Microsoft is willing to invest up to 10 per cent of its operating income in its internet search business for up to five years, chief executive Steve Ballmer said on Thursday.
“Our shareholders, I told them we were willing to spend 5 to 10 per cent of operating income for up to five years in this business, and we feel like we can get an economic return,” Ballmer told a business lunch in Chicago, without elaborating on the timeframe.
The new search engine grabbed 12.1 percent of US internet searches for the 8-12 June work week, up from 11.3 per cent from 1-5 June but trailing Google’s 65 per cent of US searches in May.
“You don’t go from 8 per cent to 80. You have to be patient,” said Ballmer. “We invested in Xbox for years and now it generates nice economic returns for us,” he added.
Microsoft reported operating income of $4.4 billion (£2.68 billion) last quarter, which would mean Ballmer is envisaging spending up to $440 million per quarter, or almost $1.8 billion per year, developing Bing.
Microsoft does not break out investment in its various projects, so it’s not clear if that is a significant increase on previous spending. Microsoft has continued to invest in internet projects, even though its online services business is a net drain on cash, losing $575 million last quarter alone.
Bing, fully launched on 3 June, is just the opening salvo in Microsoft’s campaign to counter the dominance of Google in the web search and related advertising business.
The world’s largest software company, which is in talks with Yahoo over a potential partnership, has long been determined to play a role in that lucrative space after watching rival Google take a stranglehold on the market.
Ballmer regretted that Microsoft had not entered the internet search market earlier, saying that the company understood the technology’s importance, but had not come up with a way to monetise it.
“If we could have one do-over I would probably say I would start sooner on search,” said Ballmer. “Sometimes the error you make is what you don’t do and don’t see. Our mistake wasn’t that we didn’t see the technology change coming, we didn’t see the business change coming.”
Article produce by Ian Sherr, Reuters and reproduced here with kind thanks. To view the article click here.