June 1st, 2009
Bing's real return: A catalyst to a Yahoo deal
Microsoft’s Monday launch of its Bing search engine has generated a fair amount of hubbub, but the real return may go beyond mere market share.
The return calculation behind Bing goes something like this:
- Undisclosed cost of research and development (something Microsoft would spend anyway);
- The salary of Qi Lu, Yahoo’s former search guru, to head up Microsoft’s search engine;
- $80 million to $100 million on Bing marketing;
- A nice hedge against Yahoo (Bing will most likely take share on Yahoo);
- Savings from Microsoft forgoing a Yahoo deal completely or at least reducing the price tag. Yahoo CEO Carol Bartz wants a boatload of money. If Microsoft can downgrade that boat to a rowboat Bing has more than paid for itself.
If any of those latter two items play out Bing will have justified its existence.
Also see: Microsoft Bing: Quick, clean, handy or a present day “Dogpile”
It’s far too early to see how this plays out. For instance, it’s unclear whether Bing can hold its first day pop. However, I have come back to it a few times. Frankly, that ability to attract return users—even if Google remains the default choice—may be all Microsoft needs to justify a return.
More reading: Microsoft’s Bing: Powerset’s role, market share, brand (and other burning questions)
Larry Dignan is Editor in Chief of ZDNet and Smart Planet as well as Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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