24/7 Wall St.
09-17-2008, 12:10 PM
24/7 Wall St. Daily News
http://www.247wallst.com/images/2008/09/17/msft.jpg</img> (http://247wallstreet.typepad.com/.shared/image.html?/photos/uncategorized/2008/09/17/msft.jpg)Everyone who looks at the news knows that Microsoft (MSFT) has a search engine market share problem in the US. By most measures, it has about 10% of the pie. If it had been able to buy Yahoo! (YHOO), that number might have gone up to 30%.
Microsoft may not be able to dominate search in the US, but it could in some large markets overseas.
According to (http://www.ft.com/cms/s/0/99d3e98a-8406-11dd-bf00-000077b07658.html) the FT, "Google has made little headway against entrenched local search companies in a handful of countries around the world." The search giant has relied on moving its own technology and brand into all of these markets, which may be a mistake.
At this point Yandex gets 46% of search queries in Russia. Seznam controls 63% of Czech searches. By some measures, Baidu (BIDU) has as much as two-thirds of the search market in China. Yahoo! Japan has half of the market in that country.
Microsoft was willing to pay well in excess of $40 billion for Yahoo!.
Baidu, which is public, has a market valuation of $9 billion. Even if Microsoft was willing to pay twice that for a controlling interest, it would hold the poll position in the world's most populated market which also just passed the US for first place in total internet users. The prices that Microsoft would have to pay for Yandex and Seznam would probably be below Baidu's.
Local governments may have a problem with Microsoft owning their search companies, but that does not mean these could not be controlled to a large extent by local management. That is more a matter of contract than ownership.
Microsoft's interest in search may be branding, but their primary concern should be reach. If Microsoft can put its search results along side of those of its local partners and command the text advertising inventory across a large number of countries where it partners are the leaders, it would have a good flanking maneuver against Google.
What is clear is that search is a local and not a global phenomenon. If Microsoft wants a dominant position, it will have to attack the problem country by country.
Douglas A. McIntyre
http://feeds.feedburner.com/~f/typepad/RyNm?i=UQ4nL</img> (http://feeds.feedburner.com/~f/typepad/RyNm?a=UQ4nL) http://feeds.feedburner.com/~f/typepad/RyNm?i=xhtIL</img> (http://feeds.feedburner.com/~f/typepad/RyNm?a=xhtIL) http://feeds.feedburner.com/~f/typepad/RyNm?i=gy1sl</img> (http://feeds.feedburner.com/~f/typepad/RyNm?a=gy1sl)
complete story here... (http://www.247wallst.com/2008/09/microsoft-msf-2.html)
http://www.247wallst.com/images/2008/09/17/msft.jpg</img> (http://247wallstreet.typepad.com/.shared/image.html?/photos/uncategorized/2008/09/17/msft.jpg)Everyone who looks at the news knows that Microsoft (MSFT) has a search engine market share problem in the US. By most measures, it has about 10% of the pie. If it had been able to buy Yahoo! (YHOO), that number might have gone up to 30%.
Microsoft may not be able to dominate search in the US, but it could in some large markets overseas.
According to (http://www.ft.com/cms/s/0/99d3e98a-8406-11dd-bf00-000077b07658.html) the FT, "Google has made little headway against entrenched local search companies in a handful of countries around the world." The search giant has relied on moving its own technology and brand into all of these markets, which may be a mistake.
At this point Yandex gets 46% of search queries in Russia. Seznam controls 63% of Czech searches. By some measures, Baidu (BIDU) has as much as two-thirds of the search market in China. Yahoo! Japan has half of the market in that country.
Microsoft was willing to pay well in excess of $40 billion for Yahoo!.
Baidu, which is public, has a market valuation of $9 billion. Even if Microsoft was willing to pay twice that for a controlling interest, it would hold the poll position in the world's most populated market which also just passed the US for first place in total internet users. The prices that Microsoft would have to pay for Yandex and Seznam would probably be below Baidu's.
Local governments may have a problem with Microsoft owning their search companies, but that does not mean these could not be controlled to a large extent by local management. That is more a matter of contract than ownership.
Microsoft's interest in search may be branding, but their primary concern should be reach. If Microsoft can put its search results along side of those of its local partners and command the text advertising inventory across a large number of countries where it partners are the leaders, it would have a good flanking maneuver against Google.
What is clear is that search is a local and not a global phenomenon. If Microsoft wants a dominant position, it will have to attack the problem country by country.
Douglas A. McIntyre
http://feeds.feedburner.com/~f/typepad/RyNm?i=UQ4nL</img> (http://feeds.feedburner.com/~f/typepad/RyNm?a=UQ4nL) http://feeds.feedburner.com/~f/typepad/RyNm?i=xhtIL</img> (http://feeds.feedburner.com/~f/typepad/RyNm?a=xhtIL) http://feeds.feedburner.com/~f/typepad/RyNm?i=gy1sl</img> (http://feeds.feedburner.com/~f/typepad/RyNm?a=gy1sl)
complete story here... (http://www.247wallst.com/2008/09/microsoft-msf-2.html)