Microsoft was too slow to react to the potential of search, leaving rival Google to forge ahead, according to its chief executive.
Microsoft's slowness to embrace the potential of search means it has fallen far behind rival Google, according to a new report.
Steve Ballmer, Microsoft's chief executive, told the BBC that in search terms Microsoft was a "David" compared to Google's "Goliath".
Mr Ballmer said that Microsoft had failed to grasp the potential power of online search, but still had the technology to catch up.
"Do I wish we'd started the investment in search a few years earlier? Yes. We may be David up against Goliath but we're working on it," he commented to the BBC.
He promised that Microsoft would continue to fight Google's supremacy in search engines, and would also beat off the contest for mobile phone software after the launch of Google's Android programming last week.
Mr Ballmer suggested that Windows-based smartphones would continue to outperform other models like Blackberry, iPhone and Google Android.
"You've got to remember that Android is version one … and it looks like version one," he told the BBC.
Microsoft attempted to buy rival search engine Yahoo earlier this year, but failed with a £22.4 billion bid after Yahoo's board asked for more money.
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