Microsoft losing $5.5 billion on Bing; still growing market share

As Bing slowly grows in search engine market share, it continues to hemorrhage revenue in the process. According to CNN, Microsoft has lost $5.5 billion since its launch in 2009, and the losses don’t seem to be letting up, growing year over year. While market share is a good thing, Microsoft gained much of that growth through a deal with Yahoo that made Bing their search provider. While this gave them immediate and significant growth, it wasn’t growth from user demand; those users never made a conscious decision to use Bing over Yahoo. Yahoo just became Bing.

Microsoft has said on a few different occasions that it doesn’t plan on competing with Google at their own game. Instead, they will be leveraging their multitudinous partnerships with web companies to provide a more integrated search experience that combines multiple products and services to give a personal, social and interactive results page that shies away from providing a wall of blue links. Bing will also be a predominant feature in Windows 8 and Windows phone products, becoming the default search provider for a variety of web and location based queries. By filling in the cracks where Google fails to provide useful results, Bing expects to grab enough market shares to start turning a profit.

Unfortunately, analysts are saying that Microsoft will have to double its market share to stem the tide of lost revenue. Microsoft is aware of this gap, and plans on going places traditional search has never gone before to innovate in experimental areas like natural language search. According to Stefan Weitz, director of Bing, Microsoft has the underdog advantage of being able to experiment. As the service continues to lose money, experimentation and innovation will be the only ways that Microsoft can dig itself out of their current rut.

However, no matter how good Bing gets, they have a verb to overcome. Google has already passed the vernacular test. When your product becomes part of a language in that it applies to everything else that acts and looks like it, you’ve pretty much won your market. Much like Nerf guns and Band-Aids, people will use Bing to "Google" something until there is significant competition. It takes a long time to counteract such strong household influence, but Microsoft is in it for the long run, and hopes that quality will eventually overcome quantity. 

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greenwizard88 said,
Tzvi, can you merge this with the thread in the forum, http://www.neowin.net/forum/to...0576__st__15#entry594330576

Also, can you read the article. It's not Bing, it's their online division, which included silverlight (responsible for WP7), Office 365, Live services, as well as Bing.

I think Live services, WLM, Skydrive etc were moved over to the Windows devision last quarter though? Or whenever MS did their last reorg, pretty sure it was this year though. That's why you see the tighter integration between Live and Windows 8 now.

..Microsoft gained much of that growth ..threw.. a deal with Yaho..

Threw?

I've been a member for a good number of years, I hate to see quality degrade here but almost every time I drop on by, there's negative (usually rightly so) comments regarding the quality of in-house written articles.

smooths* said,
..Microsoft gained much of that growth ..threw.. a deal with Yaho..

Threw?

I've been a member for a good number of years, I hate to see quality degrade here but almost every time I drop on by, there's negative (usually rightly so) comments regarding the quality of in-house written articles.

Embarrassing typo. Thanks for the catch, Next time, please use the report function. We aren't notified when someone catches an error and says so in a comment.

Tzvi Friedman said,

Embarrassing typo. Thanks for the catch, Next time, please use the report function. We aren't notified when someone catches an error and says so in a comment.

But that's no fun! We like to bash publicly.

Tzvi Friedman said,

Embarrassing typo. Thanks for the catch, Next time, please use the report function. We aren't notified when someone catches an error and says so in a comment.

Maybe if the author isn't actively checking the comments, the commenter would like others to take note of the mistake before you correct it. If his point is that you guys aren't writing the articles properly, it does him no good to first whisper it to you in secret so you can fix it. Then no-one would know what he's complaining about

FMH said,
But that's no fun! We like to bash publicly.

Perhaps, there should be a new feature like "Report a problem with article *as a comment* or "Report a problem with article *publicly*".

A win-win solution: the author get notified and you can bash publicly

have to give credit to MS for pummelling through until they start profiting... took them how many years to breakeven on xbox 360? serving them pretty well now...

Arpit said,
have to give credit to MS for pummelling through until they start profiting... took them how many years to breakeven on xbox 360? serving them pretty well now...

Exactly. I don't understand why people give them a hard time when a department loses money given their track record... lol

Bing's share is growing on it's own, not counting yahoos which actually grew last month as well, after having loses. I think that says something as well. Also now that Windows Azure and Office365 are out of free beta and have started to take subscriptions they'll start making back the money they lost for the devision little by little.

I'll use Bing when I find more information on it. I only use Bing when I don't find on Google. Must improve the images search.

Tvzi you are a ****in moron. You call yourself a journalist? Bing did not lose $5.5 billion since 2009. Bing is part of the online division, which includes many other products. And if you have ever taken a business course, you would know that you do not begin making massive profits your first few years with the launch of a product. But you make it seem you are a ****in business expert when in fact you don't know your head from your ass. Bing itself has %15 of the market,and with the yahoo deal, Bing accounts for %30 of the market, in 2 years time. That is ****in impressive no matter which way you try to spin it. They basically took 1/3 of the market in 2 years,and Bing is still growing. Remember when xbox was released? Basically playstation was part of the language. Now its XBOX.

vcfan said,
Tvzi you are a ****in moron. You call yourself a journalist? Bing did not lose $5.5 billion since 2009. Bing is part of the online division, which includes many other products. And if you have ever taken a business course, you would know that you do not begin making massive profits your first few years with the launch of a product. But you make it seem you are a ****in business expert when in fact you don't know your head from your ass. Bing itself has %15 of the market,and with the yahoo deal, Bing accounts for %30 of the market, in 2 years time. That is ****in impressive no matter which way you try to spin it. They basically took 1/3 of the market in 2 years,and Bing is still growing. Remember when xbox was released? Basically playstation was part of the language. Now its XBOX.

Although I don't agree with the way you put it, and the way you put it is completely the wrong way to put it..

That said, I agree with the sentiment. This is ABYSMAL journalism.

I left my last forum/news site for this exact reason :\

How about all the billions Google has lost on all their free live services like Gmail? Why no articles on that? Remember, Apple is the only company that doesn't implement $hit they can't immediately making profit on.

Keep that competition going, MS done some crafty stuff during their time with a monopoly, I don't trust anyone now. Keep Bing going!

CrazyK said,
Keep that competition going, MS done some crafty stuff during their time with a monopoly, I don't trust anyone now. Keep Bing going!

Sure, if you're an enemy of MSFT you would wish they keep pouring money down that black hole called "Online Services"! Keep depleting that cash reserve!

Breach said,
Microsoft should stop with this copycatting and start innovating.

When has Microsoft ever innovated anything? Career copycats.

there is a big difference between gaining market share because you are innovative and have a great product vs making the process of NOT using Bing near impossible for Mums and Dads who know better than to use IE

Bing vs Google, really?

This shows a complete lack of understanding of the money that is spent on Bing, what the services it provides are doing, and the integration funding that is going into Bing for Windows 8 and Windows Phone 7/8 for online integration.

Bing's 'spending' includes a lot of technology that is used outside of Bing by Microsoft. From API and framework technologies to money on recreating core services as they integrate Nokia mapping technology, etc.

Microsoft spent MILLIONS just on new high altitude photos to remove 'weather' obstructions, create consistent lighting, and not have to rely on old Satelitte imaging. And this isn't even deployed fully in the current incarnation of Bing Maps that are being integrated with Nokia's technologies.

thenetavenger said,
Bing vs Google, really?

This shows a complete lack of understanding of the money that is spent on Bing, what the services it provides are doing, and the integration funding that is going into Bing for Windows 8 and Windows Phone 7/8 for online integration.

Bing's 'spending' includes a lot of technology that is used outside of Bing by Microsoft. From API and framework technologies to money on recreating core services as they integrate Nokia mapping technology, etc.

Microsoft spent MILLIONS just on new high altitude photos to remove 'weather' obstructions, create consistent lighting, and not have to rely on old Satelitte imaging. And this isn't even deployed fully in the current incarnation of Bing Maps that are being integrated with Nokia's technologies.

Explain to investors how Bing will ever turn a profit. I didn't realize MSFT was a philanthropy.

correct me if i'm wrong i'm not an economist or work at microsoft but i dont think bing is loseing microsoft money anymore i think just because of the big deals they made to put bing out there in the last few years just dug into microsoft pockets but i think in about a year or so bing will become anothor head on the billion dollar dragon microsoft is

Rabbit94 said,
correct me if i'm wrong i'm not an economist or work at microsoft but i dont think bing is loseing microsoft money anymore i think just because of the big deals they made to put bing out there in the last few years just dug into microsoft pockets but i think in about a year or so bing will become anothor head on the billion dollar dragon microsoft is

I agree with you on what you say here.

I don't like Bing myself and I use Google only, but it's pretty obvious that Bing has elbowed its way into the search business.

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