51–60 of 70 posts
In other words they've become reactionary instead of being innovative.
Disclaimer: I do not speak for Microsoft, I am simply an employee - these opinions are mine and mine alone. As someone working in the online services division I have to say that this analysis is extremely simplistic. Would they be saying the same thing about Facebook? It was in the red for many years before it became profitable. That was the plan.
The comparison to Facebook is not fair. Facebook is now profitable and Microsoft online services are not. Facebook was never in the red to the tune of 2B a year. Microsoft online services had a multiple year head start on Facebook.
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Earlier quoted context omitted.
The comparison to Facebook is not fair. Facebook is now profitable and Microsoft online services are not. Facebook was never in the red to the tune of 2B a year. Microsoft online services had a multiple year head start on Facebook.
Facebook doesn't do 60B a year in revenue
Steve Ballmer says he is willing to invest 5%-10% of Microsoft's operating income over the next five years on search. Read more: http://www.businessinsider.com/henry-blodget-steve-ballmer-h... Specifically, assuming Microsoft's operating income stays constant (it will likely grow), it's $5.5-$11 billion. endquote.
This is a challenging problem that doesn't fit nicely into comments or short blog posts, but I'll try. Search is a tremendously expensive game to try and win. It's economics are such that the more search share you have, the more money you earn per search. This is a critical point, so I'll spell it out a little further. All search companies have more advertiser dollars than they have searches to spend them on, Google,…
So, they lose 4 cents every time a search is performed (2 B USD in loss, 4 B searches per month, or 50 B per year) but they will make up on the volume? Not to mention: they still use Overture to monetize search...
I don't think you get how search and advertising works. Clicks lead to revenue, but you need clicks first. In order to get clicks you need to be competitive. With Google just a URL away they need to be nearly as good, if not better (due to name recognition) than Google to get a large share of the pie.
So the problem is that they must effectively spend (or outspend) Google on search (data centers, employees, etc...) pretty much all the way to the point where they reach parity and beyond. All the while they bring in a lot less money than Google.
If Bing can continue at its current pace and couple it with some real marketing strength, I think they have a real chance of flipping quarterly income from a $500M loss to $500M in earnings.
The two wildcards in this space are social (Facebook) and mobile. I feel like mobile is a bigger deal than social. IMO advertising is the current and future business model of computing. I think MS gets this and realizes that this is the one fight they have to continue to fight.
Earlier quoted context omitted.
No way in the world. MS has nothing to counter Google's search. Users will not switch to Bing, there's no reason to.
I switched to using Bing Maps about 70% of the time fairly recently - largely because here in the UK they have full Ordnance Survey 1:25000 coverage.
Disclaimer: I do not speak for Microsoft, I am simply an employee - these opinions are mine and mine alone. As someone working in the online services division I have to say that this analysis is extremely simplistic. Would they be saying the same thing about Facebook? It was in the red for many years before it became profitable. That was the plan.
The comparison to Facebook is not fair. Facebook is now profitable and Microsoft online services are not. Facebook was never in the red to the tune of 2B a year. Microsoft online services had a multiple year head start on Facebook.
Besides, the whole independent division comparison to a whole entity is a little ridiculous. Every company, including Facebook, spends a certain amount of cash flow on R&D, it's a competitive necessity. The fact that Microsoft structures a large part of their R&D into a division shouldn't necessarily be the fault of the division when they don't immediately turn a profit.
As long as they are meeting their internal (revenue/profit/growth) goals, I don't see the problem with giving out bonuses and rewarding the players involved.
This is a challenging problem that doesn't fit nicely into comments or short blog posts, but I'll try. Search is a tremendously expensive game to try and win. It's economics are such that the more search share you have, the more money you earn per search. This is a critical point, so I'll spell it out a little further. All search companies have more advertiser dollars than they have searches to spend them on, Google,…
This analysis seems right to me. MSFT's annual cash flow from operations is in the $24 billion+ range. MSFT has $44 billion of cash in the bank. What is MSFT going to do with all that cash? Watch Google slowly eat its business? I'm surprised MSFT hasn't invested more in web services -- $2 billion seems small given its resources. Could it be a shortage of opportunities?
It's an abysmal performance by anyone's standard BUT they could probably sell that business for considerably more than the book value.
Even if the book value is fair and they lost $2b, they got the only viable (albeit still money-losing) alternative to Google, which was a strategic imperative if they want to link Office and Windows to the cloud.
To make the claim that this is a bad thing, one must argue that Microsoft's stock would be worth more today if Microsoft had not been aggressive about search. How a company shows gains and losses is also very subjective. The numbers could turn around and show strong profits around the time that bing reaches 45% market share (which will be soon).
45%? Not even in Ballmer's wet dreams. Bing's market share is only up 4% since launch http://www.microsoft.com/investor/EarningsAndFinancials/Earn... and most of those gains must have come at the expense of Yahoo!
It's a business that takes lots of investment in scale. I think Google is one misstep away from Bing grabbing lots more share.
Google instant was a near-miss. Even on my new macbook wtih google chrome it's annoyingly jittery and hinders the user experience.