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Bing Is Bleeding Money? No Problem, Microsoft Has An OS For That

So much noise about Bing today. It has been losing money for Microsoft and to date is about a $9b loss, with an additional $1b per quarter. Microsoft has the money to lose, don’t worry. But unless you haven’t been paying attention you’ll also know that Bing is part of their future strategy and Bing is only getting more relevant by the day. Bing is not only Microsoft’s answer to Google, it is going to be an integral part of the future of the company and will be hugely profitable for search and advertising. How?

Windows Phone 7 has been for the most part, a great test platform for Microsoft. Think of the current phones as the original Xbox where they learn a lot about what’s going on without really getting profitable. But what Microsoft has learned from Windows Phones is already showing up in their other products: from the Metro interface, to the way to set up an app store with trials and an international presence, the methods of getting developers to jump on board early, the way to integrate apps into the core OS, the synergies across their screens (from code to IE’s core to adding social networking at the heart, etc). This next year of Windows Phones is in a lot of ways about teaching Microsoft how to distribute and run an app store and how to manage developers while remembering that their core is a software company but they must ensure the hardware specs are standardized.

Of course the other part of Windows Phones is search. One of the three capacitive buttons on every Windows Phone is a search button, which sends you to Bing of course and uses their other technologies (like Bing vision and voice recognition). As Microsoft sells more phones, they also get more search results. And if the analysts are right, they are going to be selling a lot more phones over the next few years. And remember that that’s just the beginning for Microsoft. The other half of selling phones is the apps they run and in their case they are providing an advertising API for developers to use. The more search and the more ads they serve the more Bing makes sense.

But that’s just the beginning. That whole Windows 8 thing they keep talking about – that’s more of this. That’s more of Bing as the default search engine and more IE10 and more data collection and, more importantly than anything, that’s more ad based applications that load Microsoft’s ads in exchange for collecting personal data. Remember, Bing is, ultimately, less about search and more about data mining and ad distribution (that’s what Google does and that’s what Microsoft is working on). Having the number one desktop OS that is a Bing machine along with a mobile platform that’s estimated to be the second most distributed is a big deal. Of course, don’t forget that Xbox is gearing up to stream tv and provide NuAds to round things out. But ultimately Microsoft has a lot more ads and a lot more search at its core so they need to spend up front to gain in the end.

If you think Bing is losing so much money that they should fold it then you don’t get the future of Microsoft as a company and you don’t see their next $1b arm. You’re probably also one of those people that was talking about the massive loses that Microsoft took on the original Xbox and probably thought that was a mistake as well. Yeah you were spot on there and you’re spot on here. Windows 8 brings search back into Microsoft’s court and when this is all done all of the neigh Sayers will be silenced.