Microsoft Search

Summary of Key Facts

One of the world’s most powerful companies, Microsoft was founded by Bill Gates and Paul Allen in 1975, and has since then expanded to market numerous and diverse varieties of software, hardware, and services.

Microsoft has gained huge success in operating systems for personal computers and software for applications. The company was marketing around 95% of all the working systems for PCs by the middle 2000s. It had become the foremost provider for spreadsheets, presentation software and word processors by 1995, and continued in this regard until 2008. However, the operating income of its online services business, which includes its online advertising platform, emailing and instant messaging, was negative by $1.2 billion in 2008.

In 2003, Microsoft launched its own search engine; by 2005, it had begun to employ its personally owned, internally developed search engine and AdCenter.

In both 2007 and 2008, Google was the leading company in the search engine market, followed by Yahoo and MSN/Live. The average price per click and revenue per search of Google were the highest in these two years among the three search engines. The average price per click of MSN/Live was slightly higher than Yahoo, but the revenue per search of MSN/Live is lower than Yahoo in percentage. Driven by passive searches, the search market share of Microsoft was far behind that of Google, which occupied about half of the market. Microsoft’s relevance metrics was far behind Google’s in 2005, and Microsoft, Google and Yahoo had almost the same relevance scores by 2007.

The global online advertising market was emerging as a major activity on the Worldwide Web and search marketing advertising was estimated to increase from $20 billion to $40 billion between 2007 and 2012. Microsoft needs to find the right method to improve its position in search engine marketing so that it can catch up with the trend.

Core Issues

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