Microsoft pledges huge investment in search
Posted on 19 Jun 2009 at 08:19
Microsoft is willing to invest up to 10% of its operating income on search for up to five years, says Steve Ballmer.
The company's new search engine, Bing, has been winning market share from rivals, according to industry data released this week, but still trails market leader Google by a long way.
"Our shareholders, I told them we were willing to spend 5 to 10% of operating income for up to five years in this business, and we feel like we can get an economic return," Ballmer told a business lunch in Chicago, without elaborating on the timeframe.
The new search engine grabbed 12.1% of US searches for the 8-12 June work week, up from 11.3% from 1-5 June but trailing Google's 65% of US searches in May.
"You don't go from 8% to 80%. You have to be patient," said Ballmer. "We invested in Xbox for years and now it generates nice economic returns for us," he added, referring to the company's popular gaming console.
Microsoft reported operating income of $4.4 billion last quarter, which would mean Ballmer is envisaging spending up to $440 million per quarter, or almost $1.8 billion per year, developing Bing.
Microsoft does not break out investment in its various projects, so it's not clear if that is a significant increase in previous spending. Microsoft has continued to invest in internet projects, even though its online services business is a net drain on cash, losing $575 million last quarter alone.
Bing, fully launched on 3 June, is just the opening salvo in Microsoft's campaign to counter the dominance of Google in the search and related advertising business.
The world's largest software company, which is in talks with Yahoo over a potential partnership, has long been determined to play a role in that lucrative space after watching rival Google take a stranglehold on the market.
Ballmer regretted that Microsoft had not entered the internet search market earlier, saying that the company understood the technology's importance, but had not come up with a way to monetise it.
"If we could have one do-over I would probably say I would start sooner on search," said Ballmer. "Sometimes the error you make is what you don't do and don't see. Our mistake wasn't that we didn't see the technology change coming, we didn't see the business change coming."
- Michael Dell: Cloud infrastructure is the roads, bridges and highways of the 21st century
- How to check your identity hasn’t been sold to the hackers
- Tim Cook: this is how much TV has changed since the 70s
- Westminster wins the .London battle
- 20 years of PC Pro: from deep pan pizza to virtualisation
- Five reasons why the Apple Watch leaves me cold
- Apple Watch, iPhone 6 and 6 Plus: Tim Cook's Apple back with a bang?
- BT Home Hub 5: how to get maximum speed
- 20 years of PC Pro: one-star reviews (including "the worst tablet we've ever seen")
- 20 years of PC Pro: our best covers
- How to sell more ebooks on Amazon
- 10 ways to make your business more secure
- Top five VoIP mistakes
- How to add in-app purchasing to an iPhone, Android or Windows app
- Remote-control ransomware: TeamViewer and software hardball
- Why laptops with serial ports matter to the Internet of Things
- Make your mobile battery last longer
- Small steps into handling Big Data
- Nexus 5: does it really run stock Android?
- How to get broadband to a garden office