Wednesday, July 15, 2009

Bing gaining on Google and Yahoo

NEW YORK (CNNMoney.com) -- Microsoft's new search engine, Bing, has been up and running for just a month, but it has already begun making waves in the lucrative search market.

Bing gained 0.4 percentage points of market share to 8.4% in June, according to a report released Wednesday by online data tracker comScore to analysts. Rival Google (GOOG, Fortune 500) remained at 65%, and second-place Yahoo (YHOO, Fortune 500) fell to 19.6%, down from 20.1% in May.

June marked the first month since January in which Google did not gain market share.

Microsoft's search market share had been slipping for more than two years. At the same time, the company has struggled to make its online advertising unit profitable. The June results represent the biggest monthly jump in Microsoft's market share since June 2008, and it is the biggest share of the market the company has held since January.

It also brought Microsoft's share as close to Yahoo's as it has ever been, according to comScore data that goes back to January 2007.

That's significant, because comScore estimates that every percentage point of market share equals a swing of $100 million of revenue.

Bing's staying power. Microsoft (MSFT, Fortune 500) reported Monday that it has seen an 8% rise in unique visitors to Bing since the search site replaced its predecessor, Live Search, on June 3.

But experts are skeptical about how long Microsoft's boost can last.

"Microsoft's gain is a function of its $150 million PR effort," said Sandeep Aggarwal, senior Internet research analyst with Collins Stewart. "Since it was highly publicized, Microsoft has created a new buzz, and users came to the site out of curiosity."

"All of those things suggest more of a temporary gain," Aggarwal added. "If Bing can be where it was at the start of the year at the end of the year, that would be a success for Microsoft."

Others think it's too early to tell whether Bing will be able to grow over time.

"The June move wasn't material enough to make any definitive statements as to whether Bing is a search market share game changer," wrote Citigroup analyst Mark Mahaney in a client note. "We continue to view Bing as a very solid product, but one facing a very large uphill battle."

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