Bing Loses More Money As Microsoft Chases Google

angry tapir writes "Microsoft posted strong results for the third quarter of its 2010 fiscal year, largely thanks to sales of Windows 7. But the company continues to suffer heavy losses in its Online Services Division [warning: obnoxious interstitial] as it tries to match Google in the online search and advertising market. ... The division's quarterly loss grew by 73 percent to $713 million, compared to a loss of $411 million during the same period last year."

Comments

Competing Isn't Cheap

[WrongSizeGlass]

Competing on the world stage isn't cheap. I do find it surprising that MS lost $713 on its "Online Services Division", but keep in mind not all of that is search/anti-Google. They are rolling out their "Office LIve" stuff as well as pushing their version of the "cloud".

Re:Competing Isn't Cheap

[socceroos]

True. I know of people who actually enjoy using Microsoft's online services. They're not the crappiest out there any more.

I could see Microsoft carving themselves a slice of the online market - perhaps not large enough to make an impact though. Having Google spread its self over so many fronts helps their cause.

Re:Competing Isn't Cheap

[Nemyst]

Isn't Office Live a response to Google Docs?

Re:Competing Isn't Cheap

[fuzzyfuzzyfungus]

Unfortunately for them, Microsoft's "Online Services Division" has a deeper fundamental problem than merely losing money.

That is, much of the money that they do manage to make, they make by cannibalizing MS server products sales. Now, I'm sure that they'd rather cannibalize their own server product sales than have Google/Amazon/assorted 3rd party penguin swarm datacenters eat them, cannibalism beats starvation after all; but that is still sort of a depressing mandate.

Their only "greenfield", so to speak, revenue opportunities are search(at which they are fairly tepid) or in providing "the-first-hit-is-really-cheap, also granular" access to various MS services(Exchange, Sharepoint, MS SQL, etc.) to tiny outfits that can't afford to do them in house(and, given SKUs like Small Business Server, we are talking pretty small outfits).

Re:Competing Isn't Cheap

[MBGMorden]

Which is pretty much directly in competition with Google. Google has had their Docs platform out for years, and personally, despite thinking at first that it was neat, but useless, I've basically converted to Google Docs for all my personal use (naturally it's still "real" MS Office at work).

Very little of what I do in such documents is private/sensitive information - heck often it's stuff I'd like to share. It's also often stuff that I want a backup of. Google Docs provides me with access to those documents from anywhere with an internet connection, and my documents are always backuped up and safe.

I'm not going to pull out the old cliche "the desktop is dead", because it isn't, and that won't likely be the case for many years (decades - if ever), but it's importance IS becoming greatly diminished, and Google seems to be much more tuned into that than Microsoft.

In the end, Microsoft isn't being beaten by the Linux desktop, or OpenOffice.org, or any of the directly competing programs the OSS community has tried to create. Instead, it's just loosing relevance and being beaten by other companies in new markets.

Re:Competing Isn't Cheap

[aztracker1]

Perhaps you are a bit more biased than most, and your friends by nature are also biased? I'm mainly stating this in reference to your "Micro$oft" spelling. I generally find using such slurs akin to political mudslinging.

Re:Competing Isn't Cheap

[rtb61]

The problem with claims about the quality of M$'s online stuff, is the double speak inherent in those losses. Most of those losses are driven by advertising costs, M$ paying other online and old world media companies to advertise the quality of M$'s advertising but if M$'s advertsing is so good why are they spending all that money advertising else where.

The reality is that the aggressive M$, dog eat dog, prove your profit basis, employment conditions, marketing, where accountants and lawyers take total precedence and creative people are driven away to their competitors, means the company operates in a creativity vacuum and filling that vacuum with PR=B$ claims of the opposite does not make it true. Anybody that challenges the Steve Ballmer ideology is driven from the company.

So can MSN expand, certainly, all it has to do is drop M$ and the Ballmer crowd and head off in it's own direction. Forget all the B$ make the executives look good name changes, forget about being a marketing arm for the rest of M$, embrace the coolness of FOSS and leave behind the dead weights of windows, zune, bing and especially Steve Ballmer.

Re:Competing Isn't Cheap

[SplashMyBandit]

One large problem is the bright folks at Microsoft can't innovate on anything that could possibly lead to a loss of revenue of Windows products. That is, anything out on the interweb that doesn't run on Windows. From this standpoint they are hamstrung a bit competing with others that have a complete clean slate to start with. Do you think anything that reduced sales of Office or Windows would make it past the product managers? Unlikely. Windows and Office are just too profitable at the moment to risk doing anything really innovative. For example, .NET and all the applications made with it will never run in all the places Java can so no matter what cleverness they come up with their underlying technology is almost always restricted to Windows and all its legacy assumptions about the underlying platform.

Re:Competing Isn't Cheap

[dskzero]

Probably? Isn't Google Docs google's version of Office?

Re:They should stick to what they're best at

[QuantumG]

dirty tricks?

Re:Because...

[rolfwind]

I often thought that Yahoo and Microsoft just violated the KISS rule. Yahoo.com comes from the "web portal" days of AOL and seems determined to die with it. Bing.com, to their credit, seems to have learned the lesson finally that people like Google's minimalism and just slaps a background image on it to differentiate their service somehow, but I don't like their results that much and what they do well isn't that different from what Google delivers. Damned if they do, damned if they don't.

Unless Bing starts behaving like Apple and delivering what I don't even know I want yet, I don't see it heading much anywhere.

MS may not care all that much

[jc42]

Microsoft does have a bit of history of sinking large amounts of money on totally losing projects, and there have been suggestions that it may be partially intentional.

The poster child for this is Internet Explorer, which was developed and handed out free, for a 100% monetary loss. Various people have suggested that the intent was never to charge for it. The motive wasn't profit; it was control. The idea is that they wanted to control the "browser market", which included killing any startup that wanted to make money on a browser. They succeeded at that, and even the most critical reviewers agree that MS still controls at least 2/3 of the browser "market". From a power viewpoint, IE has been a real success, even if it has been a money sinkhole. It gives MS control of a large part of how the Web works in reality. It has especially been an effective tool at scrambling all attempts to develop rational standards and interoperability.

The only people who consider this a "loss" are those who believe that money is the only corporate motivator. Those who understand a desire for power and control find it easy to understand why corporations like Microsoft would sink so much of their profits into such losing projects.

It's entirely possible that MS's ongoing attempts to get into the search "market" is something along the same line. It may not matter to them how much money they lose, as long as they end up in control, with the insignificant startups all bankrupt and standards irrelevant because Bing is the de facto standard and doesn't interoperate with anything they don't control.

In particular, their main motivator may be all the information on our searches that google is collecting. Imagine what Microsoft could do to the world if they had control of all that information.

(Of course, some of us are starting to worry about the effect of nice guys like google having all that information. And maybe it'd be prudent to not worry about it quite so publicly. After all, google does know what you've been googling ... ;-)

Re:not just online services

[MichaelSmith]

Windows development was completed with XP. Since then Microsoft have been looking for reasons for people to upgrade. Before XP the next release was always better than the last.

Re:not just online services

[Gerald]

...until Office drops support for XP, that is.

Re:Bing was a stupid idea

[Thing 1]

Sony thought that -everyone- who had a PS2 would be thrilled to have a console that cost $500, had no PS2 support, and had a lot of expensive features... that were mostly useless.

Not only that, but also features that disappeared.

Balance in the Universe

[Nom du Keyboard]

Microsoft can't build a competitive search engine and Google can't field a competitive Office Suite -- and neither of them have taken the cell phone world by storm yet. All is still good and balanced with the universe.

Re:Bing was a stupid idea

[Anonymous Coward]

And the nice thing is that Microsoft can fund their money losing search engine the same way they funded their money losing game console: through their desktop OS monopoly. Ain't "competition" grand!

Re:Bing was a stupid idea

[Thing 1]

Off topic? Sony removed the Other OS feature. This is considered a big deal around these parts. Microsoft removes features in successive versions of their operating systems (DRM). This is an article about Bing, another product of Microsoft's, which they are losing money to for a reason. It's not off topic. It's a compressed way to say "they are in control." They don't care if they lose customers; they choose to control their platform. That should inform us, as customers, that their interests are not in our best; their interests are emptying our wallets, with no recourse on our part. That's what I meant by my short sentence.

Re:not just online services

[CAIMLAS]

Eh? Since when has Microsoft supported their products in more of a token manner?

What will ultimately kill XP, and the older applications which run on it, is new hardware (or rather, old hardware that dies necessitating its replacement).

But honestly, MS doesn't want to outright kill these products. They'd rather have people using them than something non-MS. They want them around filling a segment of the market - and they're not going to die for decades, anyway - for one reason or another. What Microsoft is really concerned about is corporations and large companies upgrading to the latest, greatest: those companies and licensing is Microsoft's bread and butter.

Re:Bing was a stupid idea

[Locutus]

yes, it's better to go with the devil you know will eat you up and spit out your skeletal remains than go with a company which won the hearts and minds of customers to get their marketshare and has not proven to be even close to the evil which lurks inside One Microsoft Way. That makes so much sense.

LoB

Re:sure we lose money on every deal...

[Fluffeh]

To compete with a market leader, you can expect to lose some money to start with. How much you need to factor in to "lose" at the start will be defined by three things:

1) Your flat operating costs - in this case, how much bandwidth you need to crawl the web to index things. The cost of employing staff to maintain, write and keep your search engine alive.

2) Your variable operating costs - in this case, how much extra bandwidth you need to supply your results to users, how many servers you need to keep that sort of thing.

3) Your marketing investment - which is also a variable and how much you spend will depend on how quickly you want to catch the market leader with your own product. How much do you need to advertise and market your product for people to say, "Well, I might try to bing this search rather than google it." The more users you want quickly, the larger the campaign you need to invest in to get these users quickly.

The problem is here that from what the community at large is saying, while some have tried it, they haven't been happy with the product to continue using it. That means that while the money is being sunk into point 3 above, it's not retaining those users, so much more needs to be spent to get them to try it again.

To really compete with a market leader on a world stage such as this, you really do need a great product - so many people wouldn't be using google if any kid with a garage could write a better search engine - and you need to invest a LOT of money into an advertising campaign - unless you aren't worried about the length of time it takes to reach the market leader in terms of share. You can grow slowly, through word of mouth, through organic growth - or you can grow through buying other search engines, redirecting searches, striking deals to have users sent to your platform over competitor products. The more customers you want, and the quicker, the more pricey it gets. Just be sure that you aren't throwing money hand over fist into GETTING those customers if you aren't going to keep them.

Bing

[voxner]

I really hope Bing succeeds. I haven't used it much so far, mostly out of Inertia. But I don't like the idea of placing all my bets with Google. It's very important that an alternate good quality search engine is available. MS is best placed to achieve that for they have the man-power & the money. I hope they succeed.

Re:I don't like Linux

[DI4BL0S]

Your signature elaborates your decision...
Google has shown in the past that they care allot about protecting they customer information
While Microsoft has shown in the past that all they care about is making things theirs
where a failed attempt to make the internet Microsoft compliant rather then open to all things OS by sticking to their own standards instead of W3C.

No thanks, I'd choose Google any time over MS

Re:Way off, there

[Enderandrew]

Google has made an OS however. No one is taking is seriously because it it basically a web browser. And while Microsoft and others are busy talking about the Cloud, people forget that Google is sitting on this.

http://en.wikipedia.org/wiki/Google_Native_Client

What happens when users don't need to install apps or worry about security so much because apps can just run natively in the cloud in a sandboxed instance? You just access them from the web, and they just work.

Then suddenly that simple, secure OS that Google made becomes vastly more interesting.

Re:not just online services

[Enderandrew]

7 boots faster, but requires more CPU and memory than XP. It is not faster on the same hardware.

It is significantly better than Vista largely because they fixed the broken video driver API in Vista. Aero, gaming and anything that needed accelerated video in Vista performed horribly.