Is Microsoft Targeting the Wrong Search Company? - Is Yahoo!’s Approach Working?

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Yahoo! has strong justification for calling itself a media company. Let’s take a look at the companies it has cut deals with in the past year. These include Mark Burnett Productions (famous for, among others, “The Contender” and “The Apprentice”); Investor’s Business Daily; O’Reilly Media; SBC Communications; Sprint; Verizon; BellSouth; TiVo; and, among many others…Microsoft.

Is this another sign that the software giant is underestimating Yahoo!? To quote the Ozzie memo mentioned earlier, the second place search engine seems to be barely worthy of notice. “Although Yahoo also has significant communications assets that combine software and services, they are more of a media company and – with the notable exception of their advertising platform – they seem to be utilizing their platform capabilities largely as an internal asset.”

Somehow, Yahoo! has found a way to target multiple areas in which to compete, such as music, search, and e-commerce, without angering a major player in any of these fields. This means that companies you may be competing with are still willing to partner with you. For example, in October 2005, Microsoft and Yahoo! agreed to make their instant messaging software compatible.

This also means that your competitors in general don’t see you as a serious threat. Apple’s iPod and iTunes may be a major source of its revenue, but it doesn’t seem to be particularly concerned about Yahoo!’s music business. Likewise, eBay isn’t at all worried about the auctions on Yahoo!’s network. 

Not being seen as a threat could be a good thing in other ways. You may have heard a lot of discussion about something called “Web 2.0.” According to a report from Knowledge@Wharton, this is supposed to be “a Web-based computing platform with easy-to-create services that will replace what desktop software does today.” Who will dominate Web 2.0 depends on which company’s application program interfaces (APIs) become the standard. Both Google and Microsoft are building APIs for the future – but even companies such as Amazon and Salesforce.com are making their APIs available to speed up Web 2.0 development. Yahoo! is also becoming a major API player, which could help secure its future position in whatever the Internet turns into next.
 

Next: The Down Side >>
 

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Comments On: Is Microsoft Targeting the Wrong Search Company?

· I hope you've enjoyed this somewhat "contrarian" look at the current search engine...    · You say, "look at how Wall Street values the two companies is also instructive. At...    · Those are good points. I admit I'm not a financial analyst, and depended on other...    · I agree that what's going on with R&D is more interesting, but I still think that...    · You may be right; I admit, my own background prejudices me to view things more in...    · Google has been the darling of everyone connected to the Internet in one way or...    · Well, Google actually does have an IM, they're not just thinking about it.Yes,...    · What you guys do, is focusing on the USA. Yahoo!, AOL, Lycos etc: those are for 90%...    · Actually, we do focus on Google as well as the other companies -- sometimes almost...    · Have you actually tried using both Overture and AdWords? it's like comparing windows...   >>> Post your comment now!