Thursday, September 22, 2011

Search Engines = Not Cheap

After looking into the financial results of Bing so far, CNN found that Microsoft’s search engine has been losing nearly 1 billion dollars each quarter since its launch in June 2009.

During its first two years in market, Bing lost $5.5 billion, but that’s not everything. Looking in Microsoft’s older financial records reveals that the company’s online services division has been losing money since day one and it has never made any net profits till now.



Microsoft’s online services division has incurred total losses of $9 billion since the company started releasing its financial records in 2007.

Microsoft argues that those losses are required temporarily to establish a foothold in the online search market that has been dominated by Google for too long now. The company noted that it has been gaining market share against Google steadily over the last 27 months.

Microsoft’s argument is technically correct as Bing now maintains a 14.7% of the online search market, up from the 8.4% it owned at launch. But it is important to note that this market share was not taken from Google which maintains a market share of 64.8% now, only 0.2% down from the 65% it owned when Bing launched.

Almost half of Bing’s customers are Yahoo users who use it indirectly since Yahoo is now powered by Bing. The rest of the customers came majorly from Ask.com and AOL deserters.