Microsoft’s Online Efforts Keep Losing Money
Microsoft reported good results yesterday for the last quarter of 2010. I guess the term good could be an understatement when you post a quarterly profit of $6.63 billion on numbers that beat the street. No one doubts that Microsoft is still a strong company with Windows, Office 2010, Xbox, Kinect and server businesses moving right along.
However, what we are interested in the Internet side of the ledger and it tells a familiar story that makes one wonder if Microsoft will ever make money online. The chart below from the Silicon Alley Insider gives a history of the excessive hemorrhaging that the online space has provided for the company with the latest quarter reporting a loss of $563 million.
To sum up, in the last 4 quarters alone this unit has suffered $2.5 billion in losses. So much for Bing and decide, huh? We suspect that there may never be a decision by Microsoft to get out of the space but with all the talk in the search world being around Bing making strides in market share, you have to wonder if those gains are worth it.
Search share is one thing but making money is another and Microsoft just can’t seem to do that online. So will Microsoft simply continue to fund its online losers with the profits from elsewhere? Imagine if they didn’t have these other businesses, though, to keep funding this chase for the search engine crown. Let’s face it, the only reason Google has any competition at all in search is because Microsoft is willing to lose a lot of money to say they are in the game. Oh and the fact that they have the money to lose doesn’t hurt either.
Are these efforts really providing competition to Google or is it just stubborn pride to stick it out for as long as it takes to do whatever it is they want to accomplish?