http://www.marketwatch.com/story/microsoft-may-be-in-no-mood-to-celebrate-2010-06-01
Microsoft may be in no mood to celebrate
One-year anniversary of Bing comes at unsettling time for software giant
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By John Letzing, MarketWatch
SAN FRANCISCO (MarketWatch) - Microsoft Corp. is marking the one-year anniversary of the release of its revamped Internet search engine known as Bing this week, though the software giant may be in no mood to party.
That's because the anniversary comes amid a spate of unsettling news for the software giant /quotes/comstock/15*!msft/quotes/nls/msft (MSFT 25.89, +0.09, +0.35%) , as well as a brutal selloff that sliced more than 15% from its market value during the month of May. That was a harsher beating than most tech stocks took, with the Nasdaq Composite Index /quotes/comstock/10y!i:comp (COMP 2,222, -34.71, -1.54%) down less than 10% for the month.
/quotes/comstock/15*!msft/quotes/nls/msft MSFT 25.89, +0.09, +0.35%
Still, progress has been made. According to data from comScore Inc., Microsoft's share of the search market has risen from 8% in May, 2009 -- pre-Bing -- to 11.8% in April of this year, the most recent data available.
Meanwhile Google's share has dipped slightly to 64.4%, and Yahoo's share has slipped to 17.7% from 19.6%, according to the comScore data.
Caris & Co. analyst Sandeep Aggarwal told clients in a research note published Tuesday that Bing deserves a grade of "A-" in its first year, for having achieved milestones "which appeared to be a far cry for Microsoft a few years ago."
In addition to gaining search market share on its own, Aggarwal noted, Microsoft is also now using the search engine to power results and advertising on Yahoo Inc. /quotes/comstock/15*!yhoo/quotes/nls/yhoo (YHOO 15.02, -0.32, -2.09%) sites, in a revenue-sharing arrangement.
Bing's progress has failed to boost Microsoft's stature in the eyes of investors, however.
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Late last month, long-time rival Apple Inc. /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 260.83, +3.95, +1.54%) replaced Microsoft as the most valuable technology company, as measured by market capitalization. See full story.
Microsoft's shares fell more than 15% in May, to $25.80. The shares rose slightly on Tuesday, the first day of June trading, to $25.89. Apple shares dipped less than 5% in May, and closed Tuesday at $260.83.
While Bing anchors Microsoft's crucial foray into the Internet market, the company is faced with serious questions about the future of its flagship Windows operating system software, on both traditional and non-traditional computers.
Windows is reliable mainstay for Microsoft, having produced over $3 billion in profit for the company in the quarter ended in March.
Growing competition
Last week, Microsoft announced the departures of President Robbie Bach, and vice president of design and development J Allard from the company's Entertainment and Devices Division, which includes its mobile business.
"We are set up well for success as we continue to drive our mobile and entertainment businesses forward," Microsoft Chief Executive Steve Ballmer said in a statement at that time.
The management shake-up was widely seen as the result of a need for a clean break, in a market increasingly dominated by Apple, Google Inc. /quotes/comstock/15*!goog/quotes/nls/goog (GOOG 482.37, -3.26, -0.67%) and Research in Motion Ltd. /quotes/comstock/15*!rimm/quotes/nls/rimm (RIMM 59.03, -1.66, -2.74%)
Google's Android mobile operating system helped it increase its share of the smartphone market to 9.6% in the first quarter of this year, from 1.6% in the period a year earlier, while Microsoft's share dipped to 6.8% from 10.2%, according to data published recently by Gartner Inc.
While Google unveiled Android in late 2007, a Google operating system for traditional personal computers, called Chrome, is expected later this year.
Underlining the growing competition between Google and Microsoft on the operating system front, the Financial Times, citing unnamed sources, reported Tuesday that Google is internally shifting employees away from the use of Windows, and outfitting them with other technologies - primarily due to "security concerns."
A Google spokeswoman declined to comment on operational matters.
Microsoft spokesman Frank Shaw publicly derided the Financial Times report on his Twitter account, writing that the story's focus on security issues amounted to the "wrong premise." Instead, Shaw commented, the move is akin to "Google going google."
Google will also likely be a serious software rival to Microsoft in the market for slimmed-down, tablet devices made in the image of Apple's popular iPad.
Dell Inc. /quotes/comstock/15*!dell/quotes/nls/dell (DELL 13.09, -0.24, -1.80%) , a longtime Microsoft partner, unveiled a tablet device last week based on Google's Android operating system. See related story.
Microsoft issued a statement on Tuesday, in conjunction with its participation at the Computex convention in Taiwan, which emphasized worldwide support for Windows on devices including tablets.
John Letzing is a MarketWatch reporter based in San Francisco.