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Yahoo! open to better offer, but is there any point?
April 7, 2008, 5:30 pm
Filed under: Google, Microsoft, search marketing, Yahoo! | Tags: , , ,

Yahoo! has responded bluntly to Microsoft’s three-week deadline to accept its $42 billion offer via a defiant open letter issued today saying the offer did not represent good value for Yahoo! shareholders, but that the company would be open to a better deal.

So why is Microsoft so keen on Yahoo still? Well its stock price has slipped more than 15 per cent since the start of the year an in a tightening market, search is one particular sector that is still thriving.

So that’s why the sector is so interesting – but what about Google, and if Microsoft and Yahoo! get together, do they really stand a chance? According to the latest stats from Nielsen, Google retains a 59 per cent share of all searches compared with 18 per cent for Yahoo! and 11 per cent for MSN.

Just because on their own, Yahoo! and Microsoft have failed to take make any impact on Google’s dominance, does not mean that if they get together they will miraculously make inroads. In fact, the cultures of the two companies are so vastly different that any alignment of the two businesses will take a long time to achieve and will struggle to become seemless. The real benefits of Microsoft and Yahoo! coming together will be beyond search, in terms of all the content and other services the two companies own, but that doesn’t address the sweet-spot that is search.

We’ll have to wait and see what Microsoft’s next move is, and if a hostile takeover attempt may be on the cards. Regardless, in the search sector both Microsoft and Yahoo will continue to struggle against Google. The secret to Google’s success has always been its simplicity and the fact that it was always a search engine and everything else has been built around that core, winning formula. Hard as they may try, Microsoft and Yahoo will always be coming at search from the perspective of a portal and content owner and making search the core of what they do is far easier said than done.

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