How Bing figures into Microsoft's future money-making plans

With Microsoft increasingly making Windows 'free,' how does the company expect to recoup lost revenues? Believe it or not, Bing is key, according to the company's Chief Marketing Officer.
Written by Mary Jo Foley, Senior Contributing Editor

Chris Capossela is the Chief Marketing Officer at Microsoft. He's also, to my mind, one of Softies who've done the best job articulating the company's productivity and platforms strategy.

This week, Capossela was a speaker at the Citi Global Tech Conference in New York. In a wide-ranging interview (transcript here), Capossela articulated fairly succinctly a number of Microsoft's new and evolving plans for making money in a world where Windows is increasingly "free."

Earlier this year, Capossela detailed Microsoft's freemium strategy in front of attendees of one of its big business conferences. This week, he addressed a big concern of many on Wall Street: How will Microsoft make money if it is giving away Windows for free to many OEMs and a growing number of customers?

Capossela noted, as other Microsoft execs have recently, that Microsoft has a number of ideas about how to get Windows -- and non-Windows -- users to spend with Microsoft after an initial device or product sale.

As we've heard before, Microsoft's brass believes the new unified Windows 10 Store (plumbed with games) and gaming built directly into the Windows experience are key to new monetization opportunities, once a PC is sold.

But search is a big part of Microsoft's money-making plans, too. Yes,that soon-to-finally-hit-break-even entity known as Bing.

Ads served up through Bing is one of the ways Microsoft officials think they can make up for lost Windows revenues, Capossela told the Citi audience:

"Now once you use Windows, if you're a Windows 10 user, there are other things we care about. It isn't just selling you a device that has a Windows license embedded in it, because if you're actively using the product we care about things like your -- what kind of browser are you using, what's our share of our browser versus Google's browser, or versus Firefox."

This is why Microsoft is so heavily focused on moving users to Edge, its new default browser in Windows 10, he said. More from Capossela:

"Edge usage is higher on Windows 10 than IE usage was on Windows 8 and Windows 7. That's net positive for Microsoft. That's more queries being executed through Bing, that's more ad revenue flowing through Edge. And that's obviously a revenue source for us independent of the Windows device. I shouldn't say independent, I should say post-sale of the Windows device."

Microsoft's big push to integrate Cortana, its personal digital assistant, into everything is another example of Microsoft's long-term play to make money. In Cortana's case, growing query share is the focus, Capossela said. He went on:

"As you use Cortana you're not using the Google query engine, you were probably using 15 minutes ago. And the more people fall in love with Cortana and use Cortana the more we're able to essentially capture that query share from Google."

As I've said before, Microsoft's moves to integrate Bing (and its close cousin, Cortana) into more and more Microsoft products and services haven't been random. Bing is a lot more than a standalone Web search engine that continues to lag behind Google -- something many on Wall Street, especially, seem to fail to grasp.

The transcript of the rest of Capossela's remarks is worth a read. He reiterates Microsoft's thinking around its more focused Windows Phone strategy and its coming new premium Office 365 E5 SKU, too.

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