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Humbly I Suggest…

By - January 17, 2009

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They are talking again – Yahoo and Microsoft, and many are claiming a deal in which MSFT buys Yahoo search is imminent. But we’ve heard this before. I don’t think straight out selling Yahoo search to MSFT makes sense. Jerry is right – the piece notes his view that advertisers want to buy brand with search – and as I’ve written in the past, search gives a company like Yahoo extremely valuable data – consumer insights that help drive product development.

Instead, there’s a third way.

Recall my 2009 predictions:

1. I predicted that Yahoo would buy AOL, then MSFT would work a search deal for the combined entity

2. I predicted that Microsoft would gain 5-10 points of share this year.

The two clearly work together.

But what I think is interesting, or could be, is the creation of a third party search company that is owned by Yahoo and Microsoft. I guess I will keep banging the Soverture drum. I wrote this piece back in March of 2007. From it:



Everyone knows how difficult it’s been for both Yahoo and Microsoft to beat Google at its own game – search. Yahoo has been beat up for years over its lackluster monetization efforts – after initially gaining plaudits for its bold purchase of Overture. And over at Microsoft, search is still at the Windows 1.0 phase, and the rumblings I’m hearing out of Redmond are not encouraging. People are leaving, search share is dropping, and recruitment is tough.

But then again, both companies bring a lot to the table. Yahoo did a great job combining several engines into one solid organic search performer, and early reports on Panama are also solid. Microsoft has an innovative approach in its demographically-driven AdCenter. Both companies have significant traffic of good intent. For building search companies, Yahoo is in the right location. Microsoft has huge market cap and cash. Both need to do something, quickly, to prove to Wall St. that they can compete with King Google.

So why not join forces, like back in the good old days when Overture fed both Yahoo and Microsoft? Such a venture solves any number of tough problems

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4 thoughts on “Humbly I Suggest…

  1. As far as for a hungarian where Google search share is more than 97 percent, I could say it is a non-issue, however it would be comforting for me to know that there is at least a hope, that Googe wont be the only one to stand on the search market.
    It would be better for everyone, even for Google in the long run.

  2. Internet says:

    The main problem Yahoo has is incompetent leadership that clings to the same tired Hollywood formula and the mistaken belief that content, not communications, is king. Microsoft has alienated most of the world’s technical talent through its long history of dirty tricks and given its flat stock price, bureaucratic creep and loss of focus, doesn’t offer a compelling work environment either.

    Taking two also-rans and combining them in a joint venture is a prescription for disaster: JVs invariably experience decisional paralysis due to conflicting priorities of the two parties. While Google is also developing its own form of organizational creep, it is in nowhere near as terminal stage as MS or Yahoo.

    I suspect the next big thing in this space is going to come completely out of the blue from China, India, South Korea, the former Eastern Bloc or any of the other countries that have overtaken the US in broadband penetration and foster innovation while our government coddles the AT&T-Verizon-Comcast oligopoly. The best thing MS or Yahoo could do would be to transfer a substantial fraction of their R&D and decision-making power abroad.

  3. I lost count the number of times that Yahoo has managed to screw things up and lose out on billions of dollars. I hope with a new CEO and better management they can begin to make sense of things.

    Lets go Yahoo… You can do it.

    I’ll even say a preyer tonight before I go to bed ;)

    Best,

    Mike

  4. Shawn Drewry says:

    John,

    You’re gonna say a prayer for YaHoO! ?

    WOW…lol

    http://www.ShawnDrewry.com/theceo.php