LEX Should Google be worried? Microsoft has lost a cumulative $7bn in its online business over the past decade, but has finally done something right – the software company has chosen to play a different game. The relaunch of its search engine under the new brand of Bing this month was slightly muffed by announcing the product before the site was entirely ready for the attention drawn by a $100m marketing blitz. But by trying a new tack – improving the overall user experience rather than the technical quality of its search engineering – Microsoft may have found a way to inch up its market share.
Interesting new pictures on Bing’s home page everyday will not be enough to retain the small gain in user numbers Microsoft has registered since the launch. And focusing on the areas consumers use most – news, entertainment and researching purchases and interests – does not change the fundamental maths of the search market. With two-thirds of users, compared with Microsoft’s recent high of 12 per cent, Google has more information with which to refine its search results.
Even so, Steve Balmer, Microsoft chief executive, has indicated that he is willing to pour another 5-10 per cent of the group’s operating income into the search battle for up to five years: somewhere between $6bn and $12bn on current analysts’ estimates. Such sums would force Google to react, meaning higher marketing spend or experimenting with a less spartan interface.
Most at risk, though, is Yahoo.
The struggling group, concerned with restructuring and rebranding under new boss Carol Bartz, will also shed users to a free-spending Bing. The only upside is that if Microsoft is so committed to search, it may once again return to the negotiating table with Yahoo.
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