Bing: losing money (and catching Google?)

Lots of news about Bing this week, and no, there still haven’t been any announcements about Bing HTML5, even after Build.  Everyone from disgruntled former employees to CNN Money to Google exec Eric Schmidt have been weighing in on the fate of Bing, from all different directions.

chart-bing3_topCNN Money posted yesterday on some sobering losses for Bing (well Online Services, really, of which Bing is a big part but also includes MSN), noting that OSD has lost $5.5 billion since Bing launched in June of 2009, and is currently losing some $1 billion a quarter.  While Bing has been incrementally gaining market share, that share has come at quite a cost, as the front loaded deal with Yahoo! and other acquisition costs (deals with OEMs to include Bing as a default search engine, etc.) continue to drag on the bottom line. 

But as CNN Money points out, Bing has “a plan to stop the bleeding”, a plan outlined by Online Services President Dr. Qi Lu in last week’s Financial Analyst’s Meeting.  In the meeting, after outlining three “tidal waves causing deep structural changes”: social, geospatial, and apps, Lu summed up how Bing is moving to harness those changes:

But adding all these together, the social economic forces are rapidly pushing the web toward a full-blown digital society with every human being, every location, every product, every organization, every concept; they’re all digital representatives, including the relationships. When we’re using smart devices to access, interact the web, it enables everything, anything, to be done. The web becomes a place we can get anything, everything done.

But it needs to be organized differently. Today’s keyword index, keywords to URL, are too limiting. We need to organize differently to unlock the full potential.

That’s our vision. Our vision is to reorganize the web, to fundamentally make Bing a next-generation cloud gateway, to fundamentally enable, enrich, assist any human activities.

Not everyone, of course, has the same view as Dr. Lu about how Bing has “the horsepower to innovate, and innovate at a very fast pace”.  Philip Su, who worked at Microsoft for 10 years and spent a good part of that time in search, last week posted some pretty negative reflections on his two years working on Bing:

I was reminded of Bing today during a depressing conversation with a former coworker who soldiers on, nobly, in That Great Darkness.  Though it’s been several years since I left, I still remember Bing as the time when I most despaired for Microsoft’s future.

In all seriousness, Bing is solid.  But it doesn’t matter because nobody cares.  Search is a utility – or, rather, Google by its staidness has reduced web search to a utility – and unless someone does something creative in that space, real soon now, we’re about to get stuck in another decade of Altavista (I date myself).

No, no.  When I say Bing is the heart of darkness, that it represents the very worst of Microsoft, I’m not referring to its dismal market share.  I’m referring to its people.

Bing, more than any other Microsoft team I’ve been in (and I’ve been in a lot:  Office, Tablet PC, MSN, Windows, and others), is filled with overly politicized people pursuing Machiavellian schemes to forward their career ambitions.  It was a truly odd, odd place to work.

Su goes on to tell a few anecdotes about the political pressures at Bing, it’s a worthwhile read, if only for some context.  Of course there are many stories of political infighting at Microsoft, including today’s epic saga by Scott Barnes on his days as a Silverlight Evangelist.  But not everyone takes Bing and Microsoft so lightly.

Today, in a US Senate anti-trust hearing focused on Google, Eric Schmidt is appearing before a committee of Senators, and Politico, via All Things D, noted in the notes for Schmidt’s appearance some astonishing speculation about Bing vs. Google:

Reads the testimony, according to Politico: “Microsoft’s Bing launched in June 2009 and has grown so rapidly that some commentators have speculated that it could overtake Google as early as 2012.”

In fact, here is the relevant paragraph from Schmidt’s opening remarks:

Among major search engines, Microsoft’s Bing has continued to gain in popularity, perhaps because it comes pre-installed as the search default on over 70 percent of new computers sold. Microsoft’s Bing is the exclusive search provider for Yahoo! and Facebook. Microsoft recently signed a deal for Bing to power English language search on the fast-rising Chinese search engine Baidu, which Baidu has acknowledged will help it become more competitive in markets outside of China. In addition to Internet Explorer, Microsoft has integrated Bing into its popular gaming console, theXbox 360, which it is in talks with cable companies to convert into the set-top box of the future. Microsoft?s Bing launched in June 2009 and has grown so rapidly that some commentators have speculated that it could overtake Google as early as 2012.

Of course you’d have to be a pretty good search engine to find someone willing to say that Bing is in any position to overtake Google by next year, but maybe you look extra hard if you’re about to go before Senate Anti-Trust hearings.  And there’s other news re: Google and Bing, as accusations are flying that Google is upping the auction bid costs for Windows Live ads on Google, calling Windows Live sites “low quality website(s)”.  Say what?

So where does Bing stand?  Certainly, while it has made inroads, and continues to be built into the very fabric of Microsoft centric life, becoming a seamless part of Windows Phone, Xbox, and Windows 8, Bing has a long way to go to catch Google.  Its relationship with Yahoo!, while it has increased share to the point that Bing is a viable alternative for advertisers, is still dependent on the now quite precarious situation at Yahoo!, and some are even calling for another attempt at a Yahoo! acquisition by Microsoft.  It actually may make more sense this time around.  If nothing else, regardless of the Heart of Darkness references, Bing is making Google sit up and take notice, at least in front of the US Senate.