Microsoft: How do you Solve a Problem like Bing?

by Matt Klassen on August 2, 2011

While it seemed to come out of nowhere, the controversial Reuters opinion piece written late last week suggesting that Microsoft jettison its floundering Bing search engine is certainly not without merit. The truth is, while Bing does occupy the number two position among most popular search engines, it lags so far behind the ubiquitous Google that the second place spot is almost meaningless.

So like many other businesses in the technology sector, is it time for Microsoft to scuttle its extracurricular projects like Bing and refocus itself on its core markets?Microsoft doesn’t think, arguing that its Bing search engine is a boon to its other divisions, leading to increased sales in the software and mobile phone sectors, but is that enough to offset Bing’s $2.6 billion losses over the last fiscal year?

Even if Microsoft should decide Bing’s losses are too much to handle, who would be a good fit for Bing? In a technology market increasingly dominated by a few select players, Microsoft’s only real choice is to sell to a competitor in one market or another, which itself may be enough reason to hold on to the lacklustre search engine for just a little longer.

As mentioned, Microsoft really has little choice should it decide to selloff its Bing division, as the frontrunner candidates would be Facebook—not necessarily a direct competitor to Microsoft—and Apple—with whom Microsoft competes with in both the computer software and mobile markets.

Facebook, always looking for ways to compete with its closest rival Google, seems to be the best fit out of the two, as acquiring the search engine would allow Facebook to fully integrate the search engine into its social network, something it basically does already through an agreement with Microsoft.

But why would Microsoft want to sell, especially if the deal could be a key linchpin in Facebook’s pursuit of online dominance? In a word, “money”. While Microsoft has been a delight for investors over the past few decades, there are divisions within the company that clearly aren’t carrying their fair share of the load, the foremost being Bing. In fact, as I noted before, despite gains in most other Microsoft divisions, the division overseeing Bing lost a whopping $2.6 billion over the last fiscal year.

There’s nothing that would delight investors more than the influx of cash that Bing would generate, with an estimated price tag of $11 billion. Of course, with a price tag that large, would either Facebook or Apple even be interested?

That said, Microsoft seems steadfastly confident in its losing Bing bet, arguing that despite the search engine’s losses, it remains a key piece to Microsoft’s overall strategy, particularly as it relates to generated mobile ad revenues that do much to support the company’s Widows Phone OS. With such a central role in Microsoft’s vision, I would wager that Bing will be around for the foreseeable future, regardless of its gains or losses.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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