Bing Becomes a Distraction for Microsoft(nytimes.com)
nytimes.com
Bing Becomes a Distraction for Microsoft
http://www.nytimes.com/2011/07/25/business/bing-becomes-a-costly-distraction-for-microsoft-breakingviews.html?src=rechp
19 comments
"But [Bing] has more value to a buyer that could bring it traffic."
If Microsoft can't bring it traffic... who can? Whatever other company you cite, can its putative advantage compete with owning the default browser? (Wikipedia still has IE in the lead [1], though an ever-thinner one.) Even mighty Facebook can't really compete with that sort of advantage.
Honest question, interested in the answers.
[1]: http://en.wikipedia.org/wiki/Usage_share_of_web_browsers
If Microsoft can't bring it traffic... who can? Whatever other company you cite, can its putative advantage compete with owning the default browser? (Wikipedia still has IE in the lead [1], though an ever-thinner one.) Even mighty Facebook can't really compete with that sort of advantage.
Honest question, interested in the answers.
[1]: http://en.wikipedia.org/wiki/Usage_share_of_web_browsers
If Microsoft can't bring it traffic... who can?
Facebook. Even though IE is still in the lead (for now), everyone "googles" and "facebooks" their way through the internet. No one "microsofts" anything.
Facebook. Even though IE is still in the lead (for now), everyone "googles" and "facebooks" their way through the internet. No one "microsofts" anything.
There are quite a few people who aren't so tech-savvy that unknowingly use Bing because it's the default in IE. I'm guessing they're the majority of that 27%.
They're also probably the ones that type "google" into the Bing search bar to get to Google. :)
In my experience if you set a search engine other than google to the "not so tech-savvy" they will use it to search for "google" and then proceed from there.
Trouble is Facebook doesn't have $11B. Would be interesting to see Facebook paired with a decent search technology, though. With Google+ on the horizon, it can't be far from their minds.
Microsoft doesn't have the content or services that are more compelling than its competitors to generate traffic.
Google has search, gmail, google docs, you tube, etc etc.
Facebook has your friends.
Microsoft has a bunch of second place also rans like bing, hotmail, msn, etc.
Google has search, gmail, google docs, you tube, etc etc.
Facebook has your friends.
Microsoft has a bunch of second place also rans like bing, hotmail, msn, etc.
I'm not sure. I'm pretty sure hotmail is bigger than gmail. And Office365 might be similar in size to g:docs.
I have a hotmail account; had to create it because you need it for accessing some Microsoft-owned websites -- never used it as my email and I can't remember the last time I used it to log-into anything.
I have a Google Apps account -- using it every single hour when online.
GMail is definitely bigger than Hotmail. Maybe not when it comes to total number of accounts, but it's definitely bigger when it comes to the number of active users, which count more IMHO.
I have a Google Apps account -- using it every single hour when online.
GMail is definitely bigger than Hotmail. Maybe not when it comes to total number of accounts, but it's definitely bigger when it comes to the number of active users, which count more IMHO.
It would be additive -- I'm sure any sale would include a multiyear agreement for Microsoft to leave it as the default search engine in IE. Otherwise what value Bing has today would largely evaporate.
That isn't to say that the article isn't complete crap. Bing was developed as a strategic asset. MSFT certainly isn't hurting for cash flow. They have no compelling motivation to part with it any time soon.
That isn't to say that the article isn't complete crap. Bing was developed as a strategic asset. MSFT certainly isn't hurting for cash flow. They have no compelling motivation to part with it any time soon.
A start-up?
I think Bing's problem from the start has been that it has been in a "Goliath versus Goliath" fight. No one is rooting for an old monopoly to beat a new, cooler monopoly. But an independent Bing, one which was agile enough to create its own fun, quirky and smart user experience, might get a lot interest.
I think Bing's problem from the start has been that it has been in a "Goliath versus Goliath" fight. No one is rooting for an old monopoly to beat a new, cooler monopoly. But an independent Bing, one which was agile enough to create its own fun, quirky and smart user experience, might get a lot interest.
As is typical, the article talks about Microsoft's online services division without any analysis of it's role in Microsoft's corporate strategy.
Considering that OSD does not include profit centers related to cloud computing such as sharepoint, and the substantial goodwill OSD provides Microsoft (over $6 billion in 2010), valuing OSD as if it were the whole of Google, is just poor journalism.
Comprised of both Bing and MSN along with an advertising platform, among the roles of the Online Services Division is to provide a channel by which Microsoft can promote it's products to consumers - e.g. Microsoft does not pay to advertise Windows 7 on MSN or to place advertising for SQL server alongside Bing search results. [I'll leave aside my hypotheses about the value of Bing as a research tool and as a strategic way of keeping Google from datamining queries from Redmond].
[Link to 2010 Microsoft 10-k: see Part II Item 8 Note 10] http://apps.shareholder.com/sec/viewerContent.aspx?companyid...
Considering that OSD does not include profit centers related to cloud computing such as sharepoint, and the substantial goodwill OSD provides Microsoft (over $6 billion in 2010), valuing OSD as if it were the whole of Google, is just poor journalism.
Comprised of both Bing and MSN along with an advertising platform, among the roles of the Online Services Division is to provide a channel by which Microsoft can promote it's products to consumers - e.g. Microsoft does not pay to advertise Windows 7 on MSN or to place advertising for SQL server alongside Bing search results. [I'll leave aside my hypotheses about the value of Bing as a research tool and as a strategic way of keeping Google from datamining queries from Redmond].
[Link to 2010 Microsoft 10-k: see Part II Item 8 Note 10] http://apps.shareholder.com/sec/viewerContent.aspx?companyid...
The Times misses Microsoft's strategy. You don't need to be better than Google, just be good enough so that when Google screws up, they can swoop in.
Microsoft losing $2.6B is like me dropping $5 on a crapy sandwich.
Microsoft has successfully executed this strategy several times.
Microsoft losing $2.6B is like me dropping $5 on a crapy sandwich.
Microsoft has successfully executed this strategy several times.
Exactly. Microsoft never expected Bing to make money, it's just a way to apply pressure on Google. Which helps Microsoft compete with Google elsewhere.
Of course there is a chance Google will mess up, in which case Bing might become profitable. But not likely.
In any case, the current situation is good for everyone but Google. Microsoft can afford to spend the money and it makes Google's life a little harder. Everyone else benefits since Google is not left unchallenged. We have seen what monopolies can do in computing.
Let's face it, if Microsoft doesn't burn money on this, there aren't many alternatives (the alternatives that do exist are either very limited or in fact dependent on Microsoft in some way).
Of course there is a chance Google will mess up, in which case Bing might become profitable. But not likely.
In any case, the current situation is good for everyone but Google. Microsoft can afford to spend the money and it makes Google's life a little harder. Everyone else benefits since Google is not left unchallenged. We have seen what monopolies can do in computing.
Let's face it, if Microsoft doesn't burn money on this, there aren't many alternatives (the alternatives that do exist are either very limited or in fact dependent on Microsoft in some way).
"The Times misses Microsoft's strategy" - the article doesn't represent the opinion of the NY Times - it's an opinion piece. There's a disclaimer on this version of it: http://blogs.reuters.com/columns/2011/07/22/microsoft-ought-...
(Pointing this out because I used to work for a newspaper, and it was always frustrating seeing people mistake opinion pieces for the official editorial line of the paper)
(Pointing this out because I used to work for a newspaper, and it was always frustrating seeing people mistake opinion pieces for the official editorial line of the paper)
Thanks for pointing that out.
I find it more difficult to discern these things in the online format. With the regular newspaper, there are plenty of visual cues that make it clear about what is the author's opinion vs. the papers. Not so with the online edition.
I find it more difficult to discern these things in the online format. With the regular newspaper, there are plenty of visual cues that make it clear about what is the author's opinion vs. the papers. Not so with the online edition.
This article completely misses why Bing is strategic to MS. And no one is going to pay $11B for a product that is losing nearly $3B/year.
The big deal here is a lack of efficiency. Apparently revenue is $2.5 bln and losses are also $2.5 bln. That means with double the revenue (i.e. nearly Google's market share) they'd barely be in the black.
Maybe we're missing something. How much of these billions in losses are not Bing? I mean most of it is surely Bing but Azure and Win 365 are probably substantial investments.
Maybe we're missing something. How much of these billions in losses are not Bing? I mean most of it is surely Bing but Azure and Win 365 are probably substantial investments.
> That means with double the revenue (i.e. nearly Google's market share)
You're assuming search revenue and market share are linearly related. The whole point of the Bing/Yahoo deal was that they are not - as market share increases, revenue increases superlinearly.
You're assuming search revenue and market share are linearly related. The whole point of the Bing/Yahoo deal was that they are not - as market share increases, revenue increases superlinearly.
Yeah, most marketers don't want to put the time into the platform because it won't get them anywhere near the amount of traffic as Google does. I think this is slowly turning around though as the tools around bing are catching up and marketers are seeing pretty good returns on the traffic they actually do get on there. Also tools that let you manage the same campaign on Google and Bing are getting better.
My understanding is that neither Azure nor Office 365 are in the online services division. Azure is part of Server & Tools and Office 365 is part of Office. btw, Hotmail (and the rest of Windows Live) isn't part of OSD either, it's counted as part of Windows. OSD is pretty much just Bing and MSN.
"A sale would be a boon for Microsoft’s investors. . . the unit would be worth about $11 billion."
So a boon to investors is a short-term sale that's the equivalent of 4.6% of MSFT's market cap (235b)?
And in exchange surrender an asset that's fundamental to their mobile strategy (with NOKIA blowing in the wind towards MSFT) and strategic in distracting Google from eating their primary lunch?
I am a proponent of FOCUS but this article seems shortsighted.
So a boon to investors is a short-term sale that's the equivalent of 4.6% of MSFT's market cap (235b)?
And in exchange surrender an asset that's fundamental to their mobile strategy (with NOKIA blowing in the wind towards MSFT) and strategic in distracting Google from eating their primary lunch?
I am a proponent of FOCUS but this article seems shortsighted.
Oh well, why would you care about long-term strategy if your only intent is just to short sell those MSFT shares quickly.
It's a link-bait. If GOOG can give away almost everything for free to distract their competitors and protect their core revenue (search and ads), then why shouldn't MSFT lose some $$ to get some share of the $40 Billion industry with a projected growth rate of around 10-20%.
It's a link-bait. If GOOG can give away almost everything for free to distract their competitors and protect their core revenue (search and ads), then why shouldn't MSFT lose some $$ to get some share of the $40 Billion industry with a projected growth rate of around 10-20%.
But is there any evidence that either of those strategies are working?
definitely working better than giving up search and handing over keys of the biggest money making opportunity on the internet to the competitior.
By what metric is it working better?
Google seems more profitable than ever, has the lead in search engine usage by a far, far margin, and Microsoft's online division continues to lose billions of dollars.
Google seems more profitable than ever, has the lead in search engine usage by a far, far margin, and Microsoft's online division continues to lose billions of dollars.
Bing isn't different enough to gain mindshare, and it's search results can't compete with Google (or even Blekko's IMO).
You know what would be disruptive? A search engine for physical spaces. When I'm scouring my apartment for a matching sock or my keys, I'd do a search and the missing item would be located.
I don't know how, but someone should do this.
EDIT: No, I'm not high. Just weird.
You know what would be disruptive? A search engine for physical spaces. When I'm scouring my apartment for a matching sock or my keys, I'd do a search and the missing item would be located.
I don't know how, but someone should do this.
EDIT: No, I'm not high. Just weird.
Just in your apartment and car? Perfectly possible. Just put RFID tags in everything and a bunch of readers on walls and inside the car.
A division that is bleeding cash doesn't mean that it should be sold off or closed down.
Sometimes, products that don't make money or even make losses are part of a bigger strategy.
Look at Google, no one knows if YouTube is still profitable but it has positioned Google as the leader in online video and will no doubt help their social efforts.
Innovative things have happened from online video - online lectures, talks, short films and creation of internet stars wouldn't have happened faster without the massive reach of YouTube.
Bing is positioning itself in a way that when Google does something stupid (looks highly improbable right now) then Microsoft can be at the right place at the right time.
One of the more important things is a user's trust. Yahoo! & Microsoft are very notorious at abruptly closing down their services and so it becomes difficult to trust their products even if they're a notch ahead in terms of features than their close competitors. Another sale would hurt that trust, no doubt.
Sometimes, products that don't make money or even make losses are part of a bigger strategy.
Look at Google, no one knows if YouTube is still profitable but it has positioned Google as the leader in online video and will no doubt help their social efforts.
Innovative things have happened from online video - online lectures, talks, short films and creation of internet stars wouldn't have happened faster without the massive reach of YouTube.
Bing is positioning itself in a way that when Google does something stupid (looks highly improbable right now) then Microsoft can be at the right place at the right time.
One of the more important things is a user's trust. Yahoo! & Microsoft are very notorious at abruptly closing down their services and so it becomes difficult to trust their products even if they're a notch ahead in terms of features than their close competitors. Another sale would hurt that trust, no doubt.
This is clearly a controversial article. But I think it's fair to say Microsoft is not focused. Who can say what Microsoft's focus is these days? Without vision, the company and its followers will get lost. Microsoft may be able to stumble upon success by flailing about, but without vision Microsoft won't be able to tell the difference between success and distraction when it's staring them in the face.
To make an extreme example, is a great real estate deal a success to Microsoft? Microsoft might need to buy real estate from time to time and benefit from doing it well. And yes, some companies make lots of money in real estate. Should Microsoft be opening up a real estate investment arm? Probably not. But given Microsoft's focus these days, who knows.
The question isn't just what is a distraction to Microsoft, but what is Microsoft's focus? Samsung's focus is manufacturing. Apple's focus is product design. Google's focus is data. These are all big, successful companies with laser focus even if it appears from the outside they are working on the same things. Who are you Microsoft and where are you going?
To make an extreme example, is a great real estate deal a success to Microsoft? Microsoft might need to buy real estate from time to time and benefit from doing it well. And yes, some companies make lots of money in real estate. Should Microsoft be opening up a real estate investment arm? Probably not. But given Microsoft's focus these days, who knows.
The question isn't just what is a distraction to Microsoft, but what is Microsoft's focus? Samsung's focus is manufacturing. Apple's focus is product design. Google's focus is data. These are all big, successful companies with laser focus even if it appears from the outside they are working on the same things. Who are you Microsoft and where are you going?
The real value of buying a technology company is the talent that comes with it. Sure, the technology is good, but you will need to continue innovating or else the technology will become obsolete. For that you need the talent. In company acquisitions what many times happens is that the talent just runs away which sort of defeats the whole point of buying the company (unless you just care about patents). Because of the risk of loosing the talent I don't think buying Bing is such a good idea, especially since it will cost billions. I wonder if it would be better for companies like Apple/Facebook to just develop their own search engines themselves. In fact, I would be surprised if Apple doesn't have some people working on something like that, even if just for R&D and it never goes anywhere. I know I would have a couple of smart people working on it.
The biggest issue here would be they would then probably have to make google the default browser in ie and phones, making google more money. Also you would have to think there might be something in the yahoo deal to prevent a sale.
This is interesting:
I know Apple is sitting on a lot of cash. A lot.
I think it would be fascinating to see Apple purchase Bing and rebrand it. With search built into the iPhone and the future value of mobile search in mind, I think it would be near foolish for Apple to miss this opportunity. Otherwise, no matter how well the iPhone does, Google will still always have its hand in mobile advertising money.
But what do I know?
I think it would place Apple and Google in a very interesting competitive position.
I know Apple is sitting on a lot of cash. A lot.
I think it would be fascinating to see Apple purchase Bing and rebrand it. With search built into the iPhone and the future value of mobile search in mind, I think it would be near foolish for Apple to miss this opportunity. Otherwise, no matter how well the iPhone does, Google will still always have its hand in mobile advertising money.
But what do I know?
I think it would place Apple and Google in a very interesting competitive position.
Apple is a very focused company. They build nice gadgets and sell them for nice profit margins. Everything they do is directed toward that goal.
Entering the search business means entering the online advertising business. They don't know anything about that business; just look at how iAds is working out.
Steve Jobs himself said directly at one of the All Things D conferences something like (paraphrase), "We don't want to do search. It's not a business we know anything about, other people do it well, there's no reason for us to get into it."
That's focus. It's something that's badly needed at Microsoft.
Entering the search business means entering the online advertising business. They don't know anything about that business; just look at how iAds is working out.
Steve Jobs himself said directly at one of the All Things D conferences something like (paraphrase), "We don't want to do search. It's not a business we know anything about, other people do it well, there's no reason for us to get into it."
That's focus. It's something that's badly needed at Microsoft.
I'm not disagreeing with your premise but I would like to note that always take Steve Job's comments with a pinch of salt. At the (2003) All Things D conference, he said:
There are no plans to make a tablet. It turns out people want keyboards. When Apple first started out, "People couldnit type. We realized: Death would eventually take care of this." "We look at the tablet and we think itis going to fail." Tablets appeal to rich guys with plenty of other PCs and devices already. "And people accuse us of niche markets." I get a lot of pressure to do a PDA. What people really seem to want to do with these is get the data out . We believe cell phones are going to carry this information. We didnit think weid do well in the cell phone business. What weive done instead is weive written what we think is some of the best software in the world to start syncing information between devices. We believe that mode is what cell phones need to get to. We chose to do the iPod instead of a PDA. (source: http://www.macobserver.com/tmo/article/Steve_Jobs_No_Tablet_...)
He specifically said no tablets and Apple wont' do well in the cell phone business yet 4 years later, out comes the iPhone and 7 years on, the iPad.
There are no plans to make a tablet. It turns out people want keyboards. When Apple first started out, "People couldnit type. We realized: Death would eventually take care of this." "We look at the tablet and we think itis going to fail." Tablets appeal to rich guys with plenty of other PCs and devices already. "And people accuse us of niche markets." I get a lot of pressure to do a PDA. What people really seem to want to do with these is get the data out . We believe cell phones are going to carry this information. We didnit think weid do well in the cell phone business. What weive done instead is weive written what we think is some of the best software in the world to start syncing information between devices. We believe that mode is what cell phones need to get to. We chose to do the iPod instead of a PDA. (source: http://www.macobserver.com/tmo/article/Steve_Jobs_No_Tablet_...)
He specifically said no tablets and Apple wont' do well in the cell phone business yet 4 years later, out comes the iPhone and 7 years on, the iPad.
Those are great points.
Isn't the exact same reasoning for Microsoft to operating Bing?
Bing is baked into WP7 pretty deep, and although sales of WP7 devices are off to a slow start, the marketplace is growing nicely, and the reviews are positive.
I think it's smart to take a short-term loss if they can grow their Windows Phone franchise. It is the default search engine on those phones and is tightly integrated into the OS. If the forecasts end up being correct (who knows?) then that will be quite a large part of the world searching through Bing and could drive long-term profitability.
Speculative article. No scoops or quotes from MSFT. Its similar to science fiction stuff!
But where does this $2.5bn get spent on ? Will data centers and employees cost this much.. Also since this is a loss, the actual costs must be much higher than this...
Very well done, Google PR team! Almost fooled me;)
Bing is another example of the Microsoft philosophy: compete in everything; excel in nothing.
At this point, the article stopped making sense. Yes, bing is draining money, but why on earth would Facebook want to buy something they already have a pretty good partnership with? There are other investments that make way more strategic sense for both Facebook and Apple.
" Apple might even be interested, given its growing online ambitions, evidenced by its consideration of a bid for Hulu. "
Apple wants to buy a company that streams TV (which ties in pretty well with their hardware strategy), therefore they want to get into everything web? Again, I don't see the logic here....
(Disclaimer: MSFT Employee)