Yahoo Comes Full Circle With Retreat From Search

Source:http://abcnews.go.com/Technology/wireStory?id=8207337
by jano
Yahoo Inc. invested billions of dollars in its Internet search engine during the past six years before realizing it made more sense to entrust the job to an outsider — hearkening back to a conclusion the company's co-founders reached shortly after they started their Web directory in the mid-1990s.The latest shift in direction will put rival Microsoft Corp. in control of the search results and the ads that appear alongside search results on Yahoo's highly trafficked Web site, assuming the proposed partnership is approved by antitrust regulators in the United States and Europe.The 10-year deal announced Wednesday blows up a search expansion undertaken under Yahoo's former chief executive, Terry Semel, who resigned under shareholder pressure two years ago. The repudiation of Semel's strategy returns Yahoo to a philosophy embraced by co-founders Jerry Yang and David Filo in the company's early days.

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Microsoft’s sweet Yahoo deal to take on Google !!!

Source:http://technology.timesonline.co.uk/tol/news/tech_and_web/article6736245.ece
By Jano
Not long after Carol Bartz took over at Yahoo in January she dropped the “F Bomb”. Explaining what was wrong at Yahoo, the tough-talking executive said there were “a lot of people running around telling engineers what to do but nobody is f*****g doing anything”.If anything, that endeared Bartz to potential critics. After years of bloodless management, here was a woman fired up to get Yahoo moving again.She arrived as the floundering internet giant was showing co-founder Jerry Yang the door. Shareholders were furious that Yahoo had rebuffed a $33-a-share offer from Microsoft and today the shares are worth less than half that.It had lost its way defending against the software giant and was falling ever further behind Google. Bartz was going to give Yahoo “some friggin’ breathing room” so it could “kick some butt”. Seven months later it’s Bartz’s butt that is getting the kicking. She is accused of selling off Yahoo’s crown jewel for a song.Microsoft finally reached a deal with Yahoo last week to, in effect, take over its search business. It will make Microsoft’s Bing search service Yahoo’s search engine, handing the Windows software giant almost 30% of the search market and is the end of an era in internet search, reducing the field to two key players: Microsoft and arch enemy Google.Microsoft will pay Yahoo 88% of the search revenue generated from its sites in the first five years of the agreement, the companies said. But for Yahoo, once the leader in online search, it is the end of the road.

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Yahoo Enhances and Broadens Access to Search Pad Tool

Yahoo will significantly expand on Tuesday the number of people who can test its Search Pad service, an online notebook for saving and sharing notes, links and Web site content when conducting research using the company's search engine.Search Pad, announced in February, has been in limited testing, but now Yahoo will make it available to people in the U.S., Canada, Australia, New Zealand, Singapore, Malaysia, Philippines, U.K., France, Spain, Italy, Germany, Brazil, Mexico, and Argentina.Yahoo has refined and broadened the service's features since unveiling it, such as adding ways to share its content, previously limited to e-mail. Search Pad content can now be shared through Yahoo's Delicious social bookmarking service, Facebook and Twitter. However, Search Pad is still considered to be in a beta test period.Search Pad combines functionality from online notebooks and social bookmarking sites, but since it is a feature of Yahoo's search engine, Search Pad has a very specific purpose, unlike standalone notepad-type Web applications.Thus, Yahoo doesn't foresee Search Pad replacing Delicious. Rather, Yahoo describes Search Pad as an "online personal research assistant" designed to let people capture information they find for specific projects, such as a major purchase, a vacation or a party.Yahoo hopes that Search Pad will become an online option for people who save information they find on the Web in word processing files or scraps of paper, and by creating browser bookmarks.

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Yahoo and Microsoft back in talks over ad deal

Microsoft, who ended its hostile bid for Yahoo almost one year ago, has started up discussions again with the company, this time over a possible advertising pact.Yahoo's new CEO Carol Bartz has met with Microsoft CEO Stee Ballmer this week, says sources, with both sides still hesitant to set any agreement in stone. One possible deal would have Microsoft selling search ads for Yahoo while Yahoo sells display ads on all Microsoft properties in exchange.Microsoft has been very aggressive in expanding their search engine (Live.com) and is expected to introduce another major overhaul this summer.A large scale partnership would go a long way towards creating a strong competitor to Google in search, which currently has 81.39% market share, according to Net Applications.

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Yahoo and Microsoft Said to Be Weighing Ad Pact

Yahoo and Microsoft, which held a marathon series of fruitless merger and partnership negotiations last year, have restarted discussions, this time over a possible advertising agreement, a person briefed on those discussions said Friday.Conversations between the two sides have been scant since Carol Bartz was named Yahoo’s chief executive in January. But they have started anew recently, and Ms. Bartz met with Steven A. Ballmer, Microsoft’s chief executive, last week, said the person briefed on the discussions, who agreed to speak on condition of anonymity because the talks were confidential.Yahoo and Microsoft declined to comment.The discussions are in early stages and may not lead to any agreement, the person said. They have centered on ways for the companies to pool their advertising efforts, including a possible partnership under which Microsoft would sell search ads for Yahoo, and Yahoo, in turn, would sell display ads on Microsoft properties, this person said.After merger and partnership talks collapsed last year, Microsoft continued to make sizable investments in its search business to better compete with Google. Those investments included the hiring of a string of top search executives and engineers, some of whom had previously worked at Yahoo, including Qi Lu, a well-regarded technologist who is now in charge of Microsoft’s overall online business, including search.Microsoft is expected to release the results of its latest research and development efforts in search technology this summer when it plans to introduce a major overhaul of its search engine.Microsoft executives are bullish about the capabilities of the new service. But they readily admit that it does not address one of the principal challenges the company faces in competing with Google: Microsoft’s audience and its base of advertisers are tiny compared with Google’s. That makes Microsoft’s search business, in which advertisers bid against one another in an auction, less lucrative than Google’s.A partnership that would pool Microsoft’s and Yahoo’s users or advertisers could go a long way toward addressing that problem, and could help create a more powerful No. 2 competitor to Google in search.

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Yahoo Should Have Sold Search To Microsoft

As Yahoo and Google get ready to finally launch their search partnership--and trigger a storm of legal and industry protest by doing so--it's worth revisiting Yahoo's decision to pursue this deal instead of one with Microsoft in the waning days of the Microsoft-Yahoo dance (boy, does that seem like a long time ago).

In the days when Google and Yahoo first announced their search partnership, Yahoo's stock was in the high $20s, and the Microsoft acquisition at $31 seemed inevitable. Then Jerry pulled the Google deal out of his hat, and this forced Microsoft to halfheartedly throw a couple more dollars a share at Yahoo. But the intransigence at Yahoo quickly killed that $33 bid, Microsoft walked, and now we're back below $20 again.

If the Google deal isn't quashed by regulators, it could be very successful. It could allow Yahoo to generate incremental revenue and cash flow and, ultimately, begin to reduce engineering spending on search--a war it has long since lost. But this still doesn't mean going with Google instead of with Microsoft's last offer to buy Yahoo's search business was the right decision. If Yahoo's query share continues to drop--which it did last month--it will become ever clearer that the company should have taken Microsoft's money and run.

As is clear in the chart below, Yahoo has lost almost 2 full points of search share since January and now holds under 20% of the overall search market. This is a continuation of the relentless share loss trend since Google burst on the scene seven or eight years ago.


If Yahoo continues to lose share--and there's no reason to expect it won't--the Google deal will rapidly become less and less relevant. It doesn't matter if you "improve monetization" of queries if your share of queries continues to shrink.

As you'll recall, in the waning days of the Microsoft-Yahoo dance (round one), Microsoft made two offers to buy Yahoo's search business to try to detail the Yahoo-Google search deal. The first one was weak, and Yahoo was right to reject it. The second one, however, was much closer to a reasonable deal. If Yahoo had engaged with Microsoft on that offer, it's possible they could have gotten to a deal that made sense.

A strong search deal with Microsoft would have allowed Yahoo to:

* Stop shoveling hundreds of millions of dollars a year down the Panama (search platform) rat hole
* Focus all its energy on what it's best at: content aggregation/production and display ads
* Continue to generate meaningful revenue from search while its query share lasted.

Yes, shutting down Panama would have closed the door on Yahoo's ability to bring search in-house again. But unless the company finds a way to turn around its eroding share, this just doesn't matter.

Yahoo's stock accomplished the near-impossible on Friday--declining almost 5% on a day when the market was up 400 points. Most likely this was because investors continue to realize that, Google deal or no, Yahoo's search business is headed down the tubes.

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Yahoo Is Counting on Apex

Slouched in a chair in the Holy Cannoli conference room at Yahoo!'s (YHOO) Silicon Valley headquarters one recent September day, a taciturn Jerry Yang looks every bit the embattled chief executive he is. With profits falling and sales growth slowing, the Internet portal's stock price has sunk below 19—a five-year low and 40% less than what Microsoft (MSFT) offered before walking away from its $47.5 billion buyout bid in May. Angry shareholders are still calling for his head. Then Yang starts talking about the imminent debut of an ambitious online advertising system. He leans forward, and the words pour out. "This is a big bet," he says, his voice rising. "It is truly the next generation of advertising."

It's also a do-or-die proposition. More than any other project, the ad system could be Yang's last chance to reverse the flagging fortunes of the company he co-founded in 1994 with Stanford University buddy David Filo. The culmination of a marathon effort by hundreds of engineers, the system—code-named Apex, for Advertiser Publisher Exchange—will be unveiled at the annual Advertising Week conference in New York, which opens on Sept. 22. Apex' goal is to make it far easier to buy and sell display ads, those pictorial and video banners that are the chief revenue source for most Web sites.The core of the system is a free online marketplace where publishers—Yahoo and its network of partners, including 784 newspapers—use a simple dashboard to post ad slots available on their Web pages. Advertisers, using anonymous data on visitors to the pages, can target ads to the most likely prospective buyers in particular geographic areas—say, ads for minivans to married women aged 31 to 40 in the Chicago metro area. In one transaction, they can reach potential buyers on Yahoo and on partner sites.

Yang's big hope is that improved targeting, greater reach, and less buying friction will make advertisers willing to pay higher rates. In particular, Yahoo aims to help more Web pages, especially "remnant" pages with little obvious commercial value, command something a bit closer to the rates Google (GOOG) gets on search-results pages. This way, Yahoo can start to close the widening gap between Google's expected $16.2 billion in revenue this year and Yahoo's $5.6 billion.

Under a previous ad deal, some newspapers already have generated ad rates on some Yahoo pages two to three times what Yahoo itself was getting. In Atlanta, Cox Newspapers grossed an additional $1 million this year selling ads on Yahoo, thanks to the ability to get broader reach among local consumers and thus lure bigger-spending advertisers. Apex will automate that process, allowing partners to sell ads on many more Yahoo pages. Leon Levitt, Cox's vice-president of digital media, says his company eventually plans to shift all its display ad placement business away from its current partner, Google's DoubleClick unit.

Yahoo's ambitious plan has gained urgency in recent days as a tentative $800 million-a-year search-advertising deal with Google faces intense scrutiny from antitrust officials. If that setup is nixed, Yang will be all the more dependent on display ads to convince shareholders he didn't mess up in resisting the Microsoft deal. Meantime, rivals are pursuing similar plans. Next year, Google is expected to expand DoubleClick's own ad exchange, which matches ad buyers and sellers. "We want to apply the science of search to what is today the art of display," says David Rosenblatt, a Google ad executive. Microsoft hopes to expand its display reach in the coming year or so, too.
"WEB 2.0 WORLD"

Yahoo has a lot to prove. Its last big software project, a search-ad system called Panama, was delayed repeatedly and has failed to slow Google.

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