Bing Loses More Money as Microsoft Chases Google

April 23, 2010 – 11:13 pm | by omer
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Microsoft Software Company announces third quarter financial report of its 2010 fiscal year, majority of revenue generated through the sales of Windows 7. Major sales shares go to Microsoft windows 7. Still with the growing sales of Microsoft 7 company facing heavy loses in its online services division.  Bing search engine launched in the competition of the biggest rival Google in the online search and advertising market face loses and not able to even manage it.zahipedia-microsoft-bing

Online service division increase revenue 12 percent, U.S Dollars 566 million earned for advertising revenue but not enough to carry on the advertising operating expense during the period. Loses grew up to $713 million as compare to $411 million during the same period last year. Therefore OSD division of Microsoft revenue loses increases up to 73 percent.

During Microsoft’s fiscal third quarter, which ended March 31, the Online Services Division, or OSD, reported a 12 percent increase in revenue, which rose to US$566 million on the back of higher advertising revenue. That wasn’t enough to offset a surge in operating expenses during the period. The division’s quarterly loss grew by 73 percent to $713 million, compared to a loss of $411 million during the same period last year.

Microsoft’s online advertising business, Bing search engine and various MSN websites are part of online service division OSD. According to the Microsoft Company, an OSD division face loses due to increase in operating expense on several factors.  One factor is the sales and administrative expenses as they increased by $145 million. Other factor is Microsoft higher cost due to research and development.  Sales and marketing expense increased due to high promotional activity. Payments to yahoo in order to move their search engine to Microsoft search platform.

Microsoft observed improvement in two areas where OSD improves in real manner. One area is ad revenue that rise up to 19 percent during the quarter. Second area is Bing search engine, where Search queries rose to 11.7 percent during March.

Bing’s Search Engine was introduced in May 2009 and its search market rose from 8 percent to 11.7 percent.  Market shares of the Google search engine remain almost constant, rising from 65 percent in May 2009 to 65.1 percent in March 2010. Instead of getting traffic away from Google, Bing’s search engine gains appearance in the search market at the expensive of yahoo. It decreases the share of U.S search market from 20.1 percent to 16.9 percent between May 2009 and March 2010.

If you compare Microsoft OSD division revenue with Google than Google also remains high profitable. But if you calculate the revenue on product to product bases then the result will be different. Microsoft has not included the financial results of other division. Company revenue increases up to 23 percent during the first quarter of this year 2010. Microsoft Company’s operating profit rose 32 percent to $2.49 billion. It includes company’s revenue minus operating expense excluding interest and taxes.

According to the Microsoft official, Bing search engine is on the right path and yahoo deal gives the boost to Microsoft’s search business.

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