and founder of Altimeter Group, told InternetNews.com.

Qi's departure from Yahoo last summer was only one of many executive resignations in the wake of first Microsoft's failed bid to buy all or part of the company, followed by the demise of Yahoo's advertising deal with Google under antitrust pressure.

No matter how talented and organized, however, it's hard to conceive that a single hire will change Microsoft's fortunes in the online space.

"I don't think that one person can bring everything around," Li said. "Microsoft is very far behind so there are some very big barriers to get around," she added.

One of those barriers is its tiny market share.

According to figures from Web tracking firm Net Applications, on a global basis, Microsoft remains in a weak third place in search. MSN Search currently has a 3 percent market share while Live Search holds 1.56 percent. Combined, that 4.56 percent is still less than half (NASDAQ: YHOO) Yahoo's search share at 10.47 percent – and miniscule compared to (NASDAQ: GOOG) Google's 81.11 percent.

The company had hoped to solve some of that problem earlier with its original bid for all of Yahoo, and then with a second attempt, this time aimed at only buying Yahoo's search business. Neither worked out.

While Microsoft executives say they have no further interest in buying the entire company, Ballmer told shareholders in November that he's not closed to the idea of working out some kind of deal for Yahoo's search business.

Among the senior Microsoft execs who will be reporting to Qi will be Yusuf Mehdi, senior vice president of the Online Audience business and Satya Nadella, senior vice president of OSG research and development.

Meanwhile, Brian McAndrews, who was CEO of aQuantive and became senior vice president of Microsoft’s advertiser and publisher solutions group after the software giant bought it for $6 billion in 2007, will "transition" out of the company. All three were reportedly interested in Qi's job.