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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44 Comments

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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.

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.

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

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

When has Microsoft ever innovated anything? Career copycats.

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!

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.

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 :\

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.

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.

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

..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

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.

1. BING DID NOT MAKE $5.5 billion loss. It was the ONLINE DIVISION.
2. Bing has continued to eat away at Google's market share EVERY SINGLE MONTH. And eventually it will replace Google as the most popular search engine. Remember XBOX made losses early on. But now it has DESTROYED PS3. The EXACT same thing will happen with Bing and Windows Phone 7 which will DESTROY Android.
3. $5.5 billion is PEANUTS compared to the profit Microsoft makes with Windows and Office. Unlike Google, which makes ALL its money from search, Microsoft doesn't need Bing to make money. So, they can continue pumping money into it forever.

Gigi Buffon said,

2. Bing has continued to eat away at Google's market share EVERY SINGLE MONTH. And eventually it will replace Google as the most popular search engine.

Very doubtful.

Gigi Buffon said,
1. BING DID NOT MAKE $5.5 billion loss. It was the ONLINE DIVISION.
2. Bing has continued to eat away at Google's market share EVERY SINGLE MONTH. And eventually it will replace Google as the most popular search engine. Remember XBOX made losses early on. But now it has DESTROYED PS3. The EXACT same thing will happen with Bing and Windows Phone 7 which will DESTROY Android.
3. $5.5 billion is PEANUTS compared to the profit Microsoft makes with Windows and Office. Unlike Google, which makes ALL its money from search, Microsoft doesn't need Bing to make money. So, they can continue pumping money into it forever.
You can't be serious...
2. I can't see Bing overthrowing Google in terms of search. WP7 is awesome and I use it, but it's not going to beat Android anytime soon in market share.
3. $5.5 billion is big, even for Microsoft. Their profit in FY2011 is $23.5 billion and revenue $69.94 billion. Yes, they can afford the loss, but it's still a big chunk of change for them.

Gigi Buffon said,
1. BING DID NOT MAKE $5.5 billion loss. It was the ONLINE DIVISION.

Actually, they lost 9 billion in the online division since 2007.

Tzvi Friedman said,

Actually, they lost 9 billion in the online division since 2007.

This article says $5.5 billion loss since 2009, not 2007. So you're clearly wrong to say BING made $5.5 billion loss.

tsupersonic said,
You can't be serious...
2. I can't see Bing overthrowing Google in terms of search. WP7 is awesome and I use it, but it's not going to beat Android anytime soon in market share.
3. $5.5 billion is big, even for Microsoft. Their profit in FY2011 is $23.5 billion and revenue $69.94 billion. Yes, they can afford the loss, but it's still a big chunk of change for them.

It's $5.5 billion since 2009, that's 2 years, not one year. And it's not just bing, come on people, at least get the damn facts first. Online Services covers Bing, Azure, Office365 and used to cover some other things till they got moved over, like Silverlight. Azure and Office365 are huge services that need huge backends and support to work right. They also don't make money off of ads but subscriptions. MS ran free bets for both for months, on their own dime, which only added to "operating costs" which is the problem. The devision itself, and Bing itself, have seen revenue growth, it's just the two new big siblings in the devision are eating the cake and then some till recently.

tsupersonic said,
You can't be serious...
2. I can't see Bing overthrowing Google in terms of search. WP7 is awesome and I use it, but it's not going to beat Android anytime soon in market share.
3. $5.5 billion is big, even for Microsoft. Their profit in FY2011 is $23.5 billion and revenue $69.94 billion. Yes, they can afford the loss, but it's still a big chunk of change for them.

Yes, but they ARE making money on their investment in Bing. But they're booked to other departments that Bing services are built into. Bing itself is really not structured to be this huge cash cow. It has tremendous expenditures, and the service is built into other products (That generate profit) as opposed to shipping independently and generating profit that would be booked back to Bing.

Gigi Buffon said,
1. BING DID NOT MAKE $5.5 billion loss. It was the ONLINE DIVISION.
2. Bing has continued to eat away at Google's market share EVERY SINGLE MONTH. And eventually it will replace Google as the most popular search engine. Remember XBOX made losses early on. But now it has DESTROYED PS3. The EXACT same thing will happen with Bing and Windows Phone 7 which will DESTROY Android.
3. $5.5 billion is PEANUTS compared to the profit Microsoft makes with Windows and Office. Unlike Google, which makes ALL its money from search, Microsoft doesn't need Bing to make money. So, they can continue pumping money into it forever.

Baby you give fanboy's a bad name. I actually love Bing (and WP7) but that's just a load of tosh.

Gigi Buffon said,

This article says $5.5 billion loss since 2009, not 2007. So you're clearly wrong to say BING made $5.5 billion loss.


Bing was released on 2009

Gigi Buffon said,
1. BING DID NOT MAKE $5.5 billion loss. It was the ONLINE DIVISION.
2. Bing has continued to eat away at Google's market share EVERY SINGLE MONTH. And eventually it will replace Google as the most popular search engine. Remember XBOX made losses early on. But now it has DESTROYED PS3. The EXACT same thing will happen with Bing and Windows Phone 7 which will DESTROY Android.
3. $5.5 billion is PEANUTS compared to the profit Microsoft makes with Windows and Office. Unlike Google, which makes ALL its money from search, Microsoft doesn't need Bing to make money. So, they can continue pumping money into it forever.

Its people like you who make Microsoft fans look bad... You disqualify from the fan club.
Xbox and PS3 sells equally well... both sell almost equal no of consoles worldwide...
Be proud to wear the good of your favorite brand not the BS

still1 said,

Bing was released on 2009

Tzvi wrote Bing lost $5.5 billion since 2009. Bing DID NOT. ONLINE DIVISION lost $5.5 billion since 2009 and $9 Billion since 2007. The article is still wrong.

still1 said,

Its people like you who make Microsoft fans look bad... You disqualify from the fan club.
Xbox and PS3 sells equally well... both sell almost equal no of consoles worldwide...
Be proud to wear the good of your favorite brand not the BS

So it's OK to make wrong statements like "Bing failed" and "Bing lost 5.5 billion", but pointing out that Bing is gaining market share from Google makes me a fanboy?

Gigi Buffon said,

So it's OK to make wrong statements like "Bing failed" and "Bing lost 5.5 billion", but pointing out that Bing is gaining market share from Google makes me a fanboy?


You cant correct a wrong statement by giving wrong statement that makes the wrong statement you are trying to correct the right... try proving that the statement is wrong instead.... People do make mistakes so no need to be harsh..... and Bing is gaining marketshare from other service but the problem is its not making a big dent so thats def bad for bing...

M_Lyons10 said,
What Bing logo is that? I've never seen it used in anything.

Fixed. Thanks for the catch. Next time, please use the Report function.

What people (For whatever reason) fail to recognize, is that Microsoft doesn't have to make money on Bing directly. They've leveraged it in just about every service or product that they offer and continue to expand its reach and innovate on its technologies... Do they make money on Bing itself? No. Do they make money on things powered by Bing? Absolutely.

M_Lyons10 said,
What people (For whatever reason) fail to recognize, is that Microsoft doesn't have to make money on Bing directly. They've leveraged it in just about every service or product that they offer and continue to expand its reach and innovate on its technologies... Do they make money on Bing itself? No. Do they make money on things powered by Bing? Absolutely.
Exactly. This is the whole reason that I am still buying a new Windows Phone 7.5 device. I love the core OS, but the features like native voice search through Bing are just awesome (and better executed than, say, the Bing app on the iPhone).