Late on July 2, Microsoft disclosed that it will write down $6.2 billion from its Online Services Division, conceding that the unit will perform much worse than the company had predicted. Forecasts for this division were pretty rosy five years ago, when Microsoft bought digital advertising company aQuantive for $6.3 billion and, in 2009, when it launched Bing, a big public rebranding of its search portal. It was all part of a larger push to eat into rival Google's online dominance. But now, the write-down at the internet division, which also includes MSN, will wipe out all of Microsoft's profit for the quarter. Is this a good time to formally declare Microsoft's expensive, perpetually money-losing foray into internet search a dismal failure?
Yes. Bing has failed: Clearly, the aQuantive deal really didn't work out for Microsoft, says David Goldman at CNNMoney. But the real reason the online unit hasn't turned a profit in at least five years is "Microsoft's inability to catch up with Google in the online search race." Bing has seen some growth in search — much of it from "cannibalizing its search partner," Yahoo — but Google has grown far more. And Bing's 15 percent market share is only about half what it needs "to capture the attention of a critical mass of advertisers — enough to turn a profit."
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