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Why MS-Yahoo deal matters

While the pros and cons of the Microsoft-Yahoo search alliance announced last week are flying all over the place, let me add my two pence by making out a strategic case to say that this deal in the battle to counter Google’s lead in Internet advertisement is a strong and serious one. Narayan Madhavan writes.

india Updated: Aug 03, 2009 00:14 IST
Narayan Madhavan

While the pros and cons of the Microsoft-Yahoo search alliance announced last week are flying all over the place, let me add my two pence by making out a strategic case to say that this deal in the battle to counter Google’s lead in Internet advertisement is a strong and serious one.

To start with,Yahoo’s search will be powered by Microsoft’s Bing, which has got off to a good start in terms of market share in the past two months. Yahoo has had a solid leadership in banner advertisements despite its difficulties in search and also in e-mail which has seen Google’s Gmail emerge strong. As I see it, the future is wide open, that is where Microsoft, with its past performance in starting late in an industry and then making things fly, needs to be watched.

Let us look back. Apple started the Mac, but it was Microsoft that gained big from the personal computer revolution with its ubiquitous DOS and Windows. Netscape and Mosaic were the ruling deities in Net browsing, but Micrsoft’s Explorer did steal their thunder. Corel’s WordPerfect was the darling of word processing, but MS jumped in with its Office Suite. There is something about Microsoft you cannot wish away. True, the Hotmail acquisition made its co-founder Sabeer Bhatia rich and Microsoft may have squandered its advantage. But by and large, Microsoft has a sound idea of business strategy and technological forecasting.

At Hindustan Times, we recently wrote about search engines like Topsy (which covers social media) and Wolfram Alpha (which specialises in numbers and credible databases). I think cash-rich Microsoft can acquire such emerging search firms to counter Google.

Just as Google is making its own Web-based OS to counter Microsoft’s platform, Microsoft has begun offering its Office Suite on the Web. Now, imagine combining Yahoo’s portal, Micrsoft’s Office software and Bing’s search and you begin to get the picture of a future in which Google cannot take things easy.