Microsoft’s Bing search engine has been getting a lot of press in the past few weeks. One of the leading contenders for the CEO spot was talking about possibly selling off the search engine if he got the job. The Bing/Yahoo partnership has been starting to run more smoothly, and Bing’s numbers are consistently holding steady or even moving slightly up. What most people didn’t expect, however, was some fairly positive news regarding the profitability of the Bing search engine.
Bing has long been a huge money pit for Microsoft. As they spent millions of dollars every year creating and growing the data center, the algorithms, the advertising and just about every other aspect of the search engine, the income would remain low. Microsoft has long predicted that the search engine would continue to operate at a loss until they reached 20-25% of the search market. Many experts estimated that it would have to be at the high end of that range in order to break even or turn a profit.
In a recent announcement, however, Microsoft has announced that their datacenters are largely in place and functional, and the algorithm is working quite well too. This means that they won’t be spending the massive amounts of money on Bing going forward, and will simply have to invest incrementally to keep it functioning and, hopefully, grow the number of people using it.
In the first quarter of fiscal year 2014, Microsoft reported that their online services division, which includes Bing, lost $321 million, on revenues of $872 million. This is quite a loss, but since it represents the end to their big investments, it isn’t nearly as significant as it could have been.
Dave O’Hara, the Chief Financial Officer for Microsoft’s Applications and Services Group, commented that Bing isn’t just a web search engine. He says that Microsoft has been working hard to integrate it into a larger number of products and services, including the x-box 360, x-box one, Windows and their Office suite. Having the ability to provide nearly unlimited data to users in these environments can be very valuable, which is why it doesn’t make sense to consider selling Bing at this time.
Microsoft is also looking to expand its role in the ‘big data’ market with cloud services, including a business intelligence service bundle known as Power BI. They are also looking at a personal assistant technology (similar to Siri?) known as Cortana, which is supposed to be available in the Windows Phone next year.
All in all, the future of Bing is looking brighter than ever. While it is still losing money each quarter, the amount is losing is going down. If Bing can increase the number of people using the search engine, while also using it in a variety of other products, it is reasonable for Microsoft to think it may turn a profit in this division much sooner than most people expected. Of course, the search engine industry is very volatile, so it is difficult to make any predictions.
What do you think about the future of Bing? Leave your comments below.