Potential Microsoft CEO Elop Would Consider Selling Bing

Bing logoThe Microsoft CEO derby is heating up. As we discussed earlier this week the short list is down to a handful of candidates, including current Ford CEO Alan Mulally and former Nokia CEO Stephen Elop (soon to rejoin Microsoft in charge of devices). Apparently Elop has floated some bold ideas that may vault him to the head of the class or could disqualify him based on their potential heresy.

Businessweek reports that as Microsoft CEO “Elop would probably move away from Microsoft’s strategy of using [Office] to drive demand for its flagship Windows operating system on personal computers and mobile devices.” Rather Elop would try and maximize sales and usage of Office across devices and platforms, in a way that is similar to what he has tried to do with Nokia’s mapping platform Here.

The publication also says unnamed sources have indicated that Elop “would be prepared to sell or shut down major businesses to sharpen the company’s focus.” Accordingly he would consider terminating “Microsoft’s costly effort to take on Google with its Bing search engine, and would also consider selling healthy businesses such as the Xbox.”

Many financial analysts think that Xbox is too removed from Microsoft’s other businesses. Some also believe that Bing has had its chance and proved it cannot gain market share from Google — and that continuing investment is too costly.

Apparently Microsoft co-founder Paul Allen also believes that Xbox and Bing should be jettisoned. Bing and Xbox are “distractions” from a more profitable enterprise focus Allen indicated through a spokesperson.

It’s unclear how widely shared these views are among the other CEO candidates. But continuing pressure from financial analysts and institutional investors could result in similar actions regardless of whether Elop is anointed.

Let’s assume for the moment that Elop gets the nod and is serious about selling Bing. Who would he try and sell it too and for what price? And what about the Yahoo deal? Would a sale immediately let Yahoo out of its contract? (I don’t know the answer.) Or would Yahoo continue on with the successor-acquiror?

At one point Microsoft reportedly did try and sell Bing to Facebook, but the latter declined. But that was before Graph Search. Facebook would probably be the most likely candidate to buy Bing this time around and would probably take that offer much more seriously now. It also has the cash/capability to make what would probably be a multibillion-dollar acquisition.

What about Marissa Mayer and Yahoo? It would be something of a triumph — albeit very costly — to buy search back from Microsoft. Yahoo’s remaining Alibaba stake is worth something north of $20 billion. Liquidating that would enable Yahoo to potentially buy Bing.

But who are some other potential buyers? . . . someone in Europe, in Asia? What would be the best home and fit for Bing? Let us know what you think in the comments below.

Postscript By Danny Sullivan: A reality check is in order, for anyone who might think Microsoft can just easily walk away from Bing. First and foremost, it needs a search engine. It needs a search engine because search is deeply integrated into its Windows Phone and Windows OS platforms. Heck, search is everywhere in Microsoft products — and is powered by Microsoft’s Bing.

If Microsoft just threw up its hands and said “we’re done,” what the option? It can’t partner with Google. Assuming that Microsoft decided to embrace its enemy (similar to Apple), given the FTC blocked a move for Yahoo to partner with Google, all the same regulatory issues are going to come up if Microsoft wants to hand over its share to Google.

In turnabout, Microsoft — which helped push for the FTC to stall the Google-Yahoo deal — might find the same agency prevents it from working with Google.

If Google is out, and it probably is, Microsoft has to hope that someone wants to buy Bing and then partner to license Bing from the new owners. That’s more likely. I agree with Greg, above, that Facebook is a candidate. But I think Yahoo is the more attractive one. It still has some remnant of a search reputation. It’s headed by a CEO that knows search, Marissa Mayer.

With a firesale deal, Mayer possibly might take Bing off Microsoft’s hands. Another advantage is that Apple might consider a Yahoo-run Bing a more attractive primary search engine replacement than a Microsoft-run Bing, if it finally wants to make a break with Google.

Understanding the economics of a Bing sale are tough, because Microsoft doesn’t break out the costs involved with that search engine, a huge amount of which might be overkill marketing. But one thing is worth remembering. Yahoo investors already played the “outsource search and we’ll save” game, only to discover that outsourcing search didn’t up revenues and instead caused Yahoo to lose search share.

Microsoft is unlikely to suddenly earn more by ditching Bing. It would certainly be giving up one of the most important future-looking products it has. But if the goal is to double-down on software sales, and assume that a new push into hardware sales is the brighter future, then maybe it makes sense.

Postscript By Greg Sterling: I agree that Microsoft “can’t walk away” and needs search for the reasons Danny mentioned. The degree to which it sees integrated search as strategic to its products . . . that’s an argument against a sale.

Hypothetically, however, it could license Bing back from the buyer on favorable terms. And I also agree with Danny that Yahoo might be the best fit (it would be a direct role reversal). Apple would be an intriguing candidate too but in the end would probably prefer to partner rather than manage a search engine on its own.

Asian players like Baidu and Alibaba are also possible suitors should Bing go on the market. A longer shot might be Russian search engine Yandex.

 

Related Topics: Channel: Industry | Microsoft | Microsoft: Bing | Microsoft: Business Issues | Microsoft: Employees | Top News

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About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

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  • Stuart Blessman

    Almost wish Google would buy Bing so I can use the Bing UI in Webmaster Tools instead of Google’s…

  • David H. McGuire

    Baidu would buy it in a heart beat

  • http://raventools.com Jon Henshaw

    I think Bing being independent from Microsoft would actually help its (Bing’s) brand. And in the right hands, may even thrive.

  • gregsterling

    It’s a good thought and certainly a possibility. What about Alibaba?

  • gregsterling

    Agree in principle; however only a bigger entity would be capable of buying it. I suppose private equity could buy it.

  • http://federicoeinhorn.com/ Fede Einhorn

    I vouch for yandex.

  • Rock Hillbilly (*Patriot*)

    Flush with IPO cash, Bing is purchased by Twitter, forming a new search entity that serves out 140 character results… Called Bitter. :)

  • http://www.bauser.com/ Michael Bauser

    If Microsoft sells Bing, the 4 hours I spent becoming Bing Ads accredited will be wasted!

  • Austin2222

    If Microsoft sells Bing, please let it be bought by any company except facebook.

  • http://www.seo-theory.com/ Michael Martinez

    Facebook has no reason to compete head-to-head with Google. Their Graph Search is absolutely awful and would not be improved by absorbing Bing. But since we’re playing “What if”, I don’t see Facebook leaving Bing in the general Web search space.

    Bing only has to become profitable as an advertising service — like Google. It doesn’t have to take over the advertising market share that Google enjoys. Whether Microsoft hangs on to Bing or sells it to someone who understands that it’s all about advertising (and not search) doesn’t really matter.

    Google’s major search competitors at this point are Baidu, Bing, and Yandex. If Bing is converted to something new then Baidu and Yandex would have an opportunity to step in and compete with Google for advertising.

    Again — this really has nothing to do with Web search. It’s all about monetizing search results with advertising. Microsoft can tie any search engine into its products.

    But following the Paul Allen angle, the company would be making a huge gamble that its legacy business could somehow evolve enough to maintain relevancy in a marketplace dominated by new technologies. Any major investor who believes that is a winning strategy will deserve to lose value in their Microsoft stock if they persuade the company to follow that route.

  • Nicky Santoro

    Elop would try and maximize sales and usage of Office across devices and
    platforms, in a way that is similar to what he has tried to do with
    Nokia’s mapping platform Here.

    Yah we all know how well that ended up. How could the people at MSFT even consider someone who states that this is his mission to improve revenue at the company?

    The way to increase revenue is to undue everything Steve B. did. Microsoft needs to focus on it’s core and get back to basics.

    At the moment they are all over the place and they need do not have any direction allowing the competition to overtake them in every segment of the market.

  • Damien

    The multiple postscripts gave this story a tennis match feel. It could also be a consortia with search interests who’d be beneficial to competition as Bing owners. Who could they be?

    My best guess would be a smaller search incumbent, with supporting inputs from key Directory and Mobile network providers.

    Making search an integrated experience will be fundamental to success. Google are often criticised for the close synergy and promotion of their productset, but it’s an important part of why they’re successful.

  • David H. McGuire

    Alibaba is owned by Yahoo so not sure if that’s currently possible as Yahoo are thinking of selling them off. It’s very interesting though.

  • Michael

    What about Apple? Maps, Apps,… why not Search?

  • James

    I bet the NSA would be interested in purchasing Bing.

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