Bing is Microsoft's search engine. Competing directly with Google, it has been struggling hard to get just a glimpse of its success. Back in 2011, Bing succeeded in bringing a billion dollars a quarter. Then it remained unprofitable, until now.
During the company's first quarter fiscal 2016 earnings call, Microsoft announced that Bing had finally achieved profitability. The company's search business contributed more than $1 billion to Microsoft's first quarter for fiscal 2016, said Chief Financial Officer Amy Hood during the Microsoft's October 22 earnings call.
The tech giant Microsoft has pouring money and many other resources to Bing. The search engine that struggled hard to compete with Google was seen as a dead investment. To people's surprise, it's market share kept increasing.
Excluding traffic-acquisition, Bing grew 29 percent, driven by higher revenue per search and search volume.
A Better Presence As A Strategy
Bing was launched in 2009 as one of Microsoft's earliest initiative in bringing the software company to become a service company. Microsoft has put a lot of efforts to make Bing, including much of its time and money, just to make it live. But Bing never really challenged Google, or even get a slight of its dominance.
Bing in making its first billion after a few years loss, is helped by its subtle presence. Much of Bing's success can be attributed to how Microsoft made its search engine the center of many things.
As an obvious strategy, Microsoft products highlight Bing. As Cortana, the virtual assistant on Windows phone, gets more users, Bing that is its default search engine, is getting a big boost. Not to mention Internet Edge and Windows 10 that gets positive respond from the market.
In fact, 20 percent of Microsoft's search revenue in September was driven by Windows 10 devices.
Microsoft has been building Bing into more and more of its products over time. Getting more users on board by unifying every Microsoft products to use Bing has proven well for its search engine business.
For the past few months, Microsoft executives had been saying to expect Bing to break even some time during the company's fiscal 2016.
This was to expect since Microsoft has been working to streamline its search and advertising business for months. Earlier, the company handed off its display advertising business to AOL. The company also opted to get out of the map-data-collection business and sold those assets and employees to Uber.
Online As The Way To Go
Overall Microsoft posted revenue of $20.4 billion during the quarter, down 12 percent from the same period last year, and a profit of $4.6 billion, up 2 percent. Earnings per share were $0.57, a six percent increase.
The company may still be suffering from lagging sales of PCs, but by borrowing some strategies from rivals like Apple and Google, it's now seeing a substantial growth from the web. One of which is Windows 10 strategy: rather than charge individual PC owners to upgrade their older versions of Windows, Microsoft has been offering free upgrades to Windows 10 which is similar to how Apple and Google provide free updates to their operating systems for Macs, iPhones and Android devices.
Microsoft's core business continued to decline since licensing payments from PC maters were down by 6 percent. This signals the failure of Windows 10 in getting the spark of revenue in sales. Microsoft also made less money from selling mobile devices.
But despite its failure from those categories, the company posted strong performance in several other segments that CEO Satya Nadella considers key to the company's future. That included a 70 percent increase in revenue from commercial cloud computing. Microsoft also reported an increase in the number of people paying for the Xbox Live online gaming service and for Office 365, the subscription version of its email, document-editing and other productivity programs.