Microsoft's Bing search business finally is profitable

Microsoft's search business has turned the corner and is finally profitable, and generated $1 billion in revenues during the company's first quarter of 2016.
Written by Mary Jo Foley, Senior Contributing Editor

It's been a long, long time in coming, but Microsoft's Bing is officially no longer a bottomless money pit.

During its first quarter fiscal 2016 earnings call, Microsoft announced that Bing had finally achieved profitability. Search contributed more than $1 billion to Microsoft's first quarter for fiscal 2016, said Chief Financial Officer Amy Hood during the company's October 22 earnings call.

For the past few months, Microsoft execs had been saying to expect Bing to break even some time during the company's fiscal 2016.

Microsoft officials told analysts back in 2013 that Microsoft could see the light at the end of the Bing datacenter-building tunnel.

Microsoft has been working to streamline its search and advertising business business for months. Earlier this year, the company handed off its display advertising business (and possibly 1,000-plus of its employees working in that business) to AOL. The company also opted to get out of the map-data-collection business and sold off those assets and about 100 employees to Uber; its new strategy is to license/display other companies' mapping data.

Bing's growth as a Web search engine has been helped noticeably by Microsoft's search pact with Yahoo. Earlier this year, Yahoo and Microsoft negotiated a revised deal, and this week, Yahoo announced it would be working more with Google, with Google providing some search results and ads for Yahoo search queries.

Microsoft isn't simply relying on Yahoo to grow Bing and search, however.

Microsoft has been building Bing into more and more of its products over time.

Microsoft officials said during its October 21 first quarter FY2016 report that its search revenue, excluding traffic-acquisition costs, grew 29 percent, driven by higher revenue per search and search volume.

More interestingly, nearly 20 percent of Microsoft's search revenue in September was driven by Windows 10 devices, officials said. By building Cortana, Microsoft's personal digital assistant which is powered by Bing, directly into its various Windows 10 flavors, Microsoft also is growing the number of Bing searches.

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