Friday, April 2, 2010

Bing’s growth will come from India, China in next few years

Bangalore: The world’s largest software company Microsoft Corp. is accustomed to being the market leader vigorously defending its turf. However, in the Internet search business, it has been cast in the role of an upstart trying to topple the dominant Google Inc.

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After several iterations, Microsoft rebranded its search offering and relaunched it as Bing in June. According to market research firm comScore Inc., Bing has been steadily gaining market share since then. Bing had a market share of 11.5% in February in the crucial US market, compared with 65.5% for Google. Microsoft, in an attempt to take on Google, has also tied up with Yahoo Inc. All searches on Yahoo’s properties are addressed by Bing and the two have a revenue-sharing arrangement.

Road ahead: Lu says Microsoft’s focus right now is on improving search quality rather than market share. Hemant Mishra / Mint

Road ahead: Lu says Microsoft’s focus right now is on improving search quality rather than market share. Hemant Mishra / Mint

Qi Lu, who earlier headed the search business at Yahoo, is president of Microsoft’s online services division and spearheads the firm’s quest to gain market share in the search business. On a visit to Bangalore, he spoke in an interview on the progress made by Bing and the challenges ahead. Edited excerpts:

Bing has been gaining market share since its launch. However, Google’s share has remained steady and your partner Yahoo has been losing market share. So do you see friction in the relationship in the future?

Search is still a nascent market, and instead of just looking at market share, for Microsoft our focus right now is in improving search quality. Search is very sensitive to scale. More people use the product, the better it gets and that is the reason for our partnership with Yahoo. The technology behind search itself is fairly simple but the more number of users use it, we are able to better test our hypotheses and serve them ever more relevant results. The relationship (with Yahoo) is beneficial to both of us, more importantly the consumer benefits as do the advertisers. It is win-win all around. The regulatory clearances for this partnership have only come recently and we are in the process of actually implementing.

So the focus is not on monetization right now as much as gaining market share?

Our focus not just for Bing but for the entire online services division is to provide a great consumer experience based on our technological capabilities. We are confident that we will be very profitable.

Microsoft has positioned Bing as a decision-making engine. Is the strategy to go after specific business segments such as travel, shopping etc.?

We view search holistically. Instead of each query just throwing up a mass of blue links, our strategy is to look at the user intent behind the search and serve up the most relevant result.

One of the way you have been increasing—your competitors would say buying—market share has been bundling Bing with your partners such as Hewlett-Packard (HP) or partnership with Twitter to bring real time results. There has also been talk of exclusive partnerships with News Corp. where their content is only available on Bing. Are these kinds of alliances the growth model going forward?

What you are referring to are our efforts to build a pure search brand and as a part of that we have done (the alliances). It is one thing to build a great product and it is another to make it accessible to as wide an audience as possible. Distribution is key. That is where relationships like HP are important.

But wouldn’t it attract regulatory attention specially given your past when Internet Explorer was bundled with Windows?

(Laughs) Let me just remind (you about) the market share situation...

Google is exiting China. Do you see that as an opportunity though Chinese search engine Baidu is the leader there and Bing has less than 1% market share?

Microsoft has an official stated position on the China issue and I won’t be able to comment anything further on that. However, let me reiterate that markets such as India and China are very critical and strategic to us. That is where growth will come from in the next few years, even next few decades. We are committed to those markets, regardless of what others do.

Google offers local search including voice-assisted search in India. Will Bing offer such services?

Without commenting on specific (India) plans, local search is very important. We have invested across the globe heavily in geospatial data, maps, speech etc., which will help us deliver relevant results.

What about the India picture and Microsoft India’s contribution?

The Hyderabad centre works both on search and the advertising parts and is very critical to our global plans. (Microsoft on Thursday announced the setting up of a development centre in Bangalore that will have at least 200 employees, a majority of whom would transition to Microsoft from Yahoo as a part of their alliance.)

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