Microsoft has finally released its artificial intelligence-powered search engine, and some of the early reviews are good. But what will it mean in to the bottom line?
Microsoft’s MSFT analyst call held Tuesday night gave some indication. First, the good news — Microsoft says for every point of share gain in the search advertising market, it’s a $2 billion revenue opportunity. According to data compiled by Statista, Google had 86% worldwide desktop market share of search in December, compared to 9% for Microsoft’s Bing.
But AI is expensive. “The new experience will be delivered at a higher cost to serve,” said Philippe Ockenden, chief financial officer for Windows, devices and search, according to transcript compiled by FactSet. But Microsoft CFO Amy Hood insists that all the new money coming in will be “incremental gross margin dollars for us, even at the cost to serve that we’re discussing.”