Search Engine Optimization and Internet Marketing Service

Earlier this week Microsoft set Bing as the default search engine for Internet Explorer 6, without the possibility to choose another search provider. Search engine marketers noticed and wrote about it. After notifying Microsoft, here’s what they answered:

We’re aware of the issue with IE6 and Bing and are investigating a solution. This issue is not impacting IE7 or IE8 users. We respect user choice on search providers in IE and all browsers, and designed IE to enable that choice. We will provide an update soon on this issue, and we apologize for any inconvenience it has caused. In the meantime, we encourage customers to upgrade to IE8 here. Alternatively, Firefox users can install the add-in for Bing here.

Accident?

Few people use IE 6 and by their majority they are not web savvy. Has Microsoft been testing the change on the old browser in order to see people’s reactions? Sounds like a logical thing to do. Change IE6, wait for reactions. If no one catches on:

1. Leave it at that (some market share)
2. Change IE 7 as well (the really big one).

They got caught though :)))

Ms. Bartz said in a company-wide Yahoo meeting Wednesday that she plans to spend a lot of time investigating whether to sell Yahoo’s search business but that her “gut” was not to do that, according to people familiar with the meeting. - WSJ

New Yahoo CEO, Ms. Bartz does not feel right about selling Yahoo search business to Microsoft and she is 100% right. What will Yahoo be without the search business? An email and content platform, like AOL, which is struggling and is dependant on Google for revenue.

The sale only makes sense if Microsoft buys all of Yahoo. This way Microsoft money arm can be used to ante all Yahoo products and services. I personally think Bartz / Yahoo board will be very foolish to sell Yahoo search business alone.

Google is the first formidable rival Microsoft seen in years. Steve Ballmer, Microsoft’s CEO was quoted: “I’m gonna bring f***ing Google down”, after Microsoft’s main search engineer migrated to Google.

Two players are in different mediums – Google is the search king and Microsoft has a desktop monopoly. They both want a piece of those core markets. Microsoft has almost no influence in search and Google has no saying in desktop and office software.

The paradox is – though both companies aggressively try to bite off a piece of the market they don’t have, it doesn’t work. Microsoft failed to make a dent in Google’s search market share and Google failed to capture slightest 0.1% of the desktop and office software market.

They Don’t Get What They Don’t Have.

After entering into search game, Microsoft failed to live up to what it promised. Live search quality plain sucks. Same can be said about Google’s office suite. In the areas where both companies want to expand, they suck.

Live Search was launched in 2003 and Microsoft, officially made war with Google.

Google launched Google Docs in 2006 and confirmed it - the war is on.

Since then, both initiatives failed (in terms of market share). No one uses Google Docs and no one cares for Live Search

Regardless, they both continue the battle. Microsoft continues to monopolize everything it can related to desktop and Google is moving towards monopoly status in search and search advertising.

Some Financial Facts About Google and Microsoft

2008 first quarter Google made $5.19 billion

2008 first quarter Microsoft made $13.76 billion

Microsoft Share Price Range $25 - $35

Google Share Price Range $400 - $600

Google is aggressively pushing into mobile market. It bid on the FCC auction over 4.5 billion to ensure that open access rules were triggered. As a result service providers cannot put restrictions on phone usage. It made a deal with Sprint to create a free cellular internet network across USA and made a phone operating system nicknamed G-Phone.

Meanwhile, Microsoft made an acquisition in enterprise search and tried to acquire Yahoo, hoping to get search market share up. Yahoo resisted and purchase did not go through.

Both are aggressively moving against each other. Though Google largely abandoned desktop idea and is moving towards advertising dollars in mobile. Microsoft recognized this and pledged to get there whatever the cost, even if its Yahoo for over $45 billion.

As you probably heard, Microsoft withdrew its offer to purchase Yahoo on May 3rd.
Here’s a snippet from a letter by Steve Ballmer:
“Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo! has not moved toward accepting our offer. After careful consideration, we believe the economics demanded by Yahoo! do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal,”

Ballmer Chickened Out?

I think everyone would agree that Microsoft is viewed as an aggressive company. A sort of Nazi SS officer, who has no room for mistakes, coldblooded, determined, unchallenged and ready to shoot opponents in the head. In the face of this image, withdrawal from the deal puts new image on Microsoft. Not enough guts?

Yahoo shareholders wanted $35-$37, Microsoft went as far as $33. Additional $3-$4 dollar difference Yahoos were asking is roughly $5 billion.

Search industry pundits such as Danny Sullivan are Greg Sterling are calling this withdrawal a $5 billion dollar mistake. They are absolutely correct. Microsoft pulled over $40 in revenues first 2008 quarter. Though not all of is net profit, $5 more billion would not hurt the reserves.

Yahoo provided Microsoft with much needed fuel to challenge Google, which Microsoft failed to do in 5 years. Not only Google, Microsoft failed to challenge Yahoo and is sitting in single digit search market share, which keep sliding every quarter.

Yahoo was a strategic addition to Microsoft, not a purchase. The implication may be dire to the software giant. Google is aggressively pushing itself into mobile. It has conned FFC by bidding enough to make new wireless spectrum open and then walked away, safeguarding it’s Android platform. It recently opened relationship with Sprint in efforts of making nationwide broadband wireless network. If all goes successful Google has a chance to dominate wireless search devices and possibly get usage data from Sprint - the new weapon in search. All those ad dollars and search share leaves plenty of room for free software. The kind that Micrsoft charges $300 - $600 a peice.

Microsoft needs Yahoo as much as a blind guy needs a trained dog to walk on the streets. $5 more billion is a cheap strategic expense for company this size. Walk away was a big mistake.
People speculate that it had not walked away completely and may come back at a later date. We do not know at this point. It does not seem like it, since search engine land reported that Microsoft and Facebook are doing a “mating dance”.

There is of course the shareholder factor, and WSJ insiders say shareholders never liked the idea. In fact the proposal cost Microsoft $24 billion in lost share value. What we know about shareholders is that they are greedy creatures who for the most part are only concerned with the bottom line. Nevertheless, it is a small price compared to what it may have gotten in return - #2 in search. With the powerful muscle Microsfot would bring, Microhoo could do a nice battle with Google and challenge its market share.

For now, Microsoft is an outsider in searc and it should’ve bought Yahoo.