Category Archives: yahoo

aQuantive may be Microsoft’s biggest acquisition failure. Have there been good ones? A look back.

Today’s news that Microsoft  is writing off $6.2 billion from the useless acquisition of aQuantive in August 2007 gives me pause for thought.

How bad is this company at acquisitions? Particularly those under CEO Steve Ballmer’s watch. He became CEO in January 2000.


Microsoft acquired Danger in February 2008 for $500M. Small relative to the aQuantive acquisition, but how much further money did the company burn transforming Danger from an excellent cloud and mobile company to the group that came up with Kin, the phone withdrawn from the market after just two months on sale? Not to mention the downtime and threatened loss of data suffered by Danger’s online service under Microsoft’s stewardship.

Microsoft attempted to buy Yahoo for $44.6bn in 2008. Yahoo’s executives declined, a move that was (very) bad for Yahoo shareholders but quite possibly right in a business sense; it would not have been a good fit.

Microsoft acquired Groove Networks complete with Notes inventor Ray Ozzie in March 2005. I put this in the disaster category. Groove went nowhere at Microsoft. Ozzie became Chief Software Architect and talked of internet vision but did not deliver. The wretched SharePoint Workspace is apparently based on Groove.

What about the good ones? My view is that Microsoft paid too much for Skype at $8.5 billion but at least it acquired a large number of users and has some chance of enhancing its mobile offerings with Skype integration.

Microsoft acquired Bungie in 2000 and given the success of Halo (without which, maybe, the whole Xbox project might have faltered) we have to count that a success, even though Bungie was spun off back to independence in 2007.

Other notables include Great Plains in December 2000 (now morphed into Dynamics ERP); Connectix in February 2003 which got Microsoft started in virtualization; and Opalis in December 2009 whose software now plays a key role in Microsoft’s System Center 2012 private cloud software.

Winternals in July 2006 was a great acquisition. Microsoft acquired some indispensable Windows troubleshooting tools, and also Mark Russinovich and Bryce Cogwell, able people who I suspect contributed to the transformation of Windows Vista into Windows 7, and in the case of Russinovich, to the technology in Windows Azure which now seems reborn as an excellent cloud platform.

You can see all Microsoft’s completed acquisitions here.

(If the company would like to acquire for a few billion I am willing to talk.)

After Microsoft deal, what next for Yahoo’s developer platform?

In May I attended a Yahoo Hack Day in London and wrote it up for the Reg. Although I found the business story unconvincing, I was impressed by the technology – things like BOSS, SearchMonkey, and especially YQL (Yahoo Query Language), which lets you treat the entire Internet as a structured database.

One thing all these services have in common is that they are search-related. If the Microsoft-Yahoo deal goes ahead, responsibility for Yahoo’s search engine moves to Microsoft. My high-level understanding is that Bing becomes the search engine, with some Yahoo engineers possibly moving to Microsoft, and others being let go.

There are big implications for Yahoo and the developers which depend on its services. Here’s the official statement quoted by Ashim Chhabra on the BOSS team:

This is the beginning of a process and we’ll be working with Microsoft to determine what makes the best sense for both us and developers. Regardless, we are certainly committed to continuing to innovate on the user experience of search all across Yahoo! and on continuing to engage with the developer community on several fronts, opening up leading audience experiences and data to third-party innovation. In that context, SearchMonkey can add a lot of value to how we help people get the most out of search and out of Yahoo!. Over the next several months we’ll determine what makes sense with our developer offerings and provide information when available.

though Chhabra adds:

Honestly the team is still absorbing the implications and we just don’t know. We can tell you that BOSS will remain live for the time being. There are many aspects still to be considered. Over the next several days we’ll be working hard to get clarity and will update the community as soon as we can.

A reasonable guess is that the APIs will continue to work – it is not usually that hard to map one set of APIs onto another – but that the focus of the development effort will change, and the actual results will be different when based on the new engine.

Bing’s engine is not bad, as one developer observes:

Do not take me wrong, have been using the Bing API since 2.0 and find it very similar to BOSS for integration purposes and results are good, but I guess my point is that Yahoo! Search Technology is pretty much dead from my understanding and hence the "real" BOSS is dead too.

There is another problem though, which is that the Yahoo culture, which draws on open source (Yahoo runs largely on PHP), is different from that of Microsoft. Some developers who use Yahoo APIs will likely feel uncomfortable with moving to Microsoft’s Live platform – prompting comments like this one:

Don’t use Bing please please please please please

Such folk may well find Google more congenial. Google’s search engine is far from open source, but the company supports a large amount of open source code (not least its web browser, Chrome/Chromium) and has been more successful than Microsoft in engaging with the open source community.

Although I suspect Yahoo gets little direct revenue from its developers, they are a dangerous group to disrupt, because of the influence they wield. If the Yahoo platform loses momentum, it is likely to impact its other initiatives as well.


See also this announcement:

For SearchMonkey and BOSS, we currently do not have anything concrete to tell you. Clearly, we’ll need to work with Microsoft to determine what makes the most sense for you and for us. For more details, please see Ashim Chhabra’s post to developers on the Yahoo! Search BOSS group. We’ve also received questions about the future of Yahoo!’s other developer offerings, such as YUI, YQL , and Pipes. We wanted to let you know that today’s news does not affect these products.

Microsoft – Yahoo search deal: 2+2 makes 5, or 3?

Microsoft’s search deal with Yahoo makes more sense than the attempted full acquisition last year. The 10-year deal provides for Microsoft’s Bing to become the back-end search engine for Yahoo, while Yahoo becomes the exclusive sales force for premium search advertisers on both Bing and Yahoo.

Listening to today’s conference call, the rationale for the deal seems to be like this:

Maintaining a search engine is expensive. Yahoo has no appetite for it. So Yahoo saves some cash (in fact, makes some cash) while no longer having that cost burden.

On Microsoft’s side, it is convinced (probably rightly) that large scale is mandatory in order to compete with Google. As Ballmer put it:

the more searches you serve, the more you learn about what people search for and click on

When I was researching Bing, I was told that some of Bing’s features only work if there is sufficiently high usage. You cannot identify patterns of usage without a certain volume of data, which is easy to get for the most common searches, but not so much for those that are more specialist. The long tail applies – there are lots of niche searches.

The value of the data goes beyond search. Search and browsing patterns must enable some remarkable insights into human behaviour, which can inform product development.

A more humdrum fact is that advertisers like large audiences, and the combined search platform may appeal to some advertisers who would otherwise pass it by.

Microsoft is therefore relying on the combined value of the two companies’ search businesses being more than the sum of their individual values.

There is a risk though, which is that some users who like Yahoo’s current search engine may not like Bing so much. If they perceive Yahoo search as merely Microsoft search rebranded, they might jump ship, most likely to Google.

Still, you have to believe in your product. In theory, both companies could benefit from stronger search results and features.

It is important not to forget the context. Google is utterly dominant in search; this is two smaller players struggling to remain relevant in that market. I hope Yah-Bing succeeds because competition is good but the chances are that Google will sail on unperturbed.

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Bing’s disappearing search share gain in the US

Web stats site StatCounter caused some excitement last week when it announced that Bing had overtaken Yahoo in search market share, as tracked by its site analysis tools.

I took a look at the figures today, and they make depressing reading for Microsoft:

I’ve annotated the image to show Live Search share on 29 May, compared to Bing share now. They are nearly the same; within the normal daily variation. Yahoo is actually slightly ahead of where it was. Note that all Live Search hits automatically became Bing hits on the day of transition (1st June). As for Google, it is back a little above where it was before.

One odd thing about the StatCounter figures is that at the beginning of this period there was around 5% share for “other”, which has now almost disappeared. Gone to Google? Who knows; and I don’t particularly trust these figures.

There are two organizations with more reliable numbers, one of them Google, because of the number of sites signed up for its Web Analytics, and the other Microsoft, which can count actual hits, but these numbers are not published.

Well, Ballmer said it was a long haul. I’m actually impressed with Bing; the results seem decent, there are some good UI features, and the re-branding is sensible. If StatCounter accurately reflects the market though, the immediate affect of the launch is vanishingly small.

Update: Things look a little better today – Bing is up to 8.52% (note that the figure changes dynamically during each day). A long haul; I’ll be tracking the figures with interest.

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Is Zend really the PHP company?

I’m at Yahoo! Hack day in London – not hacking, but here for sessions on topics such as YUI (Yahoo! User Interface Library) and PHP.

I had a brief chat with Rasmus Lerdorf who is speaking later. I asked him about Zend, which presents itself as the PHP company (that is actually the slogan on its web site). Is it really?

Lerdorf says Zend has no special status. While acknowledging its contribution, he says there are 1300 PHP committers, and only 6 work for Zend. He emphasises that PHP is a community project and that decisions are made by consensus, influenced by who is actually willing to write the code, not by Zend or any company.

I also asked about PDT (PHP Development Tools), the Eclipse-based open source IDE. Lerdorf says there are lots of PHP IDEs, and people who use generic editors for PHP, and none has any more status than any other; he doesn’t use PDT.

From my perspective as press, there are only two organizations who ever encourage me to write about PHP. One is Zend; the other is Microsoft, keen to establish Windows as a credible PHP platform (Lerdorf says PHP on Windows has made enormous progress in the last couple of years). Zend does seem to do more than any other company to promote PHP for commercial and corporate development.

Lerdorf is not surprised. We’re developers, he says, we don’t do PR.

Zend’s effort is broadly beneficial to the PHP community – provided that it does not give a false impression of who owns PHP.

Now it’s YahGoog

Yahoo has signed up for Adsense:

By offering Google’s industry-leading technology to Yahoo!, the whole system becomes more efficient, and everyone benefits.

This is efficient in the same way that having everyone run Windows is efficient. Hmmm.

Google observes that the deal is non-exclusive; Yahoo can still sell its own ads, etc etc. I tend to agree with Om Malik, who says:

In my opinion, with this deal, Yahoo has publicly acknowledged that Google is superior to them when it comes to search & contextual advertising.

Yes. But how much does that matter? Outsourcing what you are less good at, in order to concentrate on core competencies, can be a smart business move.

The snag here: advertising is Yahoo’s primary business activity. Here are its revenue figures for the first quarter 2008:

  • Marketing services: $1,818 million
  • Fees: $245,milion

Outsourcing the core of your business is bad PR.

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Microsoft: forget the Live Search Cashback, just improve the engine

Microsoft is paying users to use its search engine with a new search cashback scheme. Looks like an affiliate scheme where the commission is paid back to the customer. US only.

I think Microsoft should focus on improving its search engine. This morning, I needed to call a local electrician and figured that search would be quicker than using a phone book. I entered the name of the retailer and the town. For some reason, this stymied Live Search: the result I was looking for was not on the first 10 pages. Identical search on Google: the first four results matched, and the address and telephone number were at the top of the page with a little map.

In a poll last year 51% thought Google delivered the best results for an example search, while 35% preferred Live Search and 31% Yahoo. That’s an inconclusive result, and this is not an exact science; but personally I find Google almost always delivers better results, sometimes (as in the case this morning) dramatically so.

If Microsoft managed to reverse this I would switch to Live Search in a heartbeat.

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Microsoft to Yahoo: Forget it, then

Microsoft is walking away. The right thing to do in my opinion.

Could Microsoft have bought Yahoo? Clearly, it could have done – for more money:

In our conversations this week, we conveyed our willingness to raise our offer to $33.00 per share, reflecting again our belief in this collective opportunity. This increase would have added approximately another $5 billion of value to your shareholders, compared to the current value of our initial offer. It also would have reflected a premium of over 70 percent compared to the price at which your stock closed on January 31. Yet it has proven insufficient, as your final position insisted on Microsoft paying yet another $5 billion or more, or at least another $4 per share above our $33.00 offer.

It follows that the withdrawal of the offer is a strategic decision, not just a victory for Yahoo, its insistence on a higher price, and its dalliance with Google.

I suspect many voices within Microsoft were saying that the deal would not deliver the benefits the company sought – namely, to pull closer to Google in the search market.

We are also seeing some interesting internal developments, from Silverlight to Popfly to Live Mesh – that suggest Microsoft does have an internet story, albeit still an uncertain one.

I wonder how this saga will look twelve months from now?

Steve Ballmer: post Yahoo, we will be a PHP shop

Steve Ballmer took a few questions yesterday at Mix08 in Las Vegas, and I asked him what Microsoft would do with all Yahoo’s PHP applications if its takeover bid succeeds, especially where they duplicate home-grown applications that are running on ASP.NET.  PHP is deeply embedded into Yahoo’s culture, and Rasmus Lerdorf, who invented PHP, works at Yahoo as Infrastructure Architect.

He gave me a fuller answer than I expected, which is worth quoting in its entirety:

There’s really two different questions. In a number of areas, and I won’t go into specifics, but we will have to make some kind of integration plans after presumably we reach deal and it will be appropriate to talk to the Yahoo guys. We shouldn’t have two of everything. It won’t make sense to have two search services, two advertising services, two mail services, and we’ll have to sort some of that through. Some of that technology undoubtedly will come from Microsoft’s side, and some will undoubtedly come from Yahoo’s side, whatever technology comes, it will also come with an infrastructure that runs it.

You ask what we will do with those PHP applications? I’m sure a bunch of them will be running, at high scale and in production for a long time to come.

I think there’s going to be a lot of innovation in the core infrastructure which we have on Windows today with ASP.NET, and Yahoo have in Linux and PHP today, and over time probably most of the big applications on the Internet will wind up being rebuilt and redone, whether those are ours, or Yahoo’s, or any of the other competitors. But for the foreseeable future we will be a PHP shop, I guess if we own Yahoo, as well as being an ASP.NET shop.

One of the things I love which we got into the new Windows Server, is that we put a lot of attention in to making sure that PHP applications run well on Windows Server. That’s not the current Yahoo environment and I’m not suggesting that we would transition that way, but for those of you who do have PHP skills, we are going to try and make Windows Server the best place to have PHP applications in the future.

It was a good answer, though I’d still expect integration to be difficult. One danger is that post-merger infighting over what gets preserved and what gets scrapped could stifle innovation. Microsoft’s Live platform actually looks increasingly interesting, as we’ve learned here at Mix, and I imagine that some of these teams will be nervous about what will happen to their efforts in Microsoft-Yahoo becomes a reality.