After a struggle that took years to take shape, Yahoo and Microsoft finally inked an agreement in an effort to compete with the 800 pound tech gorilla of the 21st century—Google.
Yesterday Microsoft and Yahoo at last announced a search deal. In a nutshell, Microsoft’s technology will power Yahoo’s search results, while Yahoo will handle ad-selling duties for both companies’ search sites. For more details, see the breaking-news story from Ina Fried, “Yahoo, Microsoft reach search, ad deal.”
The news finally puts an end to one of the biggest will-they-or-won’t-they tech stories since Apple was believed to be developing a mobile phone. It also marks the end of an era for Yahoo as an independent search company, allowing it to further cut costs and rebrand itself as a digital media company. And it transforms Microsoft, which recently unleashed its new Bing search tool, into a clear No. 2 behind Google in search technology, with what should be a steady stream of Internet-derived revenue.
Will this deal make a dent on Google’s armor? I don’t think so. Google is so embedded in the minds of mainstream users, that I find it very difficult for them to switch to Bing overnight. The disparity of market share amongst these three behemoths is astronomical, (e.g., Google 65 percent, Yahoo 20 percent and Microsoft 8 percent).
Yahoo appears to be betting its future on its ability to maintain the 300 million unique users that visit its newly redesigned home page every month and the hope that display ads will finally do for the Web what they did for television 50 years ago. Microsoft is giving up the right to sell its own search ads—still easily the most effective form of online advertising—in hopes of putting a real dent in Google’s operation.
Wall Street investors don’t see an armada full of money on the horizon for Yahoo in the near future, no matter what Carol Bartz says. Yahoo’s shares dipped $2.04 or 11.85 percent yesterday. These guys certainly were not impressed.
It is interesting to see what Google has to say about this strategic alliance amongst two former foes. Good Day.
Source: Hello Godot: Microsoft, Yahoo finally hook up -cnet news.com
