Yahoo-Microsoft deal less likely, analyst says
In Vegas terms, the likelihood of a Microsoft-Yahoo search deal is now a "pick 'em."
That was the takeaway from a report Tuesday by Collins Stewart analyst Sandeep Aggarwal.
"In our view, the likelihood of a Microsoft-Yahoo search deal has gone down materially in recent weeks," Aggarwal wrote in a research note. The biggest hurdle remains the price of a deal, he said.
"We believe that a Microsoft-Yahoo search deal can happen but we are reducing the probability from 80 percent-plus to 50 percent, and with the lowered probability, we restrain ourselves in terms of assigning any timeline," Aggarwal wrote.
Of course, a historian might also offer the same caution. Microsoft first went public with a bid to buy Yahoo early last year. The two sides never came to a deal, despite a few months of negotiations.
For the past year, Microsoft has indicated it is open to some sort of a search partnership short of an outright deal, but the two sides have remained far apart on price, Aggarwal said.
When Carol Bartz was hired as Yahoo's CEO, hopes for a deal increased. The two sides have resumed talks, and while Bartz has said she is open to some sort of deal on the right terms, she has sounded less than optimistic at times. (See video below of Bartz on Fox Business News.)
Despite some good early traction for Microsoft's Bing search engine, Aggarwal said the software giant can ill afford to wait, particularly since it has no other means of significantly boosting its search share.
"As far as Microsoft is concerned, it cannot afford to wait for long because Bing can help Microsoft (bridge) the gap in core relevancy, etc. but cannot deliver 20 percent search share (required to remain sustainable/meaningful in search)," Aggarwal wrote. "In addition, Google is getting more aggressive both in search and online applications and Microsoft cannot delay much the adoption of Cloud Computing (in absence of viable/scalable online ad business model)."
During her years at CNET News, Ina Fried has changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley. These days, most of her attention is focused on Microsoft. E-mail Ina. 
The whole cloud computing thing is already Google's game to lose, given the moves it has made already; nobody wants to be locked-in to Microsoft any more than they absolutely have to these days.
As a side note, Yahoo is doing fairly well in the cloud space as well (evidence by example? See Comcast's use of Zimbra --and not, say, hosted OWA or similar-- for all of its webmail services).
Google is now analysing what Microsoft has done and will look to incorporate the best of what can be added without it appearing that they copied it. However, unless they buy the tech they need, it will take at least a year or two to deploy. Of course nobody thinks they have been resting on there laurals either. I'm sure they have been develping other features that can be implemented sooner to regain some of the mojo they may have lost with the Bing turn around for Live Search.
My guess is this is a huge wake up call for Google. They have been taking their lead for granted and assuming no one could catch them with the momentum they had. It just goes to show you that it's always better to lead than to follow. Microsoft is getting that now and beginning to travel down a path that innovates, instead of replicates.
@Super2Online: Perhaps, but you have to remember - Yahoo is recovering, Google isn't sitting still, and there's still competition from folks lower on the food chain (e.g. Ask.com)
So, Random_Walk, name ONE large corporation which has converted a core business application from a Microsoft solution and adopt a Google cloud offering instead.
I mean, since you've "personally seen" this happening, I mean.
Now, as for specific examples? I have seen departments at Intel (as personal example) move from Sharepoint to Wiki-based CMS solutions, from Windows to Linux as a development platform (esp. in the embedded space), and from Visual Studio to Eclipse.
Of course, we can also point to specific cloud-only examples at large: The focus of generic webmail has moved from Hotmail/Live to GMail (mostly because the Hotmail/Live webmail domain is a known spam-factory and gets blacklisted more often than not among SMTP servers, but I digress). YouTube stomped Soapbox (remember Soapbox?) flat. Last I checked, Microsoft has yet to make a dent in Google Docs' domain, in spite of Microsoft's best efforts (*cough*Public SharePoint-based efforts*cough*)
So - you were saying?
becomes
"I've personally seen large corps go out of their way to avoid lock-in" - Yep that's right -- companies that practice vendor lock-in avoidance don't just avoid Microsoft. They avoid being tied to ANY one vendor. But you know that because you are so smart.
And an answer to "name ONE large corporation which has converted a core business application from a Microsoft solution and adopt a Google cloud offering instead."
is flatly answered with "The focus of generic webmail has moved from Hotmail/Live to GMail (mostly because the Hotmail/Live webmail domain is a known spam-factory and gets blacklisted more often than not among SMTP servers, but I digress). YouTube stomped Soapbox (remember Soapbox?) flat. Last I checked, Microsoft has yet to make a dent in Google Docs' domain, in spite of Microsoft's best efforts (*cough*Public SharePoint-based efforts*cough*)". Hmmmm... these all don't sound like core business apps moving to the cloud.
BTW, why Comcast for consumers uses Zimbra they host many Microsoft services on Comcast Business (Outlook, OWA, SharePoint, ActiveSync). Check it out here: https://businessclass.comcast.net
Please serve up some facts not your usual fiction next time.
Here in the heartland, from what I've seen and heard, Bing is a hit, and is already #2 to Google, albeit a really distant #2. The kids are "Binging" all over the place, or at least say they are.
I don't think Microsoft really needs a Yahoo deal as much as Yahoo does. I think Zimbra is their only really success in a decade, and that's not enough to sustain a company their size.
I don't think Microsoft will ever catch the monopolistic juggernaut known as Google, but I think they will fare well enough, especially with enterprise cloud applications, to remain a major player for a long time. I don't feel Google has yet to grasp enterprise needs, as a lot of their products seem to be geared towards technophiles and not the larger audience of end-users.
Google serves a lot of its own content in response to queries now so Google's so-called "market share" is inflated because it essentially leeches traffic from the rest of the Web.
Microsoft search destinations have served around 100 million monthly visitors for a year or longer. By contrast Google has been unable to reach more than 140 million monthly visitors and Yahoo! has been stuck down around 60 million monthly searchers.
The real story here is that BING finally gives Microsoft an edge over Google in the area that matters most: relevance of search results. Google has increasingly sacrificed the relevance of its search results in its efforts to make its PageRank algorithm look like it can actually deliver good quality sites.
- by JCPayne June 18, 2009 3:11 AM PDT
- Another ICAHNN victory story. He should have purchased Circuit City too and merged it with Blockbuster. Then he'd have 3 strikes.
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