Microsoft Has a Long Way to Go to Catch Up to Google

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There's still time for Microsoft (NAS: MSFT) to get the last laugh.

It was nearly five years ago that Microsoft exec Kevin Johnson -- addressing investors at a UBS conference -- revealed Microsoft's aspirations to triple its share of the search-engine market over the next three to five years.

Microsoft commanded just 12% of the market at the time. This was before the company turned heads with its crafty search relaunch as Bing. It was also before Mr. Softy struck a deal with Yahoo! (NAS: YHOO) to handle its search business.


We're now just five months away from the fifth anniversary of Johnson's remarks. Will Microsoft make it? No -- but you can't blame the software giant for trying.

The latest comScore research shows that Bing -- including its Yahoo! searches -- is now serving up 28.8% of the country's explicit searches. That sounds impressive, but then one has to consider that Bing and Yahoo! combined for a 28.9% piece of the market a month earlier and 30% a year earlier.

Google (NAS: GOOG) continues to hold on to roughly two-thirds of the market, as AOL (NYS: AOL) and IAC's (NAS: IACI) Ask.com are clinging to their fringe audiences.

Search Engine

May 2012

May 2011

Google66.7%65.5%
Bing15.4%14.1%
Yahoo!13.4%15.9%
Ask.com3.0%2.9%
AOL1.6%1.5%

Source: comScore.

Bing itself isn't the problem, of course. Microsoft's problem stems entirely from Yahoo!'s slide. Then again, this shouldn't come as a surprise. It was a given that once Yahoo! began outsourcing its search through Bing that many Yahoo! regulars would eventually just go to Bing directly.

The bigger concern for all providers is that growth is decelerating. There were 17.5 billion explicit core searches performed last month, just 2% more than last May. There is clearly some meat to the fears that folks are resorting to social networks and smartphone apps to get the answers that they're looking for.

The market is changing, and Bing and Google may have bigger problems here than figuring out the market share slices of the pie.

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At the time this article was published The Motley Fool owns shares of Microsoft and Google.Motley Fool newsletter serviceshave recommended buying shares of Google and Microsoft.Motley Fool newsletter serviceshave recommended creating a bull call spread position in Microsoft. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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