In theory, getting users to ditch one Internet search engine for another should be an easy sell. But doing so is likely to cost Microsoft (MSFT) every penny of the roughly $100 million it plans to spend on an advertising campaign that starts Wednesday for its new Bing search engine.

In economist speak, there are virtually no “switching costs” for a consumer that wants to change from one search engine to another, other than the burden of typing Bing.com into a Web browser instead of Google.com (GOOG). That’s nothing compared to the switching costs of a company changing a complex piece of enterprise software, which may require employee retraining, or a consumer who switches to a new operating system, requiring the purchase of new application programs.

In reality, of course, habit and inertia make it very challenging for a company like Microsoft to improve its 8 percent share of the search market against rivals like Google and Yahoo (YHOO). There’s also the problem that most people say they’re happy with their experience on Internet search engines today, though some of their online behavior–for example, the large amount of time they spend on typical searches–suggests otherwise, according to Microsoft’s research.

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At a table in Las Vegas, a town fueled by big bets, IBM (IBM) software chief Steve Mills outlined one he doesn’t want to make: Buying application provider SAP (SAP).

“We’re not changing our strategy,” said Mills, who guides Big Blue’s software strategy for CEO Sam Palmisano. “We have consistently shied away from going deep into the applications space,” he said last week at a series of business meetings.

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If you follow me on the nanoblogs, you may have seen me complaining recently about getting pitched on new Web apps that I find either derivative or confusing. Or both. Now, in any entrepreneurial ecosystem, a big proportion of the ideas that people come up with will be bad, and many of those bad ideas will become actual products. But at the moment, the ratio of bad Web products to good (or even interesting) products is worse than usual. Here are a few reasons why. …

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If you read this blog, you might think that Kara Swisher isn’t a big fan of fun. Or at least of silly, fun apps like SuperPoke! and what we call “social entertainment.” Call me silly, but I’d take entertainment over utility any time, and you know what? I bet you would too.

Case in point: the week of April 21 and the Pennsylvania Democratic Primary. That Tuesday marked a very important day for our country. A major competition between visible and opposing candidates was decided. It was a vote that is sure to generate publicity and campaigning over the coming months, and it will no doubt continue to occupy center stage of our national attention. Of course, I’m talking about “American Idol.”

That week, the two most popular television broadcasts were “American Idol” and “American Idol” (Tuesday and Wednesday, respectively). The third and fourth were both “Dancing with the Stars.” Check out the table below (from Nielsen Media Research; click on all tables and charts to make them bigger) and perhaps you’ll arrive at the same conclusion I did: When it comes to consumption, we prefer entertaining fare.

Likewise on the Web, Google News’s (GOOG) most popular searches in 2007 are by and large entertainment related (from Google Zeitgeist 2007):

Here’s a graph from Alexa.com of traffic to the three most popular non-search-engine Web sites and the most popular news Web site.

And here’s a graph from a Morgan Stanley (MS) “Internet Trends” report from 2008 of two of those same Web sites and the two most popular search-engines:

That last graph made a pretty big splash when it debuted at the Web 2.0 Expo conference; its title was “YouTube + Facebook Views > Yahoo! or Google…” Or to put it another way: today, fun is more powerful than utility.

Consider the value of other companies that deliver entertainment: Disney (DIS), Time Warner (TWX) and Sony (SNE) have a combined market cap of over $168 billion. Gross revenue for the NFL and MLB last year exceeded $12 billion. Apple (AAPL) made nearly $2 billion through iTunes music sales alone. Social networks benefit from increased activity, advertisers benefit from an exuberant audience, and widget users can, well, share favorite “American Idol” moments, send virtual margaritas or trout slap each other.

So seriously Kara, you have to try throwing a sheep or two. As Dr. Seuss said: “If you never have, you should. These things are fun and fun is good.”

Keith Rabois is vice president of strategy and business development at Slide, which makes widgets and applications such as SuperPoke!

The launch of Google’s App Engine, which allows developers to build a Web application and then host it on Google’s existing infrastructure, is a watershed moment in the software-development industry. The days of building and hosting your own servers, except for specialized applications, are officially over. This is good news. And App Engine will give everyone, including Amazon, a nice scare, which means that these companies will be forced to take a hard look at what they offer today, and what they need to do to improve it.

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Hackers have turned their attention to Facebook’s hundreds of independent applications. The results are not terribly surprising, but do not tell a good tale: App developers don’t seem to know a thing about basic security, and are putting private user information at risk. As a result, malicious hackers are able to access and change what should be private user data managed by the application providers.

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It was a good day for Web workers who build applications. On the one hand, Google released their Visualization API, which provides sophisticated ways to display tabular data with relatively little coding. On the other hand, we have the launch of the Amazon Fulfillment Web Service, which allows anyone to use Amazon’s network of fulfillment centers and packers to ship physical products to their customers.

Taken together these–and other APIs that are already out there, from Google Charts to Amazon S3 and ECC–are making it increasingly possible to build complex real-world Web applications without supercoders. But there’s a threat, too: the more services you depend on, the more points of failure you have, as demonstrated by last month’s Amazon S3 Outage.

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It’s not often I write something completely positive about Apple … but there are exceptions to every rule, as I’m about to prove. As Thursday’s iPhone special event approached, I was looking forward to it, but with some trepidation. As a user who has had third-party applications on his iPhone almost since such a thing was first possible, I had concerns that Apple wouldn’t quite understand how well this system had been working. But now, having read the coverage of Apple’s briefing, I am happy to admit I was completely off-base with my concerns. I think Apple has hit a proverbial home run here, with everything from the enterprise support to the actual SDK to the approach it plans to take for distribution. Here’s why I think Apple did everything right…

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Last year, Facebook chief executive Mark Zuckerberg suggested that a PC operating system was the inspiration for Facebook’s new “Platform.” With Platform, anyone could write applications for Facebook. Facebook’s in-house applications would get no special treatment, he declared. The analogy to an operating system is appealing. For many years Microsoft’s Windows operating system has benefited from the large number of applications written by outside developers. People buy Windows, not necessarily because it is the best operating system, but because it has the most applications. Like Microsoft, Facebook does not have a monopoly on great ideas nor unlimited bandwidth, and a platform ostensibly allows Facebook to leverage the talents of the entire developer community to its benefit.

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VideoEgg has announced that its ad network for Facebook applications–eggnetwork–has pulled in around $1.5 million in ad revenue over the past five months. While the company is touting the news as a “million-dollar payday” for developers, it actually seems like a fairly paltry figure when you consider the companies on eggnetwork’s client list.

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