Microhoo: "Nobody Gets It"

Posted On August 01st, 2014 by admin

Microsoft and Yahoo announced recently that they are joining forces in the search engine business by combining the new Bing search engine with the Yahoo name and advertising presence.  Yahoo stock drops in value.  Steve Ballmer, CEO of Microsoft, tells a group of financial analysts that "nobody gets it" in terms of how great this deal is for Yahoo.  According to Ballmer, Yahoo will be able to generate its advertising revenue without any cost to them because Microsoft will how be paying for all of the costs associated with developing and operating the Yahoo search engine.  So that means in theory a huge increase in profit margin for Yahoo with future business. How come nobody gets it?  It seems the reason is that many are skeptical that this move will do little to take market share away from Google and to win the hearts and minds of Internet searchers. Certainly if execution on the actual combination of the two services goes as planned then in the short term Yahoo will be more profitable which should make its shareholders happier.  However in the long term which in the tech world is never very long, does this mean that  advertisers will make the switch from Google to Yahoo and therefore result in bigger spend on Yahoo advertising.  Many are skeptical that MicroHoo may just become another case of Hoo Cares and the consumer will continue to use Google as their search engine of choice. Many are asking "where's the beef" or in this case where's the great leap in search technology that will compel users to make the switch.  Bing is a better engine than the previous Microsoft search engine most would agree, but does it add that secret sauce to making Yahoo better in terms of finding what you need on the Internet.  A "Decision Engine" like Bing is based on the premise that it can make decisions for you, what's the lowest fare, best restaurant, cheapest hotel etc.  The Internet is already filled with services that purport to do that for you, such as Yelp, Expedia, Amazon, and they are also trying to get a piece of the advertising dollar besides providing information.  Time will tell, but at this juncture the proof will be in the pudding which is always the second course after the beef is served.