Yahoo quarterly results endorsed the ongoing rumors regarding the impending search deal between Microsoft-Yahoo. The dismaying results from Microsoft has also set the tone for search tie-up as Microsoft would be gunning for Online business so as to penetrate into Google’s Core revenues.
Adage now reports that Yahoo is inching closer to announce a search deal with Microsoft sometime this week. It also reports that the deal would be based on revenue sharing rather than big guaranteed revenues and upfront cash.
Yahoo ever since Microsoft failed bid to acquire the company, has tried to clinch such deals with Microsoft or with other companies. The major expectation from such deals was to get huge payment obligations from Microsoft which in a bid to surpass Google’s online supremacy would pay any price.
The benefits of the deal?
For Yahoo:
Yahoo would be able to save huge money in terms of maintaining search infrastructure and reduce major operating expenses thus cushioning its balance sheet for other fruitful ventures. It earlier tried to attract publishers through BOSS, white label search solution.
At the same time Yahoo would also be able to sell advertising space on its own search network along with Ad inventory on Bing, Microsoft’s search adventure, increasing its position in Online advertising space. The search deal would also increase its bargaining power from advertisers as larger search market share would increase the PPC rates on search traffic.
For Microsoft:
Microsoft after Bing’s success would largely be able to corner greater search market share up to 30 per cent through this deal enough to challenge the dominance of Google.
The severe decrease in OS sales this quarter and upcoming setback of Google’s Web OS largely requires Microsoft to dent in Google’s Core businesses. The deal would also help in eliminating search-technology competitor – Yahoo, which was largely credited to provide ground for Google’s success.
Earlier Mr.Ballmer, CEO, Microsoft told a convocation that he would be willing to spend 5% to 10% of Microsoft’s operating income (around $5.5 billion ) on search for coming five years.
The deal could largely be good for users as more furious competition in search space will see more ground breaking technology innovation in future as Yahoo alone was unable to bring any such innovation to table. The deal would also provide relief to Microsoft which is certainly leaving no stone unturned to Stop Google’s growing dominance and now assault on its dominant businesses.
I think its a good thing that Microsoft is challenging Google in the search department, finally! In recent times, there haven’t been many innovations from Google and hopefully some ‘Bing’ competition should wake up the search giant from its slumber!
But ideally, wouldn’t it be better for Microsoft to acquire specialist search portals (such as online music search, online travel etc)and become a domain expert in certain zones rather than towing the line and doing similar things to what Google already does??