Bong

Steve Lohr has an article in The New York Times about Microsoft and its Bing search engine:

Mike Nichols has a poster on his office wall. It shows the young Muhammad Ali glaring down at a fallen Sonny Liston, the bruising heavyweight who had seemed invincible, until Ali beat him in 1964, in one of the biggest upsets in sports history, and then beat him again a year later. “The triumphant underdog,” Nichols says, nodding toward the wall. The inspirational fight poster is fitting, because Nichols, a general manager at Microsoft, is a lieutenant in an underdog corporate army here. Its daunting mission is to take on the Google juggernaut.
Microsoft’s assault on Google in internet search and search advertising may be the steepest competitive challenge in business today. It is certainly among the most costly. Trying to go head-to-head with Google costs Microsoft upward of $5 billion a year, industry executives and analysts estimate.
As the overwhelming search leader, Google has advantages that tend to reinforce one another. It has the most people typing in searches— billions a day— and that generates more data for Google’s algorithms to mine to improve its search results. All those users attract advertisers. And there is the huge behavioral advantage: “Google” is synonymous with search, the habitual choice.
Once it starts, this cycle of prosperity snowballs: more users, more data, and more ad dollars. Economists call the phenomenon “network effects”; business executives just call it momentum. In search, Google has it in spades, and Microsoft, against the odds, wants to reverse it.
Microsoft has gained some ground. Its Bing search site has steadily picked up traffic since its introduction two years ago, accounting for more than fourteen percent of searches in the American market, according to comScore. Add the searches that Microsoft handles for Yahoo, in a partnership begun last year, and Microsoft’s search technology fields thirty percent of the total.
Yet those gains have not come at the expense of Google. Its two-thirds share of the market in the United States (and Google claims an even higher share in many foreign markets) has remained unchanged in the last two years. The share losers have been Yahoo and smaller search players.
The costs for Microsoft, meanwhile, keep mounting. In the latest fiscal year, ended in June, the online services division, mainly the search business, lost $2.56 billion. The unit’s revenue rose fifteen percent, to $2.53 billion, but the losses still exceeded the revenue.
Microsoft is a big, rich company. But investors are growing restless at the cost of its search campaign. In May, when David Einhorn, the hedge fund manager, called for Steven A. Ballmer, Microsoft’s C.E.O., to be replaced, he pointed to the online unit as a particular sore spot.
Qi Lu, president of Microsoft’s online services division, sees the situation this way: “To break through, we have to change the game. But this is a long-term journey.” Lu, 49, knows about long journeys, and persistence. His grandparents raised him in rural China, in a home without running water or electricity. A bright student, he won a scholarship to the doctoral program at Carnegie Mellon University. After stints at the Almaden Research Center of IBM and at Yahoo, where he was in charge of its search and search ad technology, he joined Microsoft at the end of 2008. He was recruited by Ballmer, who assured him that Microsoft was committed to search and to competing with Google for the long haul.
Paul Yiu came from Yahoo two years ago, impressed by Microsoft’s approach to competing in search. A business and product manager, Yiu had spent most of his career in Silicon Valley, often working for Microsoft adversaries like Netscape and Oracle. He explains that, in the Valley, with its job-hopping and start-up culture, there is a 'renters’ mentality': if things aren’t working out, just move on. At Microsoft, he says, there is a homeowners’ mentality': a dedication to making things work. “If you’re in the expensive search game, you need to have a homeowners’ mentality,” Yiu says.
Microsoft’s leadership knew years ago that becoming a real competitor to Google would take patience as well as dollars. In 2007, Ballmer met with Harry Shum, a computer scientist who led Microsoft’s research lab in Beijing at the time. Ballmer, as Shum recalls, told him that the company wanted to make a concerted push in search and bring in leading technical experts and business managers. “You spent ten years in research, and now you’ll spend the next ten years in search,” he remembers Ballmer saying to him.
When Lu and Shum, another Ph.D. graduate of Carnegie Mellon, talk of changing the game, they mean making search smarter. Today’s search, they say, primarily finds topics, or noun phrases: a person’s name, a city, a product, a disease, and so on. “Search is still essentially a web site finder.” Lu says. “It’s all nouns. But the future of search is verbs: computationally discerning user intent to give them the knowledge to complete tasks.” The phrase that Microsoft uses is “decision engine”, as opposed to search engine.
New classes of information will help. Social network data, for example. Microsoft has an exclusive partnership with Facebook and, in May, it included a feature for linking the “Like” tags of a person’s Facebook friends to that person’s search results in Bing. It might show, say, that fifteen of your Facebook friends “liked” a certain restaurant. It is a first step, Lu says, in including trusted opinions in search, and not just the popular ones that conventional search does so well.
Location data, especially from the growing share of searches on smartphones, offers another rich stream of information. If the engine knows where you are, it can add another layer of context and knowledge to the search.
The ability to write increasingly responsive, full-featured applications for the web— using the new HTML5 programming language— should also make search more intelligent. The goal, Lu says, is that someday you will speak a phrase into your smartphone— “dinner for two on Friday and movie after”— and the software will go to work. It will connect to your personal data: your location and your dining and film preferences. It will then connect to dining and restaurant reservation applications, like Yelp and OpenTable, and movie reservation applications like Fandango. Then the engine will begin a dialogue: “Here’s what is available. Where would you like to eat and when?” In short, Lu describes a vision of a search engine that is part intelligent software assistant and part mind reader.
In Bing, the most visible evidence of the decision-engine concept is the ability to aggregate and present specific kinds of information in a search result. Microsoft has invested in travel services, for example. Type “flights to San Francisco” into Bing, and below a few blue-shaded links to ads is a Bing Travel flight database. Click on departure and return dates, and it performs a full search of all flights and predicts whether the fare is likely to rise or fall in the days before the departure date. That feature is based on technology from Farecast, a start-up that Microsoft bought for $115 million in 2008.
Bing also uses technology from MedStory, a health search engine it bought four years ago for an undisclosed price, to pull together information from across the web and present it in an on-screen box above the conventional search links. Type in “diabetes” and the gray-shaded information box contains a short definition from the Mayo Clinic, along with a link to the full article. Just below are links to diabetes articles from other professional health publications. Next come links to four related conditions, like high blood pressure and obesity, and four to related medications. At the bottom are links to recent Twitter posts about diabetes.
Technology experts agree that Bing is making innovative strides. “There is so little context in current search, and what Microsoft is trying to do is present users with context and structure, more a map of the world of information instead of just ranking it, especially in specific subject areas like travel and health,” says Esther Dyson, an investor in start-ups and a longtime technology analyst. “Microsoft is trying to beat Google at this different game.”
But, while Microsoft may be ahead in some facets, Google is innovating as well, and acquiring specialized technology to fold into its search engine. In April, the Justice Department approved Google’s $700 million purchase of ITA Software, which collects and organizes online data for airline flights. Last year, Google paid an undisclosed sum for MetaWeb, a start-up that used a vast database to better decipher the meaning, and not just the words, of search queries. In 2008, Microsoft paid an estimated $100 million for Powerset, a start-up that is also a specialist in so-called semantic search technology.
“Both these companies are making important steps to make search more intelligent,” says Oren Etzioni, a computer scientist at the University of Washington. “It’s an arms race.”
At Google, the Microsoft talk of a “decision engine” is regarded as a clever turn of phrase that merely describes the long-range ambition of search and information retrieval, as the field was called in the years before the internet. “The goal has always been the same,” explains Amit Singhal, a computer scientist who leads Google’s search team. “The progression is from data to useful information to knowledge that answers questions people have or helps them do things. Knowledge is the quest.”
It's a Wednesday morning in June, and Brian MacDonald is presiding over back-to-back product meetings for Bing. MacDonald, 49 and a vice president, is a returnee to Microsoft. His first stint began in 1989, when Microsoft acquired a business software company he co-founded; he stayed on, managing the development of a series of programs in Microsoft’s lucrative Office business until 2001. In those twelve years, Microsoft’s share price soared, and stock options for managers yielded the kind of personal wealth that opened up life choices. He left, invested in a few start-ups, and spent time with his young children. But his children became teenagers and the appeal of dabbling in start-ups faded, and he was lured back to Microsoft in 2007, when, he says, the company was finally becoming “focused and serious about search”. The meetings are in a sixth-floor conference room in an office complex in Bellevue, a Seattle suburb. (Most Bing employees work in Bellevue, needing more space than was available at the headquarters campus in Redmond.) Each meeting involves about a half-dozen designers and engineers ranging in age from the late twenties to their forties. A few others join in by phone and videoconference from Silicon Valley and India.
The first session focuses on software still in the concept stage, called Bing DeskBar. It is downloadable software for personal computers, and perhaps for smartphones and tablets. The DeskBar, in the early June prototype, sorts information by categories like people, documents, and web sites. It presents information in those categories in large on-screen icons, or tiles, and sorts data by what is most “recent, relevant, and frequently used”, as one designer says. The people feature, for example, sorts through communications including email, Facebook, and Twitter messages. The idea is to filter messages according to computed criteria, like those from your work colleagues, or from people you communicate with most often.
DeskBar is one of several experimental projects in the larger Bing strategy, MacDonald explains later. “You take a product category, you expand it and you own that expanded category,” he says. “We have a recipe.” That is the formula that worked in the past for Microsoft in PC software, with Windows and Office. But whether that game plan will work against Google is uncertain at best.
The second meeting focuses on design tweaks in Bing’s next wave of improvements, which would be released into the search engine a few weeks later. The upgrades have come in six-month cycles since the preparations for Bing’s introduction in May of 2009.
Each cycle is named for a city. First was Kiev, then Oslo, Boston, and Denver. A recent upgrade was called Mountain View, for the Silicon Valley town where Google is based. The next three cycles will be named for rock bands formed in West Coast cities, gradually moving closer to Microsoft’s base: Metallica (Los Angeles), Nirvana (Aberdeen in Washington) and Soundgarden (Seattle). “We’re bringing it back here,” MacDonald says.
Witty code names aside, Bing has a long way to go. It is praised for improvements in search quality and features that distinguish it from Google, including its stylish home page: a different and striking picture each day, typically of a place, plant, or animal, with four links to information about the subject that appear when a computer cursor passes over the image.
Advertisers have noticed Bing’s progress. Laura Desmond, CEO of Starcom MediaVest, an ad strategy and placement agency, says Microsoft’s share of its corporate clients’ click volume from search ads has grown to 24 percent, from fourteen percent, in the last nine months or so. “Bing is clearly behind Google, but now it’s a scale player as well,” Desmond says.
Becoming a solid Number Two behind Google is an accomplishment, but at what cost? Yusuf Mehdi, a Microsoft senior vice president, declined to say when the company planned to break even in search. The huge reported losses, he says, are a result of aggressive investment over the last few years to hire people and build data centers that can handle thirty percent to forty percent of search traffic, first in the United States, and later in other markets. Those upfront, fixed costs are enormous, Mehdi acknowledges, but once Microsoft’s search traffic and ad volumes rise, the financial picture could brighten quickly. “As we grow share,” he says, “that really can drive the profitability, and that’s the key for us to turn to profitability and then grow beyond.”
Microsoft is not yet translating its search traffic (a thirty percent share in the United States, including the Yahoo partnership) into comparable ad dollars. Revenue per search from the Yahoo traffic it handles is far less than it was when Yahoo managed its own search ads, Yahoo said in its recent earnings report. But Microsoft and Yahoo executives say the shortfall is temporary, a result of making a complex technology switch while a business is running. “It’s a matter of time and effort, not an inability to do it,” says Mark Morrissey, a Yahoo senior vice president. “I’m as confident of the economic payoff from this partnership as I was on Day One.”
If those tech teething problems can be solved, the big remaining challenge will be attracting more traffic at Google’s expense. At this stage, says MacDonald at Microsoft, the greatest hurdle for Bing is the habitual behavior that works to Google’s advantage. “For most people, Google is search— they go to Google without even thinking about it,” he says. “We’ve got to develop our own habits, of people trying Bing.”
Yes, says Singhal at Google, user habits are a powerful force that help his company. Those habits, he adds, result from Google’s doing so well for so long. “Those habits are earned with trust over the years,” he says.
Still, there may be an opening for Microsoft, underdog that it is. Charlene Li, founder of the Altimeter Group, a tech research firm, calls herself a “huge Google user” who turns to its search engine many times a day. “It takes a lot to move me out of Google,” she says. Yet Li says she now uses Bing for travel— finding airline flights— and sometimes to search for restaurants, too. “Microsoft’s best hope is that it gets more and more people to migrate to Bing for specific tasks like travel,” she says. “Then, if they like what they see, they may use Bing more broadly.”

The New York Times has an additional article entitled How Different Are Google and Bing?, a portion of which is below:

Microsoft has invested billions of dollars in Bing, its search engine. But it faces a daunting rival in Google, the giant in search. To compete, Microsoft has focused on aggregating and presenting specific kinds of information in areas like travel, restaurants and recipes as part of a search result. Here's a a look at some of the specific ways that Bing is trying to distinguish itself from Google:

Flights
Both Microsoft and Google have acquired companies that analyze data about air travel, in order to offer more than a simple list of links when users search for, say, flights from New York to San Francisco.

Restaurants
Both Microsoft and Google are developing ways to provide added context to the information in search results. In the case of restaurants, the companies are using different techniques to present basic information, like maps, descriptions and reviews, so that users do not have to click past the search results page.

Recipes
When Microsoft recognizes a user searching for a recipe, it changes the layout of its results page to provide more targeted information.