Slowly but steadily, Microsoft (
MSFT
) Bing has become a potent threat to Google (
GOOG
) in the search market. Over the last few months, Microsoft's
aggressive strategy with Bing has started to yield market share
gains over competitors Google, Yahoo (
YHOO
) and AOL (
AOL
) in the U.S. search market. Bing's market share, which was
around 11% in September 2010, is now close to 14% as of February
2011.
While the trend is a positive for Microsoft, Bing actually
accounts for less than 1% of our
$31.64 price estimate for Microsoft stock
, which stands about 25% above market price. Below we discuss a few
initiatives that Microsoft has undertaken that have sparked an
increase in Bing's U.S. search market share.
Yahoo Queries Will Improve Bing Search Results
In August 2010, Bing began powering Yahoo searches. The move
gives Microsoft access to Yahoo's search queries, which can help
improve the technology powering Bing and ultimately yield improved
search results. According to the terms of the 10-year search
partnership, Yahoo will use Microsoft's search technology and
receive 88% of search revenues generated through its own sites
during the first five years (see
Microsoft's Deal with Yahoo Could Hurt Google's
Stock
).
Bing's Partnership with Facebook
Microsoft Bing partnered with Facebook to display search results
related to social networking. This move is expected to generate
more Bing-powered searches as Microsoft leverages Facebook's user
base of over 500 million. The partnership provides users with more
personalized search results, which may turn out to be better for
certain types of searches. For example, when a user is searching
for a movie on Bing, he could see results that include how many
Facebook friends "liked" the movie (see
Social Search with Bing-Facebook Combo a Threat to
Google's Stock
).
Bing's Partnership with Nokia
Microsoft recently reached an agreement in which Nokia (
NOK
) will adopt Microsoft's Windows Phone 7 smartphone operating
system for its phones. This move will lift Microsoft's search
market share as Bing will be the default search engine on Nokia
phones. Nokia has a large presence in emerging markets, which is
also attractive to Microsoft (see Nokia Partnership Provides
Upside for Microsoft Stock).
See our full analysis and $31.64 price estimate for
Microsoft