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[W]e will be announcing a major new initiative... We are getting better and better with our core algorithmic search, and at the same time, we are investing to differentiate in vertical experiences and to disrupt the current model.

Kevin did enhance his own credibility by acknowledging that Microsoft has been sucking wind online for "longer than we'd like" (13 years). He also provided more detail about the company's core strategy. Email excerpt and some annotations below:

Earlier this week, I spoke to leaders across our online services business about our core strategy, the importance of acceleration and a set of actions we are taking, including:

1. Innovate and disrupt in search - We will disclose some elements of our plans with this week's release of search and sharpen our focus on user experience and business model innovation. The work we have done over the last 4 years on search has established a solid foundation to build upon.

Look forward to hearing details. We're skeptical.

2. Win targeted distribution - With this release of search, we are now ready to throttle up broader distribution initiatives.

Again, details critical. Microsoft's always had great distribution: Windows and Internet Explorer. Hasn't helped much.

3. Reinvent portal and deliver new experiences across PC, phone and web - We are building our new releases of Windows 7, Windows Live wave 3, Windows Mobile 7, Internet Explorer 8, Search and MSN with an eye towards optimizing and unifying experiences and scenarios.

Look forward to details. Skeptical about impact. Lots of "reinvention" in last 13 years.

4. Fix our online branding - Our brands are fragmented and confusing today, and we recognize a need to clarify and align our online branding . We are now driving forward to address this opportunity.

Hallelujah! The fact that Kevin has acknowledged this problem is a big step in the right direction.

5. Win in display advertising - We have an advantage in tools, agency assets/relationships and a team laser-focused on capturing the display ad platform opportunity. As we build from a position of strength, we will increase engineering resources to drive even more innovation.

Definition of "win"? Won't be No. 1 while Yahoo's still out there.

6. Build on our strengths in Europe - As measured by comScore in March, our online business in Europe is doing well. We have over 3 times the page view volume and nearly 7 times the minutes of usage compared to Yahoo!, and 68% reach to internet users throughout Europe. We will double down on our investments in Europe and expand on this strong position.

This is interesting--would like to hear more about this. It's the specific competitive position within each country that matters, but Microsoft does tend to be far stronger online outside the US than here.

7. Expand strategic partnerships - In addition to our organic innovation agenda, we will expand strategic partnerships that increase inventory on our display ad platform, enable new paradigms in search and accelerate growth in key geographies.

Yawn.

8. Pursue small, targeted acquisitions - Looking forward, we will focus on small, targeted acquisitions that support our work in search, complement our value in the ad platform and help us grow scale in key geographies. Recent acquisitions including Rapt and YaData are examples of these types of acquisitions.

Makes sense.