4 ms·

>>business' has naturally high margins $8bn in revenue might not mean profitable. Google certainly spend a lot more than this on search and advertising, and we

>>business' has naturally high margins $8bn in revenue might not mean profitable. Google certainly spend a lot more than this on search and advertising, and well... software scales. In any case, whether they make $1bn in profit, losses or something in between... This is <1% of market profits. Apple is making $8bn-$12bn, all profit, just on defaults.

arcturus17 5y ago
GP is saying naturally high margins because it is a pure software play with close-to-zero marginal distribution cost and massive scale. We don’t know if Bing’s profitable but GP is merely saying that with the circumstances above it is an interesting market for Microsoft to pursue.
- dalbasal 5y ago
  Perhaps, but I think it's marginal in practice. Whether MSFT makes an internally accounted 10% margin or 10% loss on their $8bn in revenue, Apple collect >$8bn which is entirely profit. Cooperating and accepting a slice of Google's monopoly profits is far more profitable that competing would be, in all but the most bullish scenarios. IE, MSFT would need to be outright challenging Google's 1st place position in search marketing to have a hope of earning more than Apple do by doing nothing, spending nothing, investing nothing and taking no risks. Also, what would it take for MSFT to compete with Google in earnest? For one thing, Microsoft would need to outbid Google for such deals. They'd need to pay Apple, Telcos, and such more than Google do now.
  - sokoloff 5y ago
    > by [Apple] doing nothing, spending nothing, investing nothing and taking no risks. Apple did none of those things with respect to launching a search engine. Apple did all of those things with respect to building an audience of daily engaged (often affluent) users. That’s the investment Apple made to earn the position to cash Google’s check.

4 ms·

>>business' has naturally high margins $8bn in revenue might not mean profitable. Google certainly spend a lot more than this on search and advertising, and we

by dalbasal 5y ago

arcturus17 5y ago
GP is saying naturally high margins because it is a pure software play with close-to-zero marginal distribution cost and massive scale. We don’t know if Bing’s profitable but GP is merely saying that with the circumstances above it is an interesting market for Microsoft to pursue.
- dalbasal 5y ago
  Perhaps, but I think it's marginal in practice. Whether MSFT makes an internally accounted 10% margin or 10% loss on their $8bn in revenue, Apple collect >$8bn which is entirely profit. Cooperating and accepting a slice of Google's monopoly profits is far more profitable that competing would be, in all but the most bullish scenarios. IE, MSFT would need to be outright challenging Google's 1st place position in search marketing to have a hope of earning more than Apple do by doing nothing, spending nothing, investing nothing and taking no risks. Also, what would it take for MSFT to compete with Google in earnest? For one thing, Microsoft would need to outbid Google for such deals. They'd need to pay Apple, Telcos, and such more than Google do now.
  - sokoloff 5y ago
    > by [Apple] doing nothing, spending nothing, investing nothing and taking no risks. Apple did none of those things with respect to launching a search engine. Apple did all of those things with respect to building an audience of daily engaged (often affluent) users. That’s the investment Apple made to earn the position to cash Google’s check.