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This document explores whether Microsoft should acquire Yahoo, examining the future of computing and the evolving landscape of search technology. It discusses the shift from traditional PCs to small devices and the need for innovative interfaces and search capabilities. While Yahoo boasts significant user numbers, its search technology is seen as lacking compared to competitors like Google. The analysis highlights that Microsoft may already possess the capabilities needed to succeed in the future without the need for Yahoo, considering both strategic alignments and financial implications.
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Is Yahoo a fit for Microsoft? Sarah Stottsberry Connie Skomra Phil Laube
Overview • Should Microsoft buy Yahoo? • Why? • What is the future of computing? • What about Yahoo? – what do they bring? • MS has what they need already to meet the future
Future of computing • Movement from “PC” to small devices – everything is a device • Less tapping – interface differently • Quantum leap – every aspect • “Habitative computing”
Future of computing • What’s at the base? • Information • People can’t use information if they can’t find it Search is what brings the information to the consumer
New World of searching • Devices searching without prompt (object level search) • Information will find the user • Highly accurate / more relevant results
Search & advertising:Matches businesses to end users Cost: free Cost: $$ Matching customers to businesses: Priceless
Getting to the future RELEVANCY
What does Yahoo bring? Web search #1 in users 500 million users 88 million home page visits(source: Yahoo! Corporate Overview August 2007) Ad Services Does it add to MS? MSN But Not #1 in search Brand loyalty? MS has that too Can Yahoo get MS to the future?
Yahoo search doesn’t add value • Page level search engine like MSN • Searching text strings • Results (relevancy) is not any better
Yahoo has a lot of users, but it’s not the search market • Google gets most searches now • With existing search technology • Yahoo (and MSN) now have the same, but too late • A better search can win them all
Panama • Yahoo’s ad ranking engine • Determines what ads show up in an end user’s search • Spent a lot of time and development $$ • Released 1Q 2007 • Hasn’t been the home run that was anticipated • Revenue is not up substantially • Did not exceed it’s target - Google • MSN’s AdCenter = Panama + demographic filtering
Other ad services • Yahoo does offer other ad services that MS was lacking • Statistical tools • Consulting • Publishing wizards • Among others • Purchase of aQuantive in May, 2007 filled this gap
MS Business Model • Steve Ballmer, CEO • Stated vision • “Help people reach their potential” • Innovation – passion for technology • Reality – innovation in a way • Take existing technology • Repackage it • Enhance it • Build it into a platform • Make it all more accessible & relevant
Summary “I skate to where the puck is going to be, not where it has been.” -Wayne Gretzky • Yahoo offers current technology at an expensive price ($32 B market cap.) • MS has and can develop what is needed for the future without spending the money for Yahoo!