Microhoo or mistake?
There is an upside to Microsoft’s Yahoo bid, but it comes with its share of risks
By Clint Boulton
Microsoft’s $44.6 billion
bid for struggling rival
Yahoo shook up the market for Internet-based services and
stunned industry experts used to
seeing the two companies locked
with Google in a three-horse race
for search, online advertising and
software as a service.
What no one seems to know is
what Microsoft will look like if it does
buy Yahoo. Reaction in the industry is
mixed, but most analysts see Microsoft’s move as necessary to challenge
Google in the Internet market.
Microsoft has spent more than $7 With Yahoo in its pocket, Microsoft could get a bump in online ads.
billion in its Online Services Business in acquisitions and data center a distant No. 2 to Google in search but ads will be the next great field.
investments, but it expects to report could close the gap in digital advertis- As an early mobile ad market en-operating losses for OSB for the fore- ing, industry observers said. ComScore trant in the United States and Japan,
seeable future, said Technology Busi- claims Google’s share of search is 58.4 Yahoo is strong on that front, said
ness Research analyst Allan Krans. percent in the United States and 62.4 Kelsey Group analyst Matt Booth.
Meanwhile, Googlehassteamrolled percentworldwide.Acombined Micro- This is an area where Microsoft
to the leading search engine position soft-Yahoo would have a 32. 7 percent would seem to have an advantage
and is building out applications to U.S. search share, with 15. 7 percent by adding Yahoo.
challenge Microsoft’s Officeand Share- worldwide, according to ComScore. Google in November unveiled an
Point productivity and collaboration IDC analyst Karsten Weide said open-sourcemobileoperatingsystem
software suites. Though only a few Microsoft-Yahoo would garner acom- software stack called Android as an
years old, Google’s Apps are hosted bined 22. 7 percent of the U.S. Inter- alternative to Symbian’s operating sys-on the company’s servers and piped net ad market, while Google would tem and Microsoft’s Windows Mobile.
to 500,000 businesses via the Internet, hold 32. 5 percent, a huge gulf in the The company is also rumored to be
according to Google’s count. multibillion-dollar ad market. crafting a mobile phone. An Android-
Analystssuchas Burton Group’s Guy However, ComScore said Micro- based Google phone would be opti-Creese said more businesses will pay soft would benefit from Yahoo’s mized for Google Apps, extending
for the premier edition of those Apps, market-leading share of display ads Google’s growing Apps footprint.
which includes support and costs $50 to hold 25. 5 percent of the market. Also in question is whether Micro-peruserperyear, once Googlemakesit Google claims about 1 percent of soft would be able to successfully
more enterprise- friendly with records this market. But analysts are bet- integrate Yahoo’s Panama ad plat-management and better support. ting that mobile advertising and, by form with its own AdCenter system