Blog Post

Admit It, Microsoft: You Suck at the Web

Microsoft (s msft) is many things, but one thing it’s not is a successful web company. And it’s time Redmond faced up to that.

For 15 years, Microsoft has tried time and again to become a major player on the web. It started by integrating an AOL-like (s aol) dial-up content service in Windows 95. It shifted to a Yahoo-like (s yhoo) web portal model three years later. In the search era, it designed search engine after search engine, culminating in an awkward bid to buy Yahoo that felt more like a divorce than a proposed merger. Despite having the most popular browser, however, Microsoft has never really monetized the web in a significant way.

And what does it have to show for all its effort? Years of losses. Since 2002, when Microsoft began breaking out MSN and online services as a separate category, the division has seen aggregate revenue of $20 billion but a total operating loss of nearly $7 billion. In the past 18 months, the losses in proportion to revenue have only grown larger. Microsoft now spends nearly two dollars on its online businesses for every dollar it makes in revenue. Major points for trying, but it’s time to call a failure a failure.

But what about Bing? Hasn’t Microsoft’s latest search engine been growing market share for seven straight months? Yes, it has: Bing’s search share grew to reach nearly 11 percent in January from 8 percent in May 2009, the month before Bing was launched. But look where it’s stolen its search business from — AOL and Bing’s own partner, Yahoo. Meanwhile, Google’s market share during that period inched up to 66 percent. Unless Bing can start eating away at Google’s share, its prospects for growth are limited.

And Google’s big challenge isn’t Bing, it’s the evolution of the web from a primarily search-oriented media to one driven by social dynamics and discovery. The time to start chipping away at Google’s dominance of the search market was five or 10 years ago. Now is the time to be hitting at Facebook and Twitter, but if Microsoft has a plan of attack on that front, it’s not evident what it is.

Does Microsoft not realize that all the spoils of the mobile web are going to the companies that control the front-end interface — that is, the big mobile OS players like Android and iPhone and not the fringe players like Windows Mobile? Maybe. It’s reportedly trying to make Bing the default search engine for the iPhone, but that move may be temporary, if it happens at all. Delay is costly. It released a Bing search app for the iPhone last December — more than six months after Bing debuted for PC browsers — and after a Google app had already been a staple on the iPhone for nearly two years. As of this week, the Google app remains the top reference app in the App Store. Bing trails in the seventh spot.

Which is too bad because in some small but interesting ways Bing is actually an innovative search engine. But Microsoft’s only choice appears to be to keep spending money and creating bigger losses. So there are lots of expensive deals, with Yahoo, with Twitter, with Verizon and maybe with Apple. Indeed, rather than letting its online offerings grow organically, Microsoft is forced to pay rent to companies that have more of a knack for monetizing the online world.

After 15 years, the evidence is pretty clear. The web is just not a part of Microsoft’s DNA. The quarterly results it released this week showed that Microsoft is still surprisingly good at what it does best: selling operating systems and software programs for PCs. There is a long-lived if diminishing market for that business. What Microsoft is not and may well never be is a web company. Mabye it’s time the company sold off its online division to a company that is just that – like Yahoo.

71 Responses to “Admit It, Microsoft: You Suck at the Web”

  1. Yeah.. Microsoft has seen better days. They’re just not doing anything with what they have. Look at Chrome, it is many times better than Explorer. I don’t understand why they make the leap and start pushing new and innovative features out of the web browser that comes standard on all new computers. It’s no wonder they’re not seeing any profits they are behind the times. Technology is fast, they aren’t keeping up.

  2. the way this article reads you would think Microsoft didn’t have 30 Billion dollars in cash to play around with to find a way to win… failure in business is only the beginning of a future success if you learn from your failures. i think Bing is a classic case of a company who lost its way, finding out how to get back.

    Bing’s successes should not be undermined just because in less than a year it has not taken any of Googles search share

    Plus I think Bing (still hate the name) is more ready than Google to incorporate real time search and discovery than Google is. Have you actually browsed Bing? Its an incredible learning and discovery tool.

    Now if we can only change that name… don’t plan on saying “I binged it” or “Binging it right now” any time soon.

    • Exactly. The only grammatically-correct uses of the capitalized word “Bing” that I’m aware of are as the name of a type of cherry, or the nickname of an American singer surnamed Crosby. Oh, yes, there are several million Chinese with the surname Bing as well. Should I ring one up when I need to do a Net search? :-)

  3. “Mabye it’s time the company sold off its online division to a company that is just that – like Yahoo.”

    I’m confused, the whole article goes on about how MS has failed as a web company, but then you say they should sell to Yahoo, who have also shown their inability to keep up and prosper online.

  4. Dynamo Hom

    “And Google’s big challenge isn’t Bing, it’s the evolution of the web from a primarily search-oriented media to one driven by social dynamics and discovery.”

    When I need airfare, I google or bing, I don’t “become a fan of” or “@reply” someone. Social media is supplemental but will NEVER replace basic proper research and query resolution.

  5. I saw an article on “MS suck at the web” and all I see (except few comments) around there are commonplaces about IE and Bing…
    Web is not only about browsing and search engines. It’s all about services that transit through the international network (applicative layer). Anybody is right saying that MS IE and Bing reflect this company’s inertia, but you would be right also saying that MS has made great effort to integrate online features to its desktop software.
    Office 2010 turns the page of local-stored files, with functionalities such as real-time collaborative and concurrent work, web version of MS apps, social aggregation and feedbacks, mobile access… ( and
    I am not a fan of Richmond giant, but I thought that the conversation here needed a wider point of view.

  6. Ivan de la Jara

    They dont do nothing good for web becasue they do not understand it. Its not his world. They cannot create rules to make people assume… They always been the king of SO and they decided mostly what people was goign to do. This is new for them and out of his world/mind. Apple is starting to fall in the same error. They think that they decide the things but they only do it, people decide it success. The same about the Google and jabber messenger, people is enough happy with a messenger so way to suffer a change and lost all their contacts to change for “nothing” better? “Its a people driven economy stupid!” (Erik Qualman)

  7. Subhash Bose

    It took Microsoft more than 10 years to accept TCP/IP and then all it did was screw up tcp/ip , dns and LDAP. I dont believe Microsoft – no one outside Microsoft does (beleive them that is). They are one sneaky son of a bitch if you ask me.

  8. Totally agree. The net never has been Microsoft’s forte. This holds true not just for MS’s consumer applications but also for their business applications. MS has always been a laggard.

    Now that SaaS and collaboration have really caught on, MS has been forced to enter its own candidates in the market (SharePoint Online, Exchange Online, BPOS). However, it may be noted that being a SaaS provider is not merely about having money and entering the fray, it is more about competencies and experience developed over many years of being in the market.