Tech Strategy Trends

Jul 27 2011   8:11AM GMT

For Sale: Bing Search Engine, Good Condition

Tony Bradley Tony Bradley Profile: Tony Bradley

That is the classified ad you might see if Robert Cyran and Martin Hutchinson–a pair of Reuters bloggers–were making decisions in Redmond. 

The recent financial report from Microsoft was a pleasant surprise. With record revenue of nearly $70 billion, Microsoft saw profit jump 23 percent over the last year. However, the online services division was not a part of that success story–bleeding more than $2.5 billion from the bottom line.

The poor performance of the online division prompted Cyran and Hutchinson to declare that Microsoft should put its Bing search engine on the auction block while it still has value. It might be able to get as much as $11 billion for Bing, and put some money into the coffers instead of taking it out.

Computerworld’s Preston Gralla shoots a variety of holes in that plan, though. First, the online services division may have lost money as a whole, but it is not because of Bing. In fact, Bing is the crown jewel of online services for Microsoft, and the revenue from Bing saved the division from being a catastrophic drag on overall revenue.

Gralla also illustrates why the short-term gain from the sale of Bing would also be woefully short-sighted, and would take Microsoft out of a market that potentially defines the playing field for future online revenue, and could make online services a very lucrative division for Microsoft in the long run.

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