I don't know that Bing has "failed" yet, but I highly doubt it'll be anything other than one amongst many in the pack in 5 years.
Microsoft has always been good at the pivotal turnaround. Recognizing when a key moment was on the wind, mustering together a tremendous effort, making a good number of smart decisions and putting out a solid anchor product that (re)cements their position in the industry and reinvigorates the brand in doing so. Windows 95 and Windows 7 are perfect examples. IE4 (yes really), Bing, and Windows Phone 7 are also good examples. One of the big problems with Microsoft is that its organization and its culture are extremely tied to the traditional 3-ish year ship cycle. A hugely successful diving catch every other ship cycle or so is rapidly becoming less and less feasible as a means to hang on to or acquire a market. Microsoft does not seem to get the web at a fundamental level, it doesn't seem to have the capacity to release software at a pace of yearly, monthly, or continuously.
And that will ultimately be the undoing of Bing and the Windows Phone. The only way MS knows how to crank out releases faster is the deathmarch, and that is a certain route to doom.
Worse yet, since Gates left MS has no real technical or managerial leadership, it's bureaucracy all the way up and down. This has been affecting the culture at Microsoft little by little, also partly coupled to the stock price having plateaued. More and more talented devs are finding that MS lacks the excitement and the reward of cutting edge development, so they are moving elsewhere. Also, without that talent around fewer good projects are pushed forward, fewer projects succeed, people become less satisfied with their jobs, etc. (think about the movie "It's a Wonderful Life" only translate the bad stuff, on a corporate level, to hundreds and then thousands of George Bailey's going away). This makes the environment that much less rewarding for everyone else who remains, so yet more people leave. And slowly but surely the creep of a more rigid and bureaucratic corporate culture and organization fills in the gaps left by the people who had the most clout in the company, causing yet more and more talent to evaporate away.
It's a self-reinforcing cycle that will lead to the rapid diminution of the company and its prospects over time and the examples the article provides of the process as it happened at Bing have played out throughout the company. Nobody young with high prospects seriously considers Microsoft as a destination anymore, and increasingly the older devs are either retiring on their massive earnings from the glory days or they're just looking for somewhere else to be that's a better use of their time and talent.
MS continues to make a crap-ton of money from its core products, but it will be institutionally ham-strung in responding to the threats that will steal away that revenue (such as mobile-heritage operating systems). Because those threats will grow at a rate MS is incapable of competing with.
>"I don't know that Bing has "failed" yet, but I highly doubt it'll be anything other than one amongst many in the pack in 5 years."
For Microsoft, having a full featured reliable non-core product with measurable market share is a success because it allows Microsoft to offer vertical integration without the specter of anti-trust allegations - imagine the howling in DC and Europe if Bing controlled 70% of search (never mind the valley).
Bing's robustness helps Microsoft sell software and services, while it's modest market share keeps infrastructure costs lower and Microsoft's core revenue stream coming from areas other than search reduces the pressure to game search algorithms towards their advertisers in order to increase revenue in the way that Google does.
What the article shows is not that Microsoft is inept, but rather that they are able to create an internal unit with many elements of a startup, scale that unit massively, and then transition it into a solid corporate structure capable of surviving over the long term - in other words, the article shows that Microsoft was not only able to successfully foster internal entrepreneurship in order to quickly move into a new market and capture meaningful market share in the face of a mammoth, entrenched, and powerful rival which dominated the market, but also to consolidate that position swiftly before their rival could respond in a significant way.
I'm afraid you're moving the goal posts a bit. When I was at Microsoft I saw a lot of presentations about how the advertising industry was much bigger than the software industry, and how MS needed to tap into that growth opportunity in a big way. I saw very few presentations about how a modest search market share would keep infrastructure costs lower.
I believe you are mis-characterizing my position somewhat - I stated that lower infrastructure costs are a benefit of smaller scale but I did not state that they were the sole measure of success.
While I don't doubt that powerpoints about quick easy money from advertising were legion in Redmond, it doesn't change my belief that Bing has been a significant success for Microsoft despite the money being neither quick nor easy. The notion of measuring the success of the Bing team against the whole of Google is silly. Bing's success should be measured solely by the business benefits it provides to Microsoft.
"I stated that lower infrastructure costs are a benefit of smaller scale"
I find this statement confusing. Perhaps in terms of absolute numbers, infrastructure costs are less at smaller scale, but as a percentage of revenue, larger scale usually shows increased infrastructure leverage, until you get to Microsoft/Google/Facebook size, and start designing your own Servers, Power Supplies, Storage, etc...
It's completely reasonable to compare companies against each other to determine their success - particularly when being the leader gives you network-effect benefits.
Measuring costs with actual dollars rather than percentage signs is often the best way to judge the bottom line. Yes, relative infrastructure cost tend to go down at a larger scale - assuming that revenues increase in proportion to the infrastructure added, which may not necessarily be the case with Bing and advertising.
It is also important to acknowledge the opportunity costs for Microsoft that scaling Bing might entail, e.g. is infrastructure more profitably used for cloud services or search? Does an advertising revenue model interfere with the necessary trust which underpins Microsoft's business relationships with enterprise customers?
I am not saying it is unreasonable to compare Microsoft with Google at the corporate level - but using Bing and Google Search as the primary criterion for such a comparison is a category mistake.
This was not the goal. Recall that they tried to buy Yahoo and merge into a solid competitor agains Google. I'm sure there are many smart people still left at MS, but not as many as you make it sound.
Not necessarily, "Bing : Microsoft" is not analogous to "Google Search : Google." Bing just needs to fill a small gap in Microsoft's total product portfolio whereas Google Search is the crown jewels for Google. In other words, Bing can be a cost center for Microsoft and still contribute to the company's bottom line by contributing to increased revenues in other areas, but if Google Search starts losing money Google is in real trouble.
So long a Bing provides meaningful statistical data regarding internet search,keeps Google from data mining searches performed in Redmond, and serves as a productive R&D platform it is successful for Microsoft because they do not need to generate significant revenue from advertising to be profitable.
Of course more market share is good. But Microsoft is not purely interested in growing share with Bing; non-differentiation with Google is a good thing in and of itself. The less differentiated Microsoft is from Google, the greater perception of their platform having feature parity with Google. That way consumers are not forced to choose based on features, just ecosystem.
This is a the reason that Microsoft is a fast copier of market leaders, so that everything consumers could want, on paper, is housed within their roof (and Google's). It seems counterintuitive that less differentiation would be useful, but I think it's what Microsoft is going for.
Microsoft used to be able to "embrace and extend" in order to extinguish the competitor. With Bing it seems they can only "embrace", by which I mean copying and trying to decrease differentiation. But look at the trend. In the future, when/if Google search incorporates social feedback effects (ala +1), Bing won't even have the user-base to be able to copy the competitor, let alone extend and extinguish.
One look at my website statistics tells me Bing is already as good as dead.
I'm not completely convinced that Bing lacks the user base to compete with Google. There are diminishing returns in user base volume after some point, and Bing has around 100mm US users[1]. I think any of us would be pleased as punch with that volume and it's not clear it's not enough to do something-social-with-search.
Microsoft doesn't either. I have no doubt Google's search will be superseded by an even more competent product. I just doubt Microsoft is able to deliver such thing. To go against Google you either need infinitely deep pockets or a technology so disruptive that it effectively neutralizes the size advantage Google has or turns into a disadvantage. Microsoft will go head-on with Google until it acknowledges failure, rename the product and try again. Much like the Black Knight on Monty Python's Holy Grail, they just won't quit. And, when they do, they'll claim victory.
> Microsoft has always been good at the pivotal turnaround. Recognizing when a key moment was on the wind, mustering together a tremendous effort
I remember it happening once - they went against Netscape. They could outspend Netscape 100 to one and bundle/force bundle their competitor with their OS and that's why they could crush Netscape. They can't outspend Google two to one.
Note: I remember how they took the air out of Netware with Windows for Workgroups. They recognized there was a market below the one Novell had nearly monopolized and took it before Novell could launch a competitor (something hard because it came - again - bundled with the client) and provided a smooth upgrade path to Windows NT. But that's not the same as with IE vs. NS - they had Lan Manager for eons before they realized they had a niche they could expand. And, like with IE, they could rely on bundling with their OS. I doubt Microsoft can put Google in that position.
>"I have no doubt Google's search will be superseded by an even more competent product"
I don't think it will be a matter of technical competence, but of economic competence. The achilles heal of Google's model is it's dependence on advertising and the incentive such dependence creates to skew search results and engage in "creepy" behavior with respect to individual privacy. The way in which Google monetizes search is increasingly susceptible to significant social and legal backlash. the structure of Microsoft's revenue stream is such that Bing could be adapted to the radical changes such a backlash would entail more easily than Google's data mining based revenue stream would allow Google Search to be adapted.
I've never met someone outside of a very narrow subset of the technical scene who even cares about the implications of Google's tracking and monetization strategy. I suppose it's a risk, but an "achilles heel"? I doubt it.
It is a nice place for a niche player (like DDG) to come in and fill tho.
Microsoft has always been good at the pivotal turnaround. Recognizing when a key moment was on the wind, mustering together a tremendous effort, making a good number of smart decisions and putting out a solid anchor product that (re)cements their position in the industry and reinvigorates the brand in doing so. Windows 95 and Windows 7 are perfect examples. IE4 (yes really), Bing, and Windows Phone 7 are also good examples. One of the big problems with Microsoft is that its organization and its culture are extremely tied to the traditional 3-ish year ship cycle. A hugely successful diving catch every other ship cycle or so is rapidly becoming less and less feasible as a means to hang on to or acquire a market. Microsoft does not seem to get the web at a fundamental level, it doesn't seem to have the capacity to release software at a pace of yearly, monthly, or continuously.
And that will ultimately be the undoing of Bing and the Windows Phone. The only way MS knows how to crank out releases faster is the deathmarch, and that is a certain route to doom.
Worse yet, since Gates left MS has no real technical or managerial leadership, it's bureaucracy all the way up and down. This has been affecting the culture at Microsoft little by little, also partly coupled to the stock price having plateaued. More and more talented devs are finding that MS lacks the excitement and the reward of cutting edge development, so they are moving elsewhere. Also, without that talent around fewer good projects are pushed forward, fewer projects succeed, people become less satisfied with their jobs, etc. (think about the movie "It's a Wonderful Life" only translate the bad stuff, on a corporate level, to hundreds and then thousands of George Bailey's going away). This makes the environment that much less rewarding for everyone else who remains, so yet more people leave. And slowly but surely the creep of a more rigid and bureaucratic corporate culture and organization fills in the gaps left by the people who had the most clout in the company, causing yet more and more talent to evaporate away.
It's a self-reinforcing cycle that will lead to the rapid diminution of the company and its prospects over time and the examples the article provides of the process as it happened at Bing have played out throughout the company. Nobody young with high prospects seriously considers Microsoft as a destination anymore, and increasingly the older devs are either retiring on their massive earnings from the glory days or they're just looking for somewhere else to be that's a better use of their time and talent.
MS continues to make a crap-ton of money from its core products, but it will be institutionally ham-strung in responding to the threats that will steal away that revenue (such as mobile-heritage operating systems). Because those threats will grow at a rate MS is incapable of competing with.