The newly-relaunched Technorati exposes a weakness in Google’s armor. I just tried a bunch of searches. Technorati does “Live” search MUCH MUCH better than Microsoft and even better than Google’s Blog Search.

I predict that, with this update, Technorati will become a quick takeover target. If I were at Microsoft I’d be spending a few corporate hours wining and dining Dave Sifry.

Technorati is so superior to all the other blog search engines now that it isn’t even funny. Why can 45 people at Technorati beat Google yet Microsoft, with its billions of dollars, can’t get any traction?

The answer? Technorati is a small idea. It takes one tiny little niche away from Google. It doesn’t try to compete with the main Google engine.

On Monday I sat next to a developer on Microsoft’s Popfly team. He didn’t like that I called Popfly a “small” idea. I told him that was a term of endearment, not of derision. The most interesting things on the Internet are done by small teams. Not “boil the ocean and try to kill Google” teams.

Microsoft should be cheered that Technorati, a small company of 45 people, can take on Google and can build a successful SEARCH brand and experience that beats Google.

Google, on the other hand, with its billions in revenue and thousands of PhD’s should be ashamed that it isn’t as good as Technorati.

Oh, and didn’t Blinkx go public yesterday? Yeah, and their stock went up! Amazing that two little companies are making businesses in Google’s backyard. If I were at Google I’d worry about that and remember Google’s history. It was, what, eight years ago that Google was the little upstart and companies like Yahoo and AltaVista owned the search space.

Microsoft: why haven’t you changed your search strategy yet? Look at your search on Live.com. Now compare to Technorati. Which one is more “live?” Technorati by a mile. Maybe this is what we mean when we say Microsoft is “dead.”

I bet some people/companies are wishing they acquired Technorati last week. I have a feeling that their valuation just went up about $500 million. At least.

UPDATE: Another example of how Microsoft’s Internet strategy is lacking? Check out the new Pageflakes, TechCrunch just wrote about that. Now compare to anything Microsoft has put out there. In fact, compare to Google’s “iGoogle” page. How does Pageflakes measure up? Smaller is better!