Daniel MacLennan (dsmaclen)

Microsoft’s Online Business29% of U.S. web searches

Over 5 billion per month

Yahoo! partnership

Cortana

Siri

The Numbers

-3

-2

-1

0

1

2

3

4

5

6

2010 2011 2012 2013

Revenue vs. Expenses (in billions)Source: Microsoft.com (FY10-13 Earnings Statements, Online Services Division)

Revenue Expenses Operating Income

History

1995: MSN.com launches

1998: MSN Search

introduced

2005: MSN builds its own web

index

2006: Windows

Live Search replaces

MSN

2009: Microsoft launches

Bing

2009: Bing partners

with Yahoo!

2013: Bing partners

with Apple on Siri

Competitors

Global Market Share

Google Baidu Bing Yahoo Other

Source: NetMarketShare, PC Search Engine Statistics, October 2014

The Situation TodayThe only English internet index to rival Google’s

Fierce competition

Negative operating income

Microsoft knows they won’t beat Google at traditional web search.

The Strategy for Tomorrow (“What’s Hot”)Today’s search engines are passive

Next-generation will be active

Build knowledge, not indexes

Enrich other products with dataOutlook

Windows

Visual Studio

Story“The next generation of the technology industry will be built on information and machine learning.”

“Google makes money from ‘lost,’ not ‘found.’”

“When I get an email, I shouldn’t have to ask what the Internet already knows.”

Secret SauceLong-term vision

Aggressive research

Persistence

Buy or Sell?Unimpressive numbers

Great visionDoes not imply great execution

Online services are critical for long-term success

Buy low, sell high…

Questions?