Introduction
The rise in the use of the internet has created the need to use search engines. This has led to a development of new products such as Bing, Yahoo, and Google search engines to suit the growing demand. The profitability of the search engine market has greatly increased to a tune of more than $40 billion.
The search engine market is highly dominated by three players. As at 2012, the search engine market was dominated by Google at 85.2% of the global market share, Yahoo had 6.2% while Bing for Microsoft had 5.2%. Pie chart one illustrates the proportion of market share occupied by the various companies.
In as much as Microsoft Corporation has been successful in the hardware and software industry, Bing has faced a number of problems in gaining market share as a new product in the search engine market.
This can be majorly attributed to aggressive competition from Google. This treatise discusses whether on not Microsoft should stay in the search market.
Pie chart one – illustration of market share
Arguments for
Introduction of a new product in a market which seems over dominated by a single player can be challenging. Porters five forces explains the attractiveness and the concentration of competition in a market.
Based on the five forces, the bargaining power of the customer is of most importance since it can help a company decide on whether to stay in the market or not (Roy 24) In the search engine market, a substantial amount of revenue is generated from the advertisement.
Microsoft has been able to attract a large number of customers by trying to allure small companies through free advertisements. This project has been fruitful especially in attracting small companies. Therefore, Microsoft should remain in the business to as to grow with the customers and increase further the market share.
Arguments against
The financial statements reveal that the Bing has been reporting losses since its formation in 2009. The company has not been able to recover the cost of developing and maintaining the product. The cost of running the search engine exceeds the revenue earned.
Thus, the fact that the product cannot recover the cost of operation gives a reason why it should be withdrawn from the market. Besides, the losses earned from Bing reduces the profits attributed to shareholder and the value of the company. Thus, bing should be removed from the market.
Further, based on the Porter’s five forces, the intensity of the competition may not allow Bing to penetrate and gain a profitable market share in the search engine industry (Roy 25). Further, since the product replaced Microsoft search network, there has been growth in the performance of the product.
It is noticeable that the market share of the product has been declining at a high rate. Another, reason why Bing cannot survive in the search engine market is that the main competitor offers high quality services with a large number of add on to the customers.
This creates a slim chance for Bing to attract new customer to switch from their competitors’ products. Thus, the buyers propensity to substitute is negligible (The New York Times Company 2011).
Conclusion
In summary, the discussions above show that the reasons against outweighs the reasons that support the stay of the product in the market. The main tool for analysis is the Porter’s five forces. Thus, the management should consider selling the product at a profit.
Works Cited
Roy, Daniel. Strategic Foresight and Porter’s Five Forces: Towards a Synthesis, GRIN Verlag: Germany, 2011. Print.
The New York Times Company 2011, Can Microsoft Make You ‘Bing’? 04 Mar. 2013. <https://www.nytimes.com/2011/07/31/technology/with-the-bing-search-engine-microsoft-plays-the-underdog.html?pagewanted=all&_r=0>.