MSFT + YHOO: What Would Microsoft Yahoo Look Like?
The conference call
has happened, and
despite saying it has a plan to
Microsoft didn’t share that with the world. Indeed, at one point it was said any
plan depended on what Yahoo’s leadership would suggest. That means it’s time
for What If. Some thoughts below from me and contributing editor Greg Sterling.
We’ve been IMing all day about the move.
Practically no one seems to know about the "flagship" Microsoft Live Search Brand. Hitwise stats, for example,
show that of
Microsoft’s 7.1 percent share of the US search market in November 2007, only 1.6
percent of those searches happened at Live Search. The bigger chunk happened at
MSN, 5.5 percent.
In contrast, Yahoo has an excellent search brand. It existed before Google
and was THE search engine for many years. Today, it still arguably remains
synonymous with search. Abandoning Live.com as the flagship and putting efforts
behind Microsoft’s Yahoo might keep the company’s efforts more focused and
The challenge is that both Yahoo and MSN — the strongest search brands in a
combined company — are weighted down by being littered with portal features.
The Yahoo home page is heavy compared to the clean Google home page, though
Google continues to play its long-standing "stealth" portal conversion by
showing more people its iGoogle portal page and offering a "classic" option for
those who dislike it.
A daring change might be to strip Yahoo of its portal look, making it more
like the "pure search" Yahoo page here
and migrate Yahoo’s portal folks over to MSN. It would be risky. It might
capture the attention of those seriously seeking a Google alternative, but it
might risk angering existing Yahoo people.
One thing seems clear. Microsoft with Yahoo simply could not run three search
brands successfully. Indeed, the last thing Microsoft needs in the wake of its
"Live" branding confusion is even more brands to puzzle people with.
Of course, Microsoft may disagree. Steve Ballmer said that both Microsoft
loves the Yahoo brand and that there will be a Windows Live brand, since
consumers want Windows on the web. We’ll see.
Microsoft has developed a robust ad serving platform that it currently uses
for search ads, as well as other products. The main feature it lacks is actual
search traffic — of which acquiring Yahoo will help immensely.
Yahoo, of course, rolled out its updated Panama ad serving platform over the
past year. It had a
huge success in moving a significant number of advertisers over to it without
serious pain. Huge success — like doing open heart surgery with the patient
still awake and somehow not noticing.
Since Yahoo has more advertisers than Microsoft, one has to
consider that it would be the Microsoft platform that becomes the loser. It
makes sense to keep the pain for advertisers to a minimum. That
means moving the fewer people using Microsoft adCenter to Yahoo than vice versa.
Don’t expect Microsoft to see it that way, however. This is Microsoft driving
the deal, and it wouldn’t be surprising to see corporate in-fighting and
possessiveness neglect where most of your advertising customers are in place of
Of course, complicating all this is that Microsoft is still digesting its
acquisition of aQuantive to fuel its push into the display ad space. Well,
according to Microsoft, that’s all done and went great (more on this below). And Yahoo
is still dealing with
buying BlueLithium and
Right Media. In some
ways, the time is right for all these things to be absorbed and consolidated. On
the other hand, it means that Microsoft will lose some ground against Google if
it gets the final go-ahead from the European Union over DoubleClick (and loses
some of the oomph to fight that deal on anti-trust grounds).
This was touched on above. Yahoo has portal features; so does MSN. Does Yahoo
Mail go away in place of Hotmail (ahem, I mean Windows Live Hotmail)? Is it
Yahoo Videos or MSN Videos? Yahoo News or MSN News? At least Flickr will
probably maintain its brand. Some people simply won’t want even a brand change
from what works. And doing that change or any change potentially causes them to
look at other options — say Google? Ironically, the consolidation, if not
handled right, could deliver Google more portal customers than it may have
ever hoped for in the short term.
Disturbingly, the answers aren’t clear from Microsoft yet. We’ve simply
gotten general corporate talk, to be frank, that there are pluses to scale and
combinations to be made. But how exactly things will get combined makes a great deal of
difference, and you’d think investors would want to know that now. You’d
certainly think that Microsoft at least has some more detailed preliminary ideas
that they’d share.
Behind the scenes, technology is a key aspect to both the paid and editorial
side of search. Here, integration seems less of an issue. The space is growing,
and all three companies are after talent that’s in short supply.
One thing from the conference call that didn’t hold much water, however, was
the idea that Microsoft would grow share with better technology. This came as an
analyst asked about Yahoo having lost share, and how Microsoft was going to turn
that around. Um — Yahoo pretty much hasn’t lost share. Microsoft has. But the
answer was that better technology would increase relevancy, and that this would
Maybe. But Microsoft has never suggested it didn’t have the technological
prowess to pull ahead already. The opposite, actually — we had Microsoft
touting proudly in the
past that they would pull ahead of Google in "six months." It was only until
this year that they said
they matched Google and were better than Yahoo. If they’re better than Yahoo,
the pitch that the technology combination will push relevancy higher and gain
share doesn’t fly.
By the way, don’t forget that there’s still more integration going on:
Microsoft To Buy Fast
Search For $1.23 Billion covers the purchase of search technology company
FAST that’s underway. At least in that case, enterprise search doesn’t duplicate
what Microsoft would get from Yahoo.
Corporate Culture & Turf Wars
Microsoft talked a lot about how successful it had been integrating aQuantive
and TellMe in terms of suggesting Yahoo would flow smoothly as well. Those two
simply don’t compare. Those acquisitions were largely additive to Microsoft,
bringing in capabilities that Microsoft didn’t have.
Yahoo is largely a duplicative acquisition, if it happens. Pick an area,
Microsoft probably already has that feature or service. That means a hard choice
of whether you keep running two, something that Yahoo itself has gone against as
it has dropped its own duplicated services (Flickr over Yahoo Photos, for
example). Alternatively, you go with one and risk alienating both users and
generating internal strife, with the upside that perhaps you win new users.
For more on the Microsoft bid for Yahoo, also see our other coverage:
- Microsoft Makes
$45 Billion Bid To Buy Yahoo
- Live Blogging
Microsoft’s Bid For Yahoo Call
- Microsoft Call:
"We Love The Yahoo Brand" [But Can The Deal Happen?]
- Q&A With Microsoft
On Proposed Yahoo Purchase: 2+2 = #1
- Microsoft + Yahoo: