I'm sorry to say, but a $100 million spend on advertising is peanuts in this game. Google's revenues last year were $16 Billion. Two thirds of that, or $10 Billion came from Google owned pages (read search advertising).
So, if my coctail napkin calculations are correct for every 1% share of their search advertising business Microsoft stands to gain roughly $100 million plus punch a competitor in the nose. Not bad. I wouldn't be suprised if Microsoft picked up an additional 5% of the search market with Bing. That means $500 million more in revenue.
People forget that online and search businesses accounted for just $850 million of Microsoft's $60 Billion total revenue last year. Their revenue streams are pretty well diversified, and they can afford to bleed money in search for years if necessary.
Google's primary source of revenue is search and advertising. Any serious loss of market share in that business is going to hit Google where it hurts: the bottom line. They have enough cash to take a few lumps. But, they've been around for 10 years, and they are still clining to a single source of revenue. That puts them in a dangerous position.
This is just senseless Microsoft bashing from someone probably incapable of original thought. The irony of saying "It's those effing customers. They keep choosing the best experience." to bash a company that owns 95% of the OS market is clearly beyond him. He clearly understands little or nothing about economics, marketing, consumer behavior, etc.
Saying Microsoft should invest in areas not owned by Google is like saying GM should build planes because Toyota isn't.
I think that this is probably the most insightful comment on this page. Microsoft can probably afford for Bing to fail, because it's not their bottom line. Their bottom line is licensing with OEMs and large businesses.
I love Google products, but from a business perspective, their only source of profit is search advertising from their search engine. They are basically bleeding money through Youtube every single day with apparently no clear way to generate revenue.
If Microsoft can focus on the domain of searches to very profitable topics, such as airline tickets and hotels, and provide a better user experience through statistical analysis and information, they can carve out a part of the search revenue. No one is going to seriously use Bing for casual search, Google is too good and too entrenched for that. But, perhaps for some areas, they might turn to Bing.
Not to mention, I think a large part of google's advertising revenue has got to be a waste of money for the person paying, it just hasn't been figured out yet.
I tried really hard, but I just can't take this type of writing seriously.
Summary: Microsoft wants to expand their search market. They plan on spending a lot of money advertising this. This is a bad idea.
Guy who wrote this, listen up:
People do not giving a flying shit about the underlying architechture of any product they use. They do not care about the quality of results. They do not care about the logo on the top.
They care about how they feel when they're using things.
Lets look at apple's ipod. Yes, they are absolutely successful. Why is this? Is it because they have a massively superior product to anybody else? Or is it because they have advertised the living hell out of it to the point of an ipod being a fashion accessory/status symbol?
Haha, ipods are so hip, what, are you behind the times with that other mp3 player? Haha, look at how happy I am with this terrific, iPod, I'm with it! I'm hip!
The ipod isn't better, the feeling is better.
Look at the bing homepage compared to google. They have a nice big graphic on there with lots of colors. Its kindof beautiful. Oh, and the graphic changes all the time! Isn't that great? It's like you'd have to go to the page a few times a day to see all the pictures.
(now I'm adopting that annoying, sarcastic writing style. Sorry)
In search, getting results is the easy part. The part that keeps people coming back isn't content, its the feeling that they get when they're using the product.
You're wrong. The iPod was significantly better. People bought it. then it became 'hip' and 'cool', and some people only bought it because it was hip+cool.
I had several mp3 players before an ipod and the difference in usability was massive.
For a search engine, results are pretty much the only thing that matters. That's why google won.
Why does it have to 'kick Google's ass'? As long as the search result quality is comparable, there is no consumer lock-in keeping users from changing their habits and typing 'bing' rather than 'google' in their browser-bar.
Remember: Power-users who fiddle with Google Apps aren't the ones paying the bills -- it's the casual users who click those ads that bring in the cash.
It may sound foolish, but many of those casual users would prefer to see a serene image during their work-day rather than Google's stark whiteness. I'm already seeing many more converting paid clicks coming from Bing than Live.com ever delivered, so it seems to be working.
Go Bing! I'm thrilled to have another quality location I can advertise with!
People associate google with search. To get them to change, you have to offer them something better/more than google. And if you're microsoft, it's an uphill battle, because most users hate you, so you'll have to be even better than that.
The Bing interface is prettier and is as-fast-or-faster than Google. That's 'better/more' enough for the typical computer user.
Remember: If you're reading Hacker News, you're not a "typical computer user". You're not the type of person that's lining Google's pockets -- you're probably a cost.
Most "typical computer users" don't hate Microsoft. They're happily using Word and IE, love FreeCell, and couldn't tell you what Emacs or The Gimp were to save their lives. People stopped reflexively typing 'yahoo' and 'altavista' pretty easily when their friends recommended 'google' and could do the same for 'bing'.
Keystrokes aren't a switching cost and Google isn't nearly as invincible as you might think.
When people are searching google, they don't want pretty. They want bare bones functional, it works. Bing looks cluttered, busy, and reminds me of why everyone switched to google in the first place - to get away from all the idiotic 'portals' that were trying to have as much stuff on the search page as possible.
Let me quantify a little more... People associate microsoft with bad things, and the past - their operating system crashing and dying. It's a necessary evil for them (Until they discover linux/osx if they ever do). Google on the other hand is associated with providing good search results, and allowing them to find what they want to, quickly.
I agree, google isn't invincible, but I believe if it is to be replaced, it'll be by a startup. Not a rebranding of a god-awful search engine by microsoft.
>> "That's 'better/more' enough for the typical computer user."
It's really not. You're talking about changing everyones behavior. Why would they do that? Because it looks prettier? You're delusional.
>>"the past - their operating system crashing and dying. It's a necessary evil for them (Until they discover linux/osx if they ever do)."
Don't intend to start a flame war but this is ridiculous.
How do you explain ~95% of desktops in the world running windows? As far as discovering linux/osx is concerned, it isn't for the common computer buyer yet. It is the computer scientists/hackers who discover them. Most of the common people probably haven't even heard of linux.
You're right, they probably haven't even heard of linux, and that's likely the way it'll stay, even as they start buying netbooks preloaded with linux.
You can't put a dress on an also ran and take on Google. It has to kick Google's ass.
Wrong. Microsoft only has to show it can compete, and it has won. They get to keep: the significant portion of the populace that's only dimly aware that they can switch search engines and also the portion that doesn't care. Certain types of results have a slicker presentation -- right there, many of the habitual users of those subsets are going to go to Bing, and these habitual searchers are probably many of the people most valuable to advertisers.
Remember, to win against the Germans at Stalingrad, the Russians first had to fight them to a standstill and keep them grinding their gears there for awhile. Sometimes the key to victory is to sap your opponent's momentum by just holding them at bay. (That said, I hope Google pulls off some fantastic stuff in response!)
I just wish Microsoft would learn from its past and be a leader again.
Actually, I think they just took the lead in search results presentation.
Maybe for the first 3 months, by that time other companies got the message. So Apple started to advertise, advertise and advertise until everyone had a white on pink burned into their eyes.
I'm not so sure. Perhaps the iPod feels better, in part, because it is easier to use, faster, holds more music, or integrates better with your computer?
These can be objectively measured, whereas "feeling" cannot.
Microsoft would love it if this were true. They may even convince themselves that it is-- that their stuff is just as good as Apple's or Google's, just not as fashionable. But it isn't true.
As companies, Apple and Google are both obsessed with making great things. Not with fashion, with engineering. Ask the people who work there. Microsoft isn't. Their history as a company has convinced them that there always has to be a shortcut to dominance-- that they don't have to obsess over craftsmanship, because they can use money or power to buy market share. Their plan to spend $100m marketing Bing shows their priorities haven't changed.
With all due respect, this is where I do not agree.
Microsoft is a company with a very diverse product spectrum and $60B in revenue. One has to give them some credit for sustaining high level of revenues and profit growth. It would be only fair to consider that they do have a lot of very smart people who can perhaps tell when is a short cut (FAST, Powerset ?) a better way to success and when the sheer commitment to high level of craftsmanship is the primary way.
With the search business being so dominated by Google (and for very good reason), introducing an entirely new brand name like Bing is a LOT of work, just to get people's ears and eyeballs. To overcome such a huge startup latency because of a new brand, a $100m investment in marketing sounds perfectly reasonable. Overall, I think they are investing a total of ~$500m in the online business operating expenses for the year.
Apple on the other hand, often seems to actively prefer to compete at a disadvantage. It's hard to get an Apple for work, it usually employees voicing (loudly) a preference. They rarely use price to break into or maintain markets. They want people to overcome those barriers to get the product. So if someone buys an Apple or an iphone it's because they really wanted it. When they win, it's usually because they made something someone really wanted. Wanted enough to pay for it themselves; nag their boss; learn something new or some other obstacle. It would be a break from this strategy if iphones started to be mass issued by employers putting them in to the hands of people who are apathetic.
MSFT take the opposite approach. Their usually involve the path of least resistance. That often using high high/dominant market share; pricing strategies; barriers to switching; barriers to being the odd one out, etc.
Both are IMO good business strategies & both are good businesses. But there is a qualitative difference in the approach. If sheer commitment to high level of craftsmanship is the primary way to winning, they probably won't win.
The iPod could store a person's entire music library, which other players at the time could not do. That was a major selling point. While advertising wouldn't hurt, you can't say that a few commercials were the only reasons anybody wanted one.
True. Unfortunately, the Archos was quite large, and had a clunky interface. The iPod was certainly the first hard disk mp3 player to have a good interface, reasonable size, and not be hideous looking, all of which were important for mass market takeup. It didn't have truly massive innovations, but it was a wonderful, weel thought out product. Which is what Apple are genuinely good at.
I want the feeling of getting what I'm searching for and the ability to skim and find it instantly on the results page without distraction. This isn't as subjective as feelings.. You can easily come up with a set of queries you used in the last year to find what you were looking for and ask: did the search engine return it as top N results?
edit: in general, as far as marketing is concerned, I agree that you should be in the business of selling feelings around your product, but I think you over-generalized.
It seems like I remember a lot of stories like this about Microsoft before the Xbox came out. Microsoft is going to compete against Sony and Nintendo? Yeah right! --Turns out they did OK.
Maybe Bing will work out and maybe not but that's no reason not to try. I'm sure Microsoft is very aware of the risks involved and the other places it could have invested the money going into Bing. I'm also sure they're aware of the money and power that goes to whomever controls search.
MS subsidized the hell out of an expensive product for 8 years, spent insane amounts of money on advertizing, AND bought software companies to increase demand. Yet it's still fighting for the number 2 spot and are a long way from making back their sunk costs.
Sony: 136 million (PS2) + 22.73 million (PS3)
Nintendo: 21.74 million (GameCube) + 50.39 million (Wii)
MS: 24 million (Xbox) + 30 million (Xbox 2)
It looks like Sony traded 3rd place to win the HD movie format war so it's probably a huge win for Sony. And Nintendo is still printing money from the Wii system. It's hard to say what the long term trend is going to be.
Ok, first of all, it's unfair to say that they're "fighting for the #2 spot" because the combined total console sales of last generation + this generation put them in #3. They're in the #2 slot for this generation, which is all that matters at this point. You don't gauge market position by looking at product sales over multiple generations.
Second, the Xbox division is profitable. Does that mean they made back their sunk costs? No, but they're on their way, and I think the original point was the MS has so much money that they can enter a market big, pour the money, and wait for things to turn their way. The Xbox is a good example of that.
You can talk about "this generation" but I am just looking at sales / month. PS2 was still selling 100k / month in Feb/2009. And Sony still makes money from each PS2.
So Sony still has 2 consuls on the market right now. The same way they sold PS1's long after the PS2 came out. Walk into a game stop and you will see lot's of PS2 games on the shelf and PS2's for sale. Once they stop selling PS2's you will see a lot more PS3's as replacement's sell. Until then note how most cross platform tiles make games for 4 platforms PS2, PS3, XBox, and Wii.
PS: Some people suggest you need to adjust the totals because the XBox is a year older and closer to being obsolete, but I think you need to look at company sales vs product sales. However, the total sales for PS3 and 360 have tracked fairly closely when you offset for a year so it's a reasonable argument when looking at totals.
Each search = predictable $$. Spending $100M will increase searches and ad clicks. Which means they will get some, or even more, of that money back. (Could $100M get a higher ROI elsewhere? maybe, but unless you know the revenue per query MSFT makes I wouldn't call the marketing campaign a mistake).
There is also the aspect of trying to catch up to Google, even if it isn't a great investment they may see it as there last real chance to catch Google. Customers probably wouldn't respond well to another rebranding in future.
Theres also the emotional aspect, you'd imagine Steve Ballmer would like nothing more than to take Google down a couple of pegs.
First off, Bing is basically a photocopy of Google with a couple different features. If you put the two side by side you won't get significantly different search results. The only real difference is layout. (video thumbnails, etc) So that being said if Microsoft has a product that is more or less equal at this point they obviously need to advertise it to gain marketshare. Is anyone actually unhappy with Google search? No, not really. So Microsoft's only hope is to at least get a large number of people to try it -- even if they only try it once or twice. There's more opportunity for growth there than simply trying to wait for people to become dissatisfied with Google and search out alternatives on their own.
Very few (if any) Microsoft products have experienced real organic grass roots growth. They've always been forced into the market Top Hat style. Since they don't have any real monopoly to tie Bing into they obviously have to try a different method here. They tried with both MSN and Live to leverage IE for more marketshare and it didn't work. You can't really blame them for trying something different. When you're dealing with a mainstream consumer oriented technology advertising is very important.
I wonder what decision is driving them to screw their chances in other countries. Because that's what they're doing. Anyone who gives it a try outside of the US is probably never going to look back.
One of the reasons for the rebranding was because people wouldn't give Live another chance. Now those same people are gonna see that Bing sucks and that image will get hard printed on their mind.
I already recommended it a couple of times to people in my country and they always tell me it sucks. I'm not gonna spend the extra effort of telling them to switch to the US version. They don't pay me to do that.
What I had really hoped was that Bing had a good search engine for shopping for computer hardware. There really isn't anything great out.
Froogle's ok, but sometimes gets bad results. So that $30 hd turns out to be a $30 cord. And it's kind of hard to comparison shop when you're going by the lowest price, and the lowest price is not the correct item.
I guess that this is an area for a human-powered search engine. Newegg's search is a really awesome example of how good search works. Unfortunately, Newegg is only one company, and I have not found a search engine that does something similar.
He does begin to make a valid point - but he is stil totally wrong. M$ needed a search engine - and Bing is actually pretty good: fast, decent results and useable day to day - it WILL get market share. What they needed was mass excitment to bring people to the engine - hence the huge budget.
And look at the stats already - ok so they might not be sticky stats but that is a HUGE amount of traffic. They are pitching $100 Million on people liking what the see when they visit to check out the hype.
Bing also has very little obvious M$ branding on it - which is another good tactical move to try and avoid the anti-MS vibe affecting opinions.
in all this has been, so far, a great exercise in marketing and product launch.
The crucial thing that proves this guy has no clue what he is talkign about is in the second comment to the blog he replies to a post about how Natal will "change the console world".
> Thanks, BJ... and that's a perfect example of a good
> experience getting spread online... you're talking about
> Project Natal because you genuinely think it's good, not
>because it has a clever ad campaign or because some
> talk-show host said "Natal" in a funny voice.
As we've already seen Natal is just an engineered tech demo - all it IS at the moment is marketing hype and a clever ad campaign to swing attention to the Xbox at E3........
It really astounds me when people think that Microsoft has to instantly beat Google. I think they're looking at it from the wrong point of view - They only really need to beat Yahoo at this stage.
Microsoft are throwing $100M dollars at an advertising campaign, when you compare that to the tens of billions they were willing to spend on acquiring Yahoo for their search business last year, its a cheap investment.
Hell, I'd wager that since they'll be recuperating some of the costs through search advertising, that the $100M spent will only be the beginning. I think we will all see more advertising spent in the future.
If Microsoft is serious about search, this $100M is a cheap gambit.
Let's say, hypothetically speaking, that Google's users are so entrenched that they wont be able to steal any of them, yet they do manage to take all of Yahoo's users, that means they still would control essentially half of the search volume that Google would control.
$100M for a glimpse at that outcome is cheap, especially when they have the cash reserves to do it.
So like I said, they just have to steal Yahoo users, which then puts them in a really good position to outdo Google.
If history has shown us anything, when it comes to technology & consumers, the more technically superior solution doesn't always win (eg, betamax vs vhs or IE vs Netscape)
Microsoft needs to take a look at how google became popular in the first place.
I got told told about by a friend at school and how it was much better then yahoo.
I didn't believe him but after trying I was really impressed. I then told my parents about it and they had the same reaction I did. Since then my entire family has been using google.
If Microsoft wants to beat google at search they need to invoke the same kind of reaction in people.
I don't agree with the author of the article when he writes that we don't need another search engine. We definitely need alternative search engines here because the quasi total control and monopole on the information funnelled to nearly all internet users is a very serious problem. This is too much power in the hands of one player. In addition to the incredible amount of knowledge it has on everyones searches and thus interests and works, it is in a position that would make it possible to totally bias and corrupt the perception a user can have on knowledge published on the web.
There is also room for improvement in the "experience" provided by google.
But I fully agree with the authors on the evaluation on the Bing stuff. My experience of bing, by comparing search results on the scientific topic I'm working on, where disappointing. Microsoft results appeared to be highly biased toward particular scientific institutions which, I have heard, have some research partnerships with Microsoft.
An advertisement campaign may catch attention, but it won't change the experience perception. A very good point of the article author.
>>According to a Microsoft exec in charge of the launch, "The key will be whether we deliver a product and connect with people emotionally in the advertising."
So, if my coctail napkin calculations are correct for every 1% share of their search advertising business Microsoft stands to gain roughly $100 million plus punch a competitor in the nose. Not bad. I wouldn't be suprised if Microsoft picked up an additional 5% of the search market with Bing. That means $500 million more in revenue.
People forget that online and search businesses accounted for just $850 million of Microsoft's $60 Billion total revenue last year. Their revenue streams are pretty well diversified, and they can afford to bleed money in search for years if necessary.
Google's primary source of revenue is search and advertising. Any serious loss of market share in that business is going to hit Google where it hurts: the bottom line. They have enough cash to take a few lumps. But, they've been around for 10 years, and they are still clining to a single source of revenue. That puts them in a dangerous position.