Microsoft: Bing is now "on course or ahead of course" to stop losing money

Microsoft's online services, which includes Bing, has been losing money for the company, but one of Microsoft's financial executives says that may no longer be true in the near future. Dave O'Hara, the Chief Financial Officer for Microsoft's Applications and Services Group, told analysts in an investor call this week that the online services group is now "on course or ahead of course" to finally break even.

ZDNet reports that, according to O'Hara, part of the reason for the massive losses in the online division was because Microsoft needed to spend money to create the infrastructure needed to run the Bing service. Things like creating its search algorithms and constructing datacenters cut into the division's revenues.

However, those costs may be behind Microsoft as O'Hara indicated that Bing can now be operated with only "incremental" infrastructure improvements. That hopefully means Bing will no longer be a huge money pit. In the company's last financial quarter when it reported its online services as a separate component, that division lost $321 million. Under the company's recent reorganization, online services will no longer be reported as a separate line item.

While some analysts have called for Microsoft to sell off its Bing assets, O'Hara naturally has a different point of view, saying, "We are finally at the point where we can drive operating leverage." The big question is whether Bing will ever claim more than a small percentage of Google's dominant market share in search. If that happens, Bing could end up being a huge money maker.

Source: ZDNet | Image via ZDNet

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Atreus said,
Bing is for porn. Or so I heard.

i agree, the image search is quite...ummm...vast?? Type in teen with no adult filter and see what u get...

Kalint said,
I bing it! hahaaaaaaa that is just dreadful!

Using "google" as a verb sounds just as stupid, especially when the generic "search" has fewer syllables.

TMYW said,

Using "google" as a verb sounds just as stupid, especially when the generic "search" has fewer syllables.

Not even close!

No, he's quite right. "Google" has always been a clumsy, awkward word to use as a verb. Worse than "Bing," though I too prefer "search."

Google isn't used simply out of convenience, but rather a suggestion of how to find what you were looking for. As someone who really dislikes Google, I think it's pretty sad that their search engine is still better than using many of the search utilities on websites even. Hell, I can never find what I'm digging for on Microsoft's own website for instance. Ugh.

While technically putting all your profits into new capital is "losing money," it's far different from losing money purely on operational costs. As long as you have a decent gross profit margin, you're doing okay.

It will probably take another decade to make up the billions of dollars that Microsoft sunk into it. I mean, this isn't even an announcement of profitability - it's an announcement that it's on track to one day make money.

Microsoft entered the search engine market just a year after Google yet the only way it has been able to make any traction is by spending massive amounts of money. In business terms it's a disaster.

You don't have to make up past spending. The value of a business is how it's moving money right now. As long as they didn't create debt with the spending, it becomes unimportant after the fact.

theyarecomingforyou said,
It will probably take another decade to make up the billions of dollars that Microsoft sunk into it. I mean, this isn't even an announcement of profitability - it's an announcement that it's on track to one day make money.

Microsoft entered the search engine market just a year after Google yet the only way it has been able to make any traction is by spending massive amounts of money. In business terms it's a disaster.

well technically so is google plus and you don't see them stopping. so MSFT is doing the right thing.

Bing only went online in 2009, about 8 years after Google did. I consider Bing to be about 2 years behind now and catching up rapidly. Checkout their snapshot stuff, it's great.

Mr. Hand said,
You don't have to make up past spending. The value of a business is how it's moving money right now.

But Bing still isn't making money - it's merely on track to stop losing money at some point in the future. And a business isn't successful if it costs more money than it produces.

StarsDie said,
Bing only went online in 2009, about 8 years after Google did. I consider Bing to be about 2 years behind now and catching up rapidly. Checkout their snapshot stuff, it's great.

Bing replaced Live Search which replaced MSN Search. Each transition migrated existing users to the new service, meaning that it was in effect a rebrand. That's not to say that significant changes didn't occur behind the scenes but the reality is that it's the continuation of the same product. Further, each service was integrated into Windows giving Microsoft what should have been a significant market advantage.

theyarecomingforyou said,

But Bing still isn't making money - it's merely on track to stop losing money at some point in the future. And a business isn't successful if it costs more money than it produces.

Bing replaced Live Search which replaced MSN Search. Each transition migrated existing users to the new service, meaning that it was in effect a rebrand. That's not to say that significant changes didn't occur behind the scenes but the reality is that it's the continuation of the same product. Further, each service was integrated into Windows giving Microsoft what should have been a significant market advantage.

Yes but Microsoft as a whole is successful year after year so they can take hits on these for a while and be fine. Then, when they do start making money off something like Bing, it just adds more to their total overall profit, so its a long term win situation. Previous years' losses incurred by Bing have no bearing on that.

Edited by spenser.d, Dec 20 2013, 8:54pm :

theyarecomingforyou said,

But Bing still isn't making money - it's merely on track to stop losing money at some point in the future. And a business isn't successful if it costs more money than it produces.

They said the reason for that is new capital investments. That would indicate it is making money but they're putting that into new assets instead of booking it as a net profit.

Yes, a business should sell products for more than they cost (gross profit margin) now but not having done that in the past has no impact on the value now. You also have to consider the value of assets and not just cash flow.

They better keep Bing Rewards, that is the ONLY reason I use BING, I've gotten about $160 worth of XBL/Amazon credits because of BING. Good times.

Love Bing! I'm so happy how much it's grown! I hope they invest more in growing international support next. In some countries, Bing is outstanding but in many others it's still lacking behind. But it seems they're on the right path finally

I keep trying Bing from time to time and I just do not get as good results. I also like a clean/simple layout and would rather not have a background image loaded like Bing does. Perhaps I can can disable the images, but I have not looking in to that yet.

techbeck said,
I keep trying Bing from time to time and I just do not get as good results. I also like a clean/simple layout and would rather not have a background image loaded like Bing does. Perhaps I can can disable the images, but I have not looking in to that yet.

Me too. I really wish for an alternative to Google.

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