Bing: Another Shot at Search

The latest version of Microsoft’s Internet search engine, Bing, is not a major new initiative but rather represents a continuation of Microsoft’s search strategy of improving core algorithmic results while innovating in particular areas, such as product and travel searches. More important, Microsoft has finally come up with a coherent marketing strategy, giving the company its best chance yet to take market share from Yahoo and Google.

Why Continue in Search?

After years of outsourcing MSN Search to other providers, Microsoft began working on its own search engine in spring 2003 and launched it in Jan. 2005. Since then, the company has changed its name and user interface several times, gradually improved the relevance of its core results, and added features. Over the same period, Microsoft has built and gradually improved a platform for search advertisers, adCenter. (For a timeline of Microsoft’s search efforts, see the sidebar “Search Timeline“.)

These moves have been expensive: Microsoft’s Online business segment, in which search is included, earned US$411 million in operating profit in the four quarters ended Mar. 31, 2005. (Some of this revenue came from a search advertising deal with Yahoo; the rest came from display advertising, dial-up Internet access, and subscriptions to other online services.) Four years later, the Online segment showed an operating loss of US$2.01 billion in the four quarters ended Mar. 31, 2009. According to comments by CEO Steve Ballmer at the 2008 Financial Analyst Meeting, search is primarily responsible for the growing expenses in this segment.