The Seattle-Search.com Blog

Microsoft decided to muck its high stakes poker hand and the wager that it could induce Yahoo’s board to accept a $33 a share takeover offer and abruptly “left the table” last Saturday.

Apparently spooked by the prospect of a widening ad share arrangement between Yahoo and Google, and the unfavorable possibility of other defensive maneuvers that would further diminish Yahoo’s  value, Microsoft CEO Steve Ballmer turned on his heels.  Only afterwords, did Yahoo CEO Jerry Yang, tail between his legs, try to explain he was open to the deal all along. Yeah, Right!

Defending his company against allegations that they didn’t try hard enough to deal with Yahoo, Bill Gates spoke out in Tokyo yesterday, “A lot of effort” was put into trying to work out a deal and that the pair should pursue “independent paths”.  Gates continued, “Now at this point Microsoft is focused on its independent strategy.”

To this observer, Microsoft made the right move. Not to devalue what Yahoo could have meant to a Microhoo alliance, but the prospect that 1+1 would equal something other than 1 in this equation was speculative at best.

Ironically, many in the Search advertising world credit Microsoft with the more sophisticated technology when comparing the sharply innovative adCenter system with the often klugey Yahoo upgrade of a year ago, code named Panama. Microsoft’s keyword research tools, demographic targeting options, and the potential of visual search with Photosynth are, for starters, all more impressive than Yahoo’s technology. What Microsoft was seeking with Yahoo was simply popularity: the brand recognition (something it would ironically replace), and Web traffic,which can be fleeting. The joke on the street was that, for the asking price, Microsoft could buy the allegiance of Yahoo’s installed base by paying each user a handsome bounty.

What would a combined Microsoft-Yahoo alliance do for Microsoft that Microsoft could not do for itself? That question was far from easy to answer. Only now it will be up to Microsoft to find the path on its own. The results could come as quite a surprise for the stakeholders. Stay tuned!

Microsoft is preparing to take its most ambitious step yet in transforming its personal computer business into one tied more closely to software running in remote data centers.

The software giant announced on Tuesday a data storage and Web software system, called Live Mesh, that is intended to blur the distinction between software running on the Windows operating system and an elaborate array of services that will be delivered to a growing collection of electronic gadgets.

Live Mesh is Microsoft’s late entry into the rapidly growing market known as Cloud Computing. The term refers to the movement of software applications and services from PCs to centralized data centers, where they are made available via the Internet.

Companies like Amazon.com, Google, Salesforce and dozens of others are building computing centers that will effectively outsource data processing and make it a commodity that companies purchase as they would electricity.

The introduction of Live Mesh is a significant strategic shift for Microsoft, whose operating system helped popularize personal computers.

Ray Ozzie, one of the Microsoft’s two chief technology officers, set the stage:  “The Web is the hub of our social mesh and our device mesh,” he wrote. That statement is the first of a set of three “guiding principles” that Mr. Ozzie outlined.

15 components of the new Live Mesh service have been debuted, including a notification feature, a news feature and an information window displayed by the service, but only two are user-oriented applications. One synchronizes files on multiple computers. The other, Live Mesh Remote Desktop, is a free software service that will permit users to control computers and other devices over the Internet.

A private beta preview and waiting list line is forming here: <https://www.mesh.com/Welcome/Welcome.aspx>

Travel search site Farecast was rumored to be a takeover target recently and  CEO Hugh Crean has confirmed that the site has indeed been acquired by Microsoft. TechCrunch, citing John Cook at the Seattle PI, says the deal was worth something in the $100-$115 million range.Microsoft has a long history in travel, having started Expedia in the mid-1990s (it was sold to IAC’s predecessor USANetworks in 1999). Farecast’s claim to differentiation was that it could predict whether air fares or hotel prices were going up or down to help travelers know when to buy. The site has been around for about two years.

The capabilities are already present on MSN travel and we’ll likely see it affect travel-related search results on Live Search.

Microsoft makes headline news this week for a new service designed to find and display news on the Web. Using Live Search News, you can eyeball the latest news stories, categorized as “Top Stories,” “World,” “U.S.,” “Local,” “Business,” “Politics,” “Entertainment,” “Sports,” “Sci/Tech,” and “Health.” The site has several exciting features, one of which is a Local News sidebar. Although you can access Local News by clicking on the category page, the sidebar lets you keep tabs on your state’s news at a glance.Another cool feature is the “Breaking News” bar at the top. You won’t see this all the time, but when a top story is released, you’ll spot an orange bar at the top linking to the article.

Another feature that sets Live Search News apart from Google News is its “Top News Videos” section. Not only are the videos provided relevant, but Microsoft has implemented the same preview technology that Live Search uses in its video search. If you roll over any of the video images, a preview of the clip will automatically start to play.

While Microsoft is not disclosing the specific number of sources included in Live Search News, it appears to be significantly less than Google News’ 4,500. Google News also touts more customization and alert options than Live Search News.

Social networking web portal MySpace is planning to double the size of its development office in downtown Seattle.
MySpace opened its Seattle office at 1008 Western Ave. last year and currently employs 60 people there. Now the company is aiming to double that staff to 120 over the next 12 months, according to MySpace Chief Technology Officer Aber Whitcomb.MySpace is the latest internet giant to set up shop in the Puget Sound area, and particularly in the downtown area.

Google Inc. has been building a presence in Kirkland and Seattle’s Fremont neighborhood, and Yahoo Inc. launched a development office in Bellevue last year (the Yahoo office was announced prior to Microsoft’s $44.6-billion bid to buy Yahoo).

Will Russell, formerly of Microsoft,and currently MySpace Seattle director of engineering reports talking to the UW computer science department about setting up an internship program.

MySpace continues to be the top social networking website with 109.3 million unique monthly visitors worldwide in January, according to internet traffic measurement firm comScore Media Metrix.

At last week’s Search Engine Strategies conference in New York City, Seattle-based Widemile Inc. announced the launch of a new Optimization platform that can reduce the time of testing landing page success to a fraction of other systems.”

Multivariate optimization makes each advertising dollar more accountable and work harder, making it highly appropriate for the current economic environment. The Widemaile system makes it possible to test multiplke factors and testing levels in a fraction of the time, and with a percentage of the transactional data of traditional systems. The methodology is referred to as Predictive Analytics.

Randy Barney, Director of Site Optimization for Avenue A | Razorfish had this to say: “We’re excited about Widemile’s approach and toolset, which is structured to scale with our business and client needs.” [24x7]

Microsoft threw open the doors to its worldwide research laboratories last week at its seventh annual TechFest event, an information technology expo during which the world’s largest software maker revealed  programs designed to make solitary Internet searches a thing of the past.

The event debuted Search Together, a new plug-in to Internet Explorer that will help students, medical researchers and other prolific Web users collaborate on projects, allowing them to jointly save different searches and avoid redundancy. Another new project, CoSearch, is being designed to let groups of people participate in a Web search on a single computer by using multiple mice or even mobile phones.

Microsoft has made it clear that it  would borrow at least part of the funds to make the gargantuan shareholder payoff to acquire Yahoo Search in what has been presented as a “half-stock, half-cash” deal. Analysts are already sharpening their pencils to calculate the kind of ROI that Google Analytics might report for the CPA (cost-per-acquisition) of the transaction.

In December of 2007, Google owned a 68.1% market share on daily search activity. Microsoft’s MSN and Live search owned 9.1% market share and Yahoo! 17% in the final month of the year. Ask market share and search volume has continued on a gradual decline.

During the last four quarters, Microsoft’s revenues for its online services (MSN, Windows Live, aQuantive, etc.) were $2.8 billion and it lost $949 million.  Combining Yahoo’s revenues with that business, you get a combined sum of $9.8 billion, but Microsoft would still show a net loss for that business of $289 million.

Ventures like Yahoo! Mail and Yahoo! Finance, are extremely successful and boast loyal followings. But Yahoo! Mail faces stiff competition from Gmail and Microsoft’s Hotmail, one of which will be compromised by a consolidation. Yahoo’s  financial site also faces challenges from News Corp.’s recent decision to free WSJ.com. Yahoo! Personals is one of the largest online dating sites, but user-driven platforms on Facebook, MySpace, and even Craigslist will gain market share in the matchmaking world over the next few years.

According to comScore, traffic spent surfing through Yahoo!’s site dropped 13% this past November, year over year. Microsoft’s MSN properties also saw a dip of 5%, but Google proved resilient, increasing 116%.