Microsoft Almost Gets It Right

Kevin Johnson is looking more and more like Nostradamus with every passing month.

Analytical firm Experian Hitwise claims that Microsoft's (Nasdaq: MSFT  ) Bing powered 30% of the country's searches last month. It was back in 2007 that Microsoft exec Johnson turned heads by publicly targeting roughly 35% market share for Microsoft in search -- and 40% in online advertising -- within three to five years.

It seemed ridiculous at the time. Microsoft commanded a sliver of search, and the Bing rebranding was still a couple of years away. A few months after Johnson's comments, Microsoft came up empty in its bid to acquire Yahoo! (Nasdaq: YHOO  ) outright.

Things are different now that Yahoo! searches are powered by Bing, but even that doesn't tell the whole story. Bing and Yahoo! combined for just a 24% chunk of market share this past summer.Google (Nasdaq: GOOG  ) clocked in with a seemingly formidable 71.6% slice.

Microsoft's ascension, Yahoo!'s resiliency, and Google's gravity have made this an interesting race to watch. No one is close to unseating Big G at the helm, but Hitwise pegs Google's share at just 64.4% during the four weeks ending April 2. Yahoo! and Bing checked in at 15.7% and 14.3%, respectively.

Bing still has an uphill battle to get to Johnson's 35% goal. It's going to have to happen organically, since Google just locked up IAC's (Nasdaq: IACI  ) Ask.com to a new search-serving deal through 2016. It inked a new five-year deal with AOL (NYSE: AOL  ) last summer. Then again, it has made up more than half that ground since August.

Will the trend continue?

Google has never taken its pole position for granted, but this can't be the way it mapped it out.

Are you buying Internet stocks these days? Which ones? Why? Share your tips in the comment box below.

Google and Microsoft are Motley Fool Inside Value selections. Google is a Motley Fool Rule Breakers pick. Yahoo! is a Motley Fool Global Gains choice. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Google, Microsoft, and Yahoo!. Motley Fool Alpha LLC owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz is a huge fan of all portals and search engines. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 12, 2011, at 7:18 PM, chilero wrote:

    After years of using Google and Firefox I have recently (last few months) been using IE9 and Bing and enjoying the experience.

    Microsoft has done a great job improving them both. Reports are that their Bing app for the iPad is fantastic. They're moving forward little by little.

  • Report this Comment On April 12, 2011, at 9:16 PM, TheDumbMoney wrote:

    Here is how Microsoft works, it has always been thus:

    Wait for other people to invent innovative stuff. Eventually copy that stuff once it's clear that it works. Catch up on a lot of that lost market share, and maybe even put the first-mover out of business. Make a ton of money.

    As an investor, fighting this is like fighting the Fed: it makes you feel righteous. But it's inadvisable.

    Windows was a late-to-the-party knock-off. Excel was, too. So was Word. So was X-Box. So was Bing (market share currently climbing). So too will it be Windows 7 & 8 mobile, which is going to get huge immediate market penetration from the Nokia deal, and networking effects going forward, and which won't be given away for free.... Does it work every time? No (ahem, Zune). But over all the track record is such that pessimism about Microsoft often seems a tad excessive.

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