Why Microsoft Invested Heavily In The Desktop Search Business Even As Mobile Was Taking Off (MSFT, GOOG)

It looks like Microsoft has missed another big trend.

New data from comScore says desktop search has fallen on year over year basis for four straight months. Analyst Ben Schachter at Macquarie says that by year-end mobile will be 25-30% of all search traffic.

Microsoft's search engine, Bing, is nowhere in mobile relative to Google, which has something like 90% of the mobile search market. (On the desktop its just over 16.3% of the market to Google's 66.7%.)

Yesterday, we wondered why Microsoft put so much energy into the desktop search business right when mobile was set to take off. When Microsoft rebranded its search engine in 2009, the iPhone was two years old, and it was pretty clear mobile was going to be a big deal.

Perhaps if Microsoft had been singularly focused on mobile, it could have created a unique take on the mobile search market and prevented Google from transitioning its dominance on the desktop to the mobile market.

Microsoft was kind enough to inform us why we're dopes for thinking like this.

Mike Nichols, Corporate Vice President and Chief Marketing Officer at Bing, said Microsoft never focused on desktop over mobile. It focused on making a great product that works across devices from the traditional PC to the mobile phone to Xbox to tablets.

It pursued more desktop distribution because it made algorithmic and financial sense. But that doesn't mean it's not aggressively looking for new solutions in mobile.

"You need enough data to inform algorithms," said Nichols. You also need a lucrative ad market to build a business. "Where you get the most of each of these is through the desktop."

That doesn't mean Microsoft is just focused on the desktop. "We were always investing with a plan to build a search service that works across devices," says Nichols. "If you go look at Windows Phone 8 or Windows 8, or Xbox, it's a differentiated search experience." He also pointed out, "We're available on iPad, on iPhone, Android."

And on these new devices, Microsoft is exploring alternate search functions.

"Let's pick the Xbox, or TV, which is an emerging area," says Nichols. "We're asking Bing to play music. We're asking, what is that actress in? We're innovating with totally different UI." On the phone, "We used audio based search. Or taking photos. If you're looking at a French menu, take a photo of the menu, and it translates the menu items on your phone. That's a search problem. It's not like I'm speculating here, either, these are things that are available today."

And yet, despite these attempts from Microsoft to build something that's unique and different, it's still behind Google. Part of that is because Google owns Android and is the default search engine on the iPhone. Nichols said that as Windows 8 and Windows Phone gain market share, Bing could also gain market share.

But there has to be something else from Microsoft if it's going to beat Google.

Nichols concedes this to an extent, saying, "It's early and interesting to think about how search could be different on phones or TV. I'm not sure anybody has cracked it."

If Microsoft is going have any chance at making Bing a business that approaches Google, Nichols and his team are going to have to be the ones to crack it.

Source: http://www.businessinsider.com/why-microsoft-invested-heavily-in-the-desktop-search-business-2013-1

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