

Bing Becomes a Distraction for Microsoft - mattee
http://www.nytimes.com/2011/07/25/business/bing-becomes-a-costly-distraction-for-microsoft-breakingviews.html?src=rechp

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varunsrin
"Facebook, or even Apple, might make a better home for Bing. "

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)

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jerf
"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>

~~~
jpeterson
_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.

~~~
w1ntermute
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%.

~~~
For_Iconoclasm
They're also probably the ones that type "google" into the Bing search bar to
get to Google. :)

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brudgers
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...](http://apps.shareholder.com/sec/viewerContent.aspx?companyid=MSFT&docid=7382799)

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Duff
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.

~~~
simonw
"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-...](http://blogs.reuters.com/columns/2011/07/22/microsoft-ought-to-
kick-off-search-for-bing-buyer/)

(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)

~~~
Duff
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.

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kenjackson
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.

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Steko
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.

~~~
dmnd
> 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.

~~~
robryan
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.

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aresant
"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.

~~~
brown9-2
But is there any evidence that either of those strategies are working?

~~~
barista
definitely working better than giving up search and handing over keys of the
biggest money making opportunity on the internet to the competitior.

~~~
brown9-2
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.

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blackboxxx
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.

~~~
icebraining
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.

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amitagrawal
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.

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jonursenbach
They should sell it off to Yahoo. That'd be rich.

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ansy
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?

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felipemnoa
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.

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robryan
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.

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quizbiz
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.

~~~
jad
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.

~~~
kinkora
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_...](http://www.macobserver.com/tmo/article/Steve_Jobs_No_Tablet_No_PDA_No_Cell_Phone_Lots_Of_iPods/))

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.

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Yhippa
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.

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null_para
Speculative article. No scoops or quotes from MSFT. Its similar to science
fiction stuff!

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meow
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...

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badclient
Very well done, Google PR team! Almost fooled me;)

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RexRollman
Bing is another example of the Microsoft philosophy: compete in everything;
excel in nothing.

