Microsoft Bing needs to stick around and not only drive Google to innovate, but to enjoy the fruits mobile, local and social search have to offer.
One backlash of Microsoft's (NASDAQ:MSFT) revelation that its online services
business lost $2.6 billion in the last fiscal year is that it had financial
pundits calling for not only CEO Steve Ballmer's resignation, but for the
Redmond, Wash., software giant to dump the main culprit: Bing.
Reuters
Breakingviews columnists Robert Cyran and Martin Hutchinson July 24
called for Microsoft to shed its search business
for cash. Cyran said:
Microsoft
needs to concentrate on a different kind of search: finding a buyer for Bing,
its online search business. Bing is the industry's distant No. 2 after Google.
It has become a distraction for the software giant-one that costs shareholders
dearly. The division that houses Bing lost $2.6 billion in the latest fiscal
year. Facebook, or even Apple, might make a better home for Bing. A sale would
be a boon for Microsoft's investors.
This prompted
a public relations reaction from Microsoft, which
quickly seeded The New York Times
with an insider's piece on Bing. Microsoft granted the
Times rare access to
Bing leader Qi Lu, whom the software giant lured from Yahoo three years ago to
power Bing. Lu talks about the need for a decision engine to make search more
intuitive for users.
Analyst David
Card, who recently became GigaOm Research's director,
said ridding itself of Bing would be a bad idea
for Microsoft.
"Microsoft
must have a credible search-engine business to defend its core platforms and
APIs, as well as keep its biggest rival, Google, honest by forcing Google to
create sustainable business models in competitive markets like applications and
mobile," Card wrote. "And a somewhat more successful search engine
would solidify Microsoft's own ad business and open emerging revenue
streams."
In other
words, without Bing, Microsoft lacks the necessary firepower to counter Google
online. Facebook enjoys a growing social display-ad business, but it hasn't
quite taken off the way experts believe it should or will. There really are no
other formidable challengers, not only to keep Google "honest," but also
to keep the dominant search engine from resting on its laurels. That's prone to
happen in the Internet era; see Yahoo for reference No. 1.
Indeed, Google
has accelerated its pace of innovation. Perhaps Google's biggest search
innovation since Bing formally launched in June 2009 came in the form of
Google Instant predictive-search technology in
September 2010.
Instant was
first used for search results, but is now also employed for actual Web pages for which users
are searching. The idea is to speed up the pace at which users search for
and land on information they are seeking. Google believes this will save its 1
billion Web searchers countless hours of time.
IDC analyst
Hadley Reynolds also said that Bing is better for Google, Microsoft and the
rest of the world. Reynolds suggests that the reward for success-new business
in software and services for social, mobile and local territory-could be bigger
than Office for Microsoft at some point in the future.
"The
business models may be different, more subscriptions and advertising, but the
ability to provide users with an attractive and functional online experience is
a constant," Reynolds told
eWEEK.
"They will refuse to cede this territory to Google, no matter how many
mistakes like Zune and Windows Phone and their earlier Web-search products it
takes to eventually gain a good, strong competitive position."
To that end,
Reynolds doesn't see Microsoft shareholders forcing the company to give up
their grip on future business franchises, no matter how many pundits clamor for
the play.
"While
Google will continue to innovate, the reason they are more focused on this is
because there is a viable competitor in the market," Altimeter Group founding
analyst Charlene Li told
eWEEK.
"Is this keeping Google honest? I prefer to think that it's serving our [consumers']
needs better."
Li-who admitted
that she is a Google power user who occasionally goes to Bing for travel
search, which she claimed is better than what Google offers to date-also pointed
to the broad, deep partnership between Facebook and Microsoft: Facebook gives Microsoft social-network access and Bing
powers Facebook's Web search, need each other.
"The
social search on Bing is decent, and at some point, I expect that parts of it
will show up in Facebook itself. So add Facebook to the equation, and the whole
dynamic changes," Li said.
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