There’s a been a buzz since months now, but Microsoft finally officially announced an unsolicited $44.6 billion bid for Yahoo. The $31-a-share bid of cash or Microsoft stock is 62 percent more than Yahoo’s closing price yesterday, reports bloomberg.

So how does this change the search equation?

Google, based in Mountain View, California, captured 56 percent of U.S. Web queries in December, almost double the combined share for Yahoo and Microsoft, which attracted 18 percent and 13 percent. Searches will account for 37 percent of the $27.5 billion U.S. online advertising market in 2008, estimates research firm EMarketer Inc.

Both Yahoo and MSN have been continually losing market share to Google in the search space (both paid and organic). This can be confirmed by looking at Yahoo’s quarterly balance sheet, which shows 8 straight quarters of declining profits. Now, the combined force of Yahoo & MSN, may just be able to start regaining market share that they’ve lost to Google. However, today Google’s search engine is far superior to both Yahoo’s and MSN and they need to be able to offer a compelling reason for users to switch over.

Going back a few years in history, when Altavista and then Yahoo dominated search. In came Google with its cleaner interface, faster search query processing and more accurate results. Today, I see no reason for Google users to switch to any other search engine  simply because there is no value addition that any other search engine can provide. And this is something that Microsoft needs to address if they manage to take over Yahoo… otherwise it may just end up being another hotmail, which only lost marketshare and became one of the more marginal players in the email space after the Microsoft takeover.

 

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This entry was posted on Friday, February 1st, 2008 at 7:32 pm and is filed under Search Engine News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.