Posted January 23, 2009 5:02 pm by with 16 comments

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Well, Microsoft, you just cut 5000 jobs and missed your Wall Street estimates. What are you going to do now? If you guessed they’re going to Disney World, you’re wrong. No, according to Steve Ballmer, they’re looking to drop some big bucks on Yahoo search.

Naturally, Ballmer isn’t naming his price quite yet. On the earnings call this week, however, Ballmer made no bones about the future for web search from Microsoft, according to the New York Times:

Asked about a deal with Yahoo on search during a conference call with investors early Thursday, Mr. Ballmer said, “We would like to do one.” And Mr. Ballmer sounded more optimistic about the possibility of coming to terms with Yahoo now that Carol Bartz, the former chief executive of Autodesk, replaced Jerry Yang as chief executiveof Yahoo. “I know Carol Bartz well from the Autodesk days and am glad to see her at the helm of Yahoo,” he said. Mr. Ballmer, who met last week with Roy Bostock, the Yahoo chairman, also said he had spoken with Ms. Bartz recently.

Why is he still interested after a year of drama and rebuffs:

Whether he succeeds or not [in getting his hands on Yahoo’s search business], [Ballmer] plans to continue investing in Internet search to take on Google.

There are some obvious draws for Microsoft, as there have been for nearly a year since their first offer to buy Yahoo. Rather than taking the time and money investment that building up their own search offering would require, they can increase their market share for only the cost of Yahoo’s search. Plus with their profit drop last quarter, they’re looking to do something to make their online offerings pull in more cash. And given what Microsoft Search has accomplished so far in its life, without purchasing Yahoo, can they ever really hope for the momentum it would take to challenge Google?

Yahoo, as always, has fewer incentives to deal. Sure, they’re struggling internally and we all know the path they’ve been on for the last year. But with a new CEO, there’s also a strong possibility that they’ll have the guidance necessary to forestall the crash that we’re all anticipating. Is it the right time to sell off a major part of their online offering just as they’re getting new leadership?

Yeah, we need someone to give Google competition. But ultimately, it may not be Yahoo, Microsoft or any combination thereof that can stave off a complete Google monopoly. What do you think?

  • But of course. If they really want to become a major player against Google like they say they do they will have to acquire Yahoo Search…

  • Microsoft aquiring yahoo….

    that’s new!
    Very Interesting….

    thanks for the info…


    David king’s last blog post..What is your marketing saying?

  • It will be interesting to see if carol can turn yahoo around. Its a smart move by microsoft trying to acquire yahoo search, Google’s monopoly in the market will only get bigger.

    Brandon Walker – Internet Marketing Online’s last blog post..Monetizing A Website To Earn An Income

  • I don’t know whether it is ego or something else that struck Steve Ballmer but this is not a good time for them to acquire Yahoo Search. The tech market seems to be shrinking and Microsoft is facing competition from all ends (softwares/OSes/online). In my opinion, they should focus on their upcoming OS because that is what they are good at.

    Wayne Liew’s last blog post..7 Reasons Why Innovation Sucks

  • I wouldn’t run around spending all my cash right now, but things are cheaper now then they would be in a good market. I’m just not sure that they can do it with Yahoo!’s share…would it be much more than combining two bad search engines? Maybe they’ve been working on some things and have plans? For the sake of innovation, Google needs competition so I’m all for it as long as it’s not my dime. I think they need to work on branding a term e.g. Googled – when people say “I googled X” the virus continues to spread.

    Jayson’s last blog post..Floor Plan Friday

  • Let Microsoft go to hell! I chuckled when I read that they were laying off 5000. They’ve held back the technology industry for so many years, spreading their mediocrity and milking consumers. Yahoo had a head start on search and everything. They had so many assets – I still have my yahoo email dating back from 1998 – so to find themselves in the situation they’re in is just pitiful. Google has quality products and they care about users. That’s formula for success. Microsoft cares about their wallets.

  • I think it is going to be difficult for anyone to catch Google in keyword based search. They are way out in front and continue to innovate. Competition is going to have to come from a completely new search paradigm – something that can connect and engage people and information in new ways, and can provide advertisers with higher quality audience targeting.

  • Hmmm, is this saga ever going to end? I still don’t see either Yahoo or Microsoft, or the two combined posing any kind of a serious threat to Google’s dominance.

  • @Buff
    Less and Less people are starting to use google, and more and more web masters are gtetting annoyed with how google continue to spam their results with ads.
    They best pull their act together before people get majorly pi$$ed

  • Whether Microsoft gets yahoo or not, it’s going to be a big battle to get Google off that first spot. From what I can see, Google’s hold on the first position is getting stronger by the day, 🙂

  • I think if Microsoft buys Yahoo it will be the first step to putting a dent into Google. Without the purchase it just won’t happen.

  • I think it will take a small band of rebels penetrating the shield generator on Endor prior to anyone taking on Google 😉

  • Jordan McCollum

    @Hershel—Agreed—and I assure you this battle station is fully operational!

  • @Hershal & Jordan – these are not the comments you are looking for. 😉

  • They are just waiting for the right moment when Yahoo falls further down.

    Diamonds’s last blog post..The Romantic History of Diamonds

  • My experience in life would say that when a business is the most dominant is when they become the most vulnerable.

    IBM gave Intel and Microsoft their start and both are larger than their benefactor now. Aol gave Google their start and they are way larger now.

    Who thought 20 years ago that GM would be bankrupt now?