The first session focuses on software still in the concept stage, called Bing DeskBar. It is downloadable software for personal computers, and perhaps for smartphones and tablets. The DeskBar, in the early June prototype, sorts information by categories like people, documents and Web sites. It presents information in those categories in large on-screen icons, or tiles, and sorts data by what is most “recent, relevant and frequently used,” as one designer says.
The people feature, for example, sorts through communications including e-mail, Facebook and Twitter messages. The idea is to filter messages according to computed criteria — like those from your work colleagues, or from people you communicate with most often.
DeskBar is one of several experimental projects in the larger Bing strategy, Mr. MacDonald explains later. “You take a product category, you expand it and you own that expanded category,” he says. “We have a recipe.”
That is the formula that worked in the past for Microsoft in PC software, with Windows and Office. But whether that game plan will work against Google is uncertain at best.
The second meeting focuses on design tweaks in Bing’s next wave of improvements, which would be released into the search engine a few weeks later. The upgrades have come in six-month cycles since the preparations for Bing’s introduction in May 2009.
Each cycle is named for a city. First was Kiev, then Oslo, Boston and Denver. A recent upgrade was called Mountain View, for the Silicon Valley town where Google is based. The next three cycles will be named for rock bands formed in West Coast cities, gradually moving closer to Microsoft’s base: Metallica (Los Angeles), Nirvana (Aberdeen, Wash.) and Soundgarden (Seattle).
“We’re bringing it back here,” Mr. MacDonald says.
Witty code names aside, Bing has a long way to go. It is praised for improvements in search quality and features that distinguish it from Google, including its stylish home page — a different and striking picture each day, typically of a place, plant or animal, with four links to information about the subject that appear when a computer cursor passes over the image.
Advertisers have noticed Bing’s progress. Laura Desmond, C.E.O. of Starcom MediaVest, an ad strategy and placement agency, says Microsoft’s share of its corporate clients’ click volume from search ads has grown to 24 percent, from 14 percent, in the last nine months or so.
“Bing is clearly behind Google, but now it’s a scale player as well,” Ms. Desmond says.
Becoming a solid No. 2 behind Google is an accomplishment, but at what cost? Yusuf Mehdi, a Microsoft senior vice president, declined to say when the company planned to break even in search. The huge reported losses, he says, are a result of aggressive investment over the last few years to hire people and build data centers that can handle 30 percent to 40 percent of search traffic, first in the United States and later in other markets. Those upfront, fixed costs are enormous, Mr. Mehdi acknowledges, but once Microsoft’s search traffic and ad volumes rise, the financial picture could brighten quickly.
“As we grow share,” he says, “that really can drive the profitability, and that’s the key for us to turn to profitability and then grow beyond.”
Microsoft is not yet translating its search traffic — that 30 percent share in the United States, including the Yahoo partnership — into comparable ad dollars. Revenue per search from Yahoo traffic it handles is far less than it was when Yahoo managed its own search ads, Yahoo said in its recent earnings report. But Microsoft and Yahoo executives say the shortfall is temporary, a result of making a complex technology switch while a business is running.
“It’s a matter of time and effort, not an inability to do it,” says Mark Morrissey, a Yahoo senior vice president. “I’m as confident of the economic payoff from this partnership as I was on Day 1.”
IF those tech teething problems can be solved, the big remaining challenge will be attracting more traffic at Google’s expense. At this stage, says Mr. MacDonald at Microsoft, the greatest hurdle for Bing is the habitual behavior that works to Google’s advantage.
“For most people, Google is search — they go to Google without even thinking about it,” he says. “We’ve got to develop our own habits, of people trying Bing.”
Yes, says Mr. Singhal at Google, user habits are a powerful force that help his company. Those habits, he adds, result from Google’s doing so well for so long.
“Those habits are earned with trust over the years,” he says.
Still, there may be an opening for Microsoft, underdog that it is. Charlene Li, founder of the Altimeter Group, a tech research firm, calls herself a “huge Google user” who turns to its search engine many times a day. “It takes a lot to move me out of Google,” she says.
Yet Ms. Li says she now uses Bing for travel — finding airline flights — and sometimes to search for restaurants, too.
“Microsoft’s best hope is that it gets more and more people to migrate to Bing for specific tasks like travel,” she says. “Then, if they like what they see, they may use Bing more broadly.”