Bing, Cloud and Android
Bing Microsoft also intensified its cloud and online efforts. Thanks to its search-and-advertising agreement with Yahoo, in which Microsoft's Bing search engine powers Yahoo's back-end search, Microsoft owns roughly a third of the U.S. search-engine market. Rather than compete head-to-head with Google, Microsoft has decided to differentiate Bing by making it the search engine for those exploring very specific verticals, such as travel. In addition, Microsoft entered into an agreement with Facebook that adds a number of social-networking features to Bing.In light of that, he continued, Microsoft decided to evolve Bing by "infusing the emotional into it." That meant adding Facebook-fueled social features, including the ability to see, in search results, which Websites one's friends "Liked." By November, according to research firm comScore, Microsoft had managed to reach 15 percent market share at the expense of both Google and Yahoo, while Google dipped slightly to 65.4 percent. The Cloud and Android In terms of the cloud, Microsoft launched the final version of its Office 365 platform at a high-profile event in New York City in June. Office 365 links Microsoft Office, SharePoint Online, Exchange Online and Lync Online into a platform that costs $2 to $27 per user per month. On top of that, Microsoft began offering an Office 365 Marketplace with productivity applications and professional services. From 2010 into 2011, Microsoft has pushed an "all-in" cloud strategy centered on subscription products such as Office 365. By embracing an industrywide trend toward the cloud, the company hopes to diversify its revenue stream beyond desktop software such as Windows. Moreover, the cloud model holds certain advantages for Microsoft, as subscriptions ultimately yield more revenue over the long term than a single copy of software (provided the customers in question keep paying for a sustained period of time). But the cloud comes with its own drawbacks, the most visible of which is the occasional downtime. Over the summer, Office 365 experienced a handful of outages, similar to those experienced by Google and other cloud vendors. The cloud also has yet to generate the sorts of revenue that Microsoft enjoys from its more traditional "boxed" software, with no clear timetable for when those online efforts will start becoming more profitable. Microsoft's competition ramped up against Google in areas beyond cloud products. Throughout 2011, Microsoft went to companies building Google Android devices with a simple proposition: Either pay us royalties, or face a patent-infringement suit (Microsoft insists that Android violates its intellectual property). That strategy paid off, as a growing number of Android manufacturers large and small (including HTC and Samsung) agreed to pay royalties rather than engage in a wide-ranging court battle. As for the companies that decided to engage in a courtroom tussle rather than pay up, Microsoft scored a few victories. Near the end of December, the International Trade Commission (ITC) found that Motorola Mobility's Android devices infringe on aspects of one Microsoft patent. Microsoft executives played up that victory. "ITC finds Motorola patent infringement in Microsoft case. Another indication that licensing is the best path for the industry," Brad Smith, executive vice president and general counsel of Microsoft, wrote in a Dec. 20 tweet, following it up with: "One key step behind us in the ITC. More to follow. But we'll also remain focused on licensing, as we have with Samsung, HTC and others." Microsoft's competition against Google seems unlikely to abate in 2012, with more legal action in the making, although executives in Redmond likely hope that Windows Phone will gain market share to the point where it can compete more heartily against the growing family of Google Android devices. But Google is just one aspect of Microsoft's challenges for the next year: Apple, Salesforce.com and a variety of other rivals will all continue to fight for their own-and Microsoft's-pieces of the cloud, mobility and operating systems. Follow Nicholas Kolakowski on Twitter
"Decisions don't get made on rationality alone," Bing Director Stefan Weitz told eWEEK in a May interview. "People ask other people for information. Eighty percent of the people making a purchase online will delay that decision until they ask someone else."