Microsoft’s biggest gamble is finally making money

23 Oct 2015 | Author: | No comments yet »

Bing Is Profitable.

“Search revenue increased to more than $1 billion this quarter,” Amy Hood, Microsoft’s MSFT 10.10% Chief Financial Officer said in an earnings call with analysts Thursday. “And we passed an important milestone as our search business reached profitability.” Bing was launched in 2009, and it quickly won the title of second most-used search engine behind Google GOOG 9.34% . But for many years the search engine bled money for Microsoft as it invested in data centers, employees, and expensive marketing campaigns to help it become competitive with rivals like Google.

Microsoft’s search engine has struggled to generate profits since it’s introduction in 2009, but the company reported its FY16 Q1 earnings on Thursday revealing that search accounted for over $1 billion. On the earnings call, Microsoft’s CFO Amy Hood said “In search, we expect Bing’s strong trajectory to continue, remaining profitable for the remainder of the year.” According to comScore, Bing’s US market share is 20.7 percent.

Although it isn’t an exclusive along the lines of Yahoo’s previous hook up with Microsoft, the partnership will mean more options become available. With nearly 20% of search revenue in September that was driven by Windows 10 devices and search revenue excluding traffic acquisition costs grew 29% CC. The new deal needs approval from the US Department of Justice and also regulators in India and the EU, and if it gets the go ahead, it is set to run until the end of 2018. He later said, “I’m very, very excited obviously about what’s happening with Bing.” Microsoft beat reporter Mary Jo Foley explains at ZDnet, “Microsoft has been working to streamline its search and advertising business business for months. He added that “Windows 10 users [have asked] Cortana more than 1 billion questions.” Windows 10 has been the most popular and best-received Microsoft operating system update of the last several cycles.

The statement read: “In October, the Company reached an agreement with Google that provides Yahoo with additional flexibility to choose among suppliers of search results and ads. Earlier this year, the company handed off its display advertising business (and possibly 1,000-plus of its employees working in that business) to AOL. Google’s offerings complement the search services provided by Microsoft, which remains a strong partner, as well as Yahoo’s own search technologies and ad products.” Last April, Yahoo and Microsoft amended their own 2009 deal and claimed to be “committed to maximising the alliance.” The tweaks allowed Yahoo increased flexibility regarding the way it used any platform and became non-exclusive for both desktop and mobile. The company also opted to get out of the map-data-collection business and sold off those assets and about 100 employees to Uber; its new strategy is to license/display other companies’ mapping data.” Meanwhile, Bing has been frequently upping its game in terms of ad offerings. Microsoft reacted to the news about Yahoo’s new arrangement with Google by saying: “We remain committed to the Yahoo syndication partnership and will continue to serve the majority of Yahoo traffic as outlined in our contract extension.

Recent months have seen changes to the Bing Merchant Center, improvements to Accounts & Billing, the launch of a new Marketplace Trends visualization tool, new automation features for Bing Ads, the announcement of the Bing Ads Keyword Planner, improvements to conversion tracking, and new remarketing capabilities. Bing crossed the 20% market share threshold in search for the first time in March, and currently holds 20.7% of the desktop search engine market share, according to comScore’s September 2015 data.

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