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PGTS Humble BlogThread: Microsoft (Decline Of) |
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Date: Sat, 12 Jun 2010 18:01:09 +1000Microsoft is probably the most remarkable success story of the 20th Century. It grew to be the world's greatest technology company, and maintained that position (until recently bumped off by Apple) mainly due to some extraordinarily canny business decisions. Of course many of those business decisions were instigated in the previous century by a genius who was arguably the most remarkable business man that century ever produced. But even after the departure of the amazing Citizen Gates, Microsoft Corporation has continued to enjoy the reputation of still being able to make excellent business decisions. |
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So, a couple of years ago, the online community sat up and paid close attention to a gaggle of spin doctors from Microsoft's marketing department who had donned their zaniest apparel, funny hats, party whistles and crazy goggle eyeballs-on-springs glasses ... And stepped out into the spotlight to announce that they had a great scheme for making their search engine competitive with Google ... Ha! ha! Hee! hee! ...
The online blogosphere paused for a nanosecond in anticipation ... What brilliant scheme were the brains trust at Redmond about to announce?
The Redmond geniuses unveiled their master strategy ... They said: "We are going to ... Pay our on-line customers to do business with us! (Ha! ha! Hee! hee!)"
And the bloggers, so-called experts and tech-journos didn't dial 911 and log an urgent request for some well-muscled psychiatric nurses with their sturdiest straight-jackets, padded vans and sedatives to come and pick up a batch of new prospective patients just outside of the Microsoft headquarters ... As they would have done in the pre-Internet age ... Instead the online commentariate started blogging and twittering with enthusiasm about the new scheme ... At last! Some competition for Google! ... Blah, blah, blah ... Microsoft never gives up! ... Yada, yada, yada ... One thing for sure! Microsoft has an un-erring instinct for strategic business decisions ... Blog, blog, blog ...
And then everyone promptly forgot about Microsoft and search ... And moved on to the next hot Internet topic (Britney Spears uses iPad in the nude?).
Oh ok, not all of us forgot Bing entirely ... Since then, there has been the odd complaint about the Bing Cashback scheme. It's too complicated! It's difficult to work out how much savings consumers make ... It's only available in the USA! ... Sometimes dealers offset the savings with complex shipping charges ... The payback is delayed for a long, long time ... The amount of the refund should be greater ... etc. There were even a few problematic blogs about how one might game the Cashback system ... In other words, use Google to search for the products and then use Bing to close the deal and (a few months later) pocket the Cashback! (Now it must be said dear reader -- Some of those latter blogs should have lit a few tell-tales on the Big Board in the war-room at Redmond central -- Or perhaps they did?)
And just last week there was an interesting announcement from Microsoft, to the effect that:
Bing Cashback is dead!
And in your blogger's humble opinion ... So is Bing! ... But we'll get to that shortly.
Now you could be forgiven for missing the announcement about the demise of Cashback. It was made with considerably less hoopla and fanfare then that which accompanied the launch of the illustrious scheme. In fact even your blogger, huddled in this humble cashback-less corner of the globe, might have over-looked the little announcements hidden in tiny boxes in the sidebars of a few websites, had it not been brought to his attention by a well-informed source.
Of course while everyone was blogging with enthusiasm about Cashback, they over-looked a couple of things. First of all there is the question of search engines, and the type of market that they comprise. These wondrous Internet phenomena are provided as a service -- Free of charge! And the leader, Google established their position by providing the best service and doing it with ruthless efficiency and cost-effectiveness that their competitors just could not match. Secondly there is the question of margins. Promotions usually come out of the up-front fees that businesses charge for their goods and services. In the case of search engines the fee is zero ... And so is the margin ... So the cost of promotions have to come out of the back-end fees the providers charge their advertisers. The problem here is that advertisers were less likely to pay a premium for a service provided by the search engine that was coming last in a three horse race ... So don't all reach for your calculators just yet! Those of you who need them ... Please keep them handy until you get to the end of this blog entry!
The simple fact remains ... The only way to improve Bing's market share would be to improve Bing's performance! Or in other words, to produce better search engine results than their rivals and to produce them faster. The problem for Microsoft is they couldn't do that. Or not since they ditched all their Unix servers ... And as a result, they now lack the know-how and the technology to improve the performance of their search engine.
And so they tried everything but improving the performance of their search engine.
Without much success it seems. The fact that the insane Cashback scheme continued as long as it did, is a tribute to Microsoft's deep pockets rather than to any coherent business strategy. We now come to the final chapter in the sad and sorry tale of Bing. The search engine that people would not use ... Even if they were paid to! For the time being Bing will continue to lose money for Microsoft. But now that they have scrapped Cashback, it won't lose money at the same eye-watering rate that it formerly was!
It really depends on how one defines success! If Microsoft had paid us to install Vista, then by the same criteria, the release of their ill-fated, much reviled operating system could have been deemed to be an even bigger success than they already claim the Vista Train Wreck was!
Microsoft has chalked up quite a few successes this year. There is the Xbox and MS Office (although the Office team might still snatch defeat from the jaws of victory). And there is Windows 7, which succeeded because the clever Vista team marketed it as an operating system that was not Vista (which was clever and devious -- because Windows 7 really is Vista, with many much needed patches).
Bing however has not been and will not be a success for Microsoft. Although, it must be admitted that the usage statistics for Bing have been slightly better in the USA than in the rest of the world. In the USA, Bing has captured a modest ten percent of the search engine market, whereas everywhere else they languish at less than three percent.
But we need to keep in mind that Bing Cashback is only available in the USA!
Anyone want to have a guess at what is going to happen to Bing's usage in the USA now that Cashback is dead?
Don't all rush me with your answers ... I know some of you will have to use your calculators to work that one out. Before you start tapping away on your calculator ... You might want to read your blogger's humble submission regarding The Concept Of Zero.
References:
- Apple Passes Microsoft as No. 1 in Tech. An article By Miguel Helft and Ashlee Vance, Published May 26, 2010, in the New York Times. Apple is now considered a more valuable company than Microsoft by the financial geniuses who run Wall Street. The same clever people who brought us Unexplained chaotic markets.
- The Bing Cashback Home Page. http://www.bing.com/cashback/
Which gives details of "Featured products" and "Cashback stores". Over in
the right hand corner is a small notice, which states:
As of July 30th, 2010 9:00 p.m. PT, we will no longer be offering the cashback program.
If you are a bing cashback customer, you may seen an email already.