Bing Becomes a Distraction for Microsoft

"Facebook, or even Apple, might make a better home for Bing. "<p>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.<p>" Apple might even be interested, given its growing online ambitions, evidenced by its consideration of a bid for Hulu. "<p>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....<p>(Disclaimer: MSFT Employee)

"But [Bing] has more value to a buyer that could bring it traffic."<p>If Microsoft can't bring it traffic... who <i>can</i>? 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.<p>Honest question, interested in the answers.<p>[1]: <a href="http://en.wikipedia.org/wiki/Usage_share_of_web_browsers" rel="nofollow">http://en.wikipedia.org/wiki/Usage_share_of_web_browsers</a>

As is typical, the article talks about Microsoft's online services division without any analysis of it's role in Microsoft's corporate strategy.<p>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.<p>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].<p>[Link to 2010 Microsoft 10-k: see Part II Item 8 Note 10] <a href="http://apps.shareholder.com/sec/viewerContent.aspx?companyid=MSFT&#38;docid=7382799" rel="nofollow">http://apps.shareholder.com/sec/viewerContent.aspx?companyid...</a>

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.<p>Microsoft losing $2.6B is like me dropping $5 on a crapy sandwich.<p>Microsoft has successfully executed this strategy several times.

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.<p>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.

"A sale would be a boon for Microsoft’s investors. . . the unit would be worth about $11 billion."<p>So a boon to investors is a short-term sale that's the equivalent of 4.6% of MSFT's market cap (235b)?<p>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?<p>I am a proponent of FOCUS but this article seems shortsighted.

Bing isn't different enough to gain mindshare, and it's search results can't compete with Google (or even Blekko's IMO).<p>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.<p>I don't know how, but someone should do this.<p>EDIT: No, I'm not high. Just weird.

A division that is bleeding cash doesn't mean that it should be sold off or closed down.<p>Sometimes, products that don't make money or even make losses are part of a bigger strategy.<p>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.<p>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.<p>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.<p>One of the more important things is a user's trust. Yahoo! &#38; 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.

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

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.<p>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.<p>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&#38;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:<p>I know Apple is sitting on a lot of cash. A lot.<p>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.<p>But what do I know?<p>I think it would place Apple and Google in a very interesting competitive position.

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.