Microsoft is in the news this week with more bad news about its online division and its struggling search engine, Bing. Recent results have been just terrible; in the 9 months ending March 31 the division lost $1.45 billion on revenue of $2.1 billion. Microsoft this week announced a $6.2 billion write-off related to the online division and a prior acquisition. That is a lot of money, even for Microsoft.
This isn’t a big surprise. Bing is a perfectly respectable search engine but it is directly attacking Google. The problem is that Google has a very good search engine and brand; it works just fine and people know and like the Google brand. Why would anyone switch to Bing? It isn’t clear. So it isn’t surprising that they haven’t and Microsoft is losing tons of cash.
The puzzle is why Microsoft carries on at all. Microsoft’s CEO Steve Ballmer is apparently quite excited about it. Last summer he proclaimed “Bing is a service that is probably amongst the things I’m most excited about at Microsoft, most excited.”
So why is Steve excited about Bing?
It might be that he thinks Bing will start working and people will switch. People tend to think their children are far above average. Perhaps Steve is similarly delusional.
Or it might be that Microsoft has other things in the works, either a new technology that will significantly improve the offerings or a positioning that will finally establish a clear place for Bing to live.
For now I think we can conclude that Bing is yet another example of a company attacking an entrenched competitor by launching a perfectly respectable product and supporting it heavily. And this rarely goes well.