Bing's real return: A catalyst to a Yahoo deal
Microsoft's Monday launch of its Bing search engine has generated a fair amount of hubbub, but the real return may go beyond mere market share.
The return calculation behind Bing goes something like this:
- Undisclosed cost of research and development (something Microsoft would spend anyway);
- The salary of Qi Lu, Yahoo's former search guru, to head up Microsoft's search engine;
- $80 million to $100 million on Bing marketing;
- A nice hedge against Yahoo (Bing will most likely take share on Yahoo);
- Savings from Microsoft forgoing a Yahoo deal completely or at least reducing the price tag. Yahoo CEO Carol Bartz wants a boatload of money. If Microsoft can downgrade that boat to a rowboat Bing has more than paid for itself.
If any of those latter two items play out Bing will have justified its existence.
Also see: Microsoft Bing: Quick, clean, handy or a present day "Dogpile"
It's far too early to see how this plays out. For instance, it's unclear whether Bing can hold its first day pop. However, I have come back to it a few times. Frankly, that ability to attract return users---even if Google remains the default choice---may be all Microsoft needs to justify a return.
More reading: Microsoft's Bing: Powerset's role, market share, brand (and other burning questions)