Let the Record Show

First of all, much acrimonious commentary has been attributed to me about Bing. I just want to say I never said Bing was a failure, a bad search engine or a step backwards on Microsoft's part.

I simply said Bing would not break the Google habit, despite 100 million dollars of advertising.

In fact, here's exactly what I said would happen. Driven by the advertising, people would temporarily disrupt the playing out of their habitual Google script, try Bing and find that it wasn't all that different from using Google: better in some ways, worse in others. Without having a compelling reason to consciously break the Google habit (which is hard cognitive work) they would just go back on autopilot and continue to use Google. A temporary blip upwards for Bing would soon disappear, at roughly the same time as Microsoft's $100 million ad budget, and we would all go back to mindlessly Googling what we're looking for.

Survey Says...

So, what's happening in terms of market share? Well, the various numbers seem to show that Bing has gained a small uptick in market share (the exact amount is difficult to determine, but Compete puts it at a 0.3% gain in share), Google's up as well, by about half a percentage point, and Yahoo and Ask are both losing ground in what seems to be an irreversible death spiral.

If you just look at the Google and Bing numbers, the words "I told you so" naturally spring to mind. And this is still with the $100 million tap fully open. Google could come out of this with the biggest net gain, paid for by Microsoft's ad budget.

But the story gets much more interesting, and more compelling for Microsoft, if you look at what's happening with Yahoo and Ask. This is something I didn't think about in my original forecast, but the logic seems clear in hindsight.

26% Still Up for Grabs

When Bing debuted, there was a 26.7% percent of the U.S. search market not owned by Google, again according to Compete. At the end of June, that shrunk to 26.1%. And that's the share that Microsoft should be paying close attention to. Don't worry about breaking the Google habit. Concentrate on picking off the weaker contenders. And right now, when it comes to search, Yahoo and Ask are lying limp and lifeless on the side of the road, easy pickins for a Bing drive-by. In the past year, Yahoo is down in market share by almost 3 and a half points, and Ask is off by a full point. All of this has gone to Google, plus some. They're up almost 10 full share points in the past year.

Is Google Domination Inevitable?

If these are the trends, is it inevitable that Google will eventually own the entire search market? No, because we always like alternatives. We get nervous when there is a de facto monopoly, so we'll keep even a weak contender on life support just to give us an alternative. At the height of the Window's OS dynasty, Mac still managed to hold onto 4.5% of the market and Linux 0.5%. Since then, Mac has come back to take almost 9% of the market and Linux almost a full point (according to Net Applications).

That's the other thing to remember about humans. If we have a viable underdog, we'll throw it more than its fair share of support. Case in point: the browser wars. In 2004, Explore owned 91.35% of the market. The fledgling Firefox was its biggest competitor, at 3.66%. But over the past five years, the balance had shifted decidedly in Firefox's favor: 65.85% for Explore vs. 22.39% for Firefox. The fact that Firefox improved its product at a much more aggressive rate than Microsoft didn't hurt either.

I believe Google is getting very close to its natural market share cap. And the stronger the alternatives, the lower that cap will be. Yahoo and Ask have lost their appetite for competing in the search arena, but Microsoft has a viable contender in Bing. I still don't expect it to break a Google habit, but it could well become our No. 1 alternative when we're ready for an occasional break from our habitual search rut.

How ironic! Microsoft's Bing playing the White Knight to Google's Evil Empire!