Microsoft Bing: Searching for a Winning Strategy
Microsoft Bing partners received a depressing reality check ahead of next week’s Microsoft Worldwide Partner Conference 2012 in Toronto. Indeed, Microsoft is taking a $6.2 billion write-down charge in its Internet division — mostly because the aQuantive acquisition is not meeting expectations in the search war vs. Google. The charge also provides an inflection point for online and mobile partners, where Microsoft’s relationships with Yahoo and Nokia, in particular, are struggling mightily.
Microsoft purchased qQuantive in 2007 for $6.3 billion cash. But in a prepared statement this week, Microsoft said:
While the aQuantive acquisition continues to provide tools for Microsoft’s online advertising efforts, the acquisition did not accelerate growth to the degree anticipated, contributing to the write down.
Microsoft insists Bing’s market share is growing, but eMarketer sees the U.S. Web-search ad revenue market this way:
- Google had 74 percent market share in 2011, growing to 77.9 percent in 2012.
- Microsoft Bing had 13.7 percent in 2011, falling to 11.5 percent this year.
Google also manages to make more money than Microsoft off of each search performed, The Wall Street Journal reported.
The Microsoft Bing challenges highlight how the software giant’s partnerships don’t always pay dividends. Microsoft has a high-profile search partnership with Yahoo, and a smart phone partnership with Nokia. Both of those relationships are under extreme stress amid Google’s continued growth with search and Android-powered smarthphone sales.
While Microsoft’s Internet division struggles, the company’s Office 365 and Windows Azure cloud businesses also face intense competition. Office 365, now one year old, continues to gain channel partner backing. But Google continually shifts the SaaS conversation to price when competing with Office 365, notes one Microsoft partner.
