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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?

  • modelportfolio2003

    @Frank
    You are absolutely right to question whether Microsoft or YaBing will ever really be a serious threat to Google in search.

    However as long as Microsoft is willing to lose money at the effort, it offers a useful figleaf for Google in discussions with anti-trust authortities in any number of countries. Google can say in all honesty that competition is just a click away.

    I am sure Eric is repeating this logic in the halls of Washington DC and Brussels.

    • http://www.frankthinking.com Frank Reed

      Was thinking that myself. In fact, if I were Google I might find a way to give Bing a boost just to make sure it sticks around!

  • http://superbowlxlv45livestream.blogspot.com Kirk

    We know Microsoft is stil a great company, they know what to do next and maybe in future. Most people are using operating system Windows, like Windows 7. But when it comes to search talk, Google is still dominating the WWW coz lots of people are using google to search. Also, Bing Yahoo combination is a great idea.

  • AMWJ

    I think that the purpose of Bing is to keep a competitor to Google. If there is no competitor to Google in the online sector, than Google will branch out to other sectors, (as it has already done with Chrome OS and Android). Microsoft has Bing to push the battle as far as possible from their core businesses, even if it is not profitable.

  • http://www.vdcardwell.com Vinay Cardwell

    Bing will stay in the game. Bing is actually a more precise search engine, just as they advertise, but my first option is google and secong is Bing. I should be using Bing but its so hard to break the google habit. Darn you google!

  • http://www.abcoffice.com Cliff

    I suspect Microsoft is hoping to eventually have the same success they did with the Xbox. Remember, the 1st generation Xbox was never profitable. Several years and billions lost later, they are now turning a huge profit with the Xbox 360.