Bing trumps Google in new Kindle Fire

This is great news for Microsoft and should be a golden opportunity to gain exposure and popularity among users.

By Trefis Sep 17, 2012 12:02PM
Amazon (AMZN) recently announced that its new line of Kindle Fire tablets will use Microsoft's (MSFT) Bing, not Google (GOOG), as its default search engine

We were initially surprised at this move by Amazon because of its important relationship with Google and because the company relies on a custom version of the Android operating system for its tablets. Regardless, Amazon has chosen to favor Bing, which is great news for Microsoft. 

The addition of Bing to the Kindle Fire move could help it gain market share at the expense of Google and could start a trend where other hardware manufacturers follow suit.

Microsoft Stock Break-Up

Amazon's move, concurrent with Microsoft's "Bing It On" campaign, can change Bing's brand value among users. If users start viewing the platform as a similar, or better, alternative to Google, we could see other hardware manufacturers such as Apple (AAPL) follow in Amazon's footsteps. If Apple removes Google as the default search engine from its phones (which is likely since it will be removing the native Youtube app and Google maps going forward), we could see the Bing platform gain search market share. While the segment is currently an immaterial segment of Microsoft's value, its future growth in the mobile and tablet space can pay huge dividends down the road for the company.


If Bing gains market share, it will do so at the expense at Google. Therefore, while the situation might not be raising red flags Google company yet, this development poses a long-term threat to Google's mobile search dominance. With Apple removing some Google products from their iOS platform and Samsung looking to other platforms by using Windows Phone 8, we could see Google lose mobile search market share going forward. This could be disastrous for the company's value because we estimate that Mobile Search Ads are its biggest division.


Overall, we did not expect Amazon to drop Google as the Fire's default search engine. Regardless of the terms of the agreement that Microsoft and Amazon had to undertake to make this happen, its presence on the Kindle Fire presents Bing with a golden opportunity in the coming year to gain exposure and popularity among users.


We currently have a $41 price estimate for Microsoft, which is approximately 30% above the current market price.


(Microsoft owns and publishes Top Stocks, an MSN Money site.)

1Comment
Sep 17, 2012 12:29PM
avatar
Microsoft's a V8 stock that's been running on 6 cylinders. If they can get mobile (WP8 and W8 tablets) and Bing search performing then they could fire on all 8 cylinders for a couple of years.
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