The Seattle-Search.com Blog

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%.

Microsoft fired the shot heard round the Search world last Friday when it bid $44.6 billion for the search assets, index and eyeballs of Yahoo, Inc.

The outrageous price tag to acquire the search industry’s beleaguered #2 search engine has been both lambasted and lauded while inviting potential White Knight potentates into the search engine arena such as Apple and NewsCorp.

Given Yahoo’s stagnant PPC system (formerly known as Panama) and Microsoft’s sophisticated challenger (formidably known as adCenter), the purchase comes down to brand, traffic and audience CPM. Yet Microsoft’s history as a brand-builder beyond Windows (an Apple/Xerox clone) has been dubious (most recently the name recognition of MSN Search was shelved for Live Search! (and we won’t go into Sidewalk, Bob, or Zune!)).

Google’s Chief Legal Officer David Drummond weighed in promptly on the marriage proposal: “Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the internet that it did with the PC? While the Internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies - and then leverage its dominance into new, adjacent markets,” he wrote.

“This is a lot like the replay of the marriage of Compaq and Hewlett-Packard, where the idea seemed good but took years to play out,”  wrote DeanTakahashi in the SJ Mercury News.

And yet, who among us would deny that Google’s dominance in online Search has reached hegemonic proportions or that only the magnitude of a Yahoo-Microsoft alliance provides the necessary counter-balance to Google’s runaway expansion?

One thing is for sure. This deal is going to take a lot of time to come together, Merging the various teams, each fiercely protective of their patches,  will be a long, traumatic affair.

Hometown-based broadband service provider Clearwire is teaming up with Google to provide popular Google Apps communication to Clearwire customers. In the first half of the year, Clearwire customers will be migrated into Gmail and Google Calendar as well as access to Gtalk.Scott Richardson, Clearwire’s chief strategy officer said that the agreement would further the company’s commitment to deliver useful internet services to its customers. “Both companies are built on the foundation of providing a simple to use, rich and open internet experience and we believe the addition of these communications tools will be a tremendous benefit to Clearwire’s customers,” said Richardson.

Dave Girouard, VP and GM of Google Enterprise said that they are pleased to offer Google’s search and communication tools to Clearwire’s customers. “Our companies share a vision of giving consumers innovative choices that will the change the way they interact with each other,” said Girouard.

Is Classmates.com a casualty of the Facebook revolution? In what seems to be a death knell to what looked like the first pure-play social networking IPO in U.S., United Online (NSDQ: UNTD) has canceled the proposed IPO of its Classmates.com social networking unit. The company originally announced its plan to hive off the company in August, and in late November it said it expected to raise $177.7 million via the sale. But, citing the standard “market conditions,” the company now says that such a move wouldn’t be in the interest of stockholders. In other words, the interest wasn’t there. While there had been some excitement over a social networking pure-play IPO, Classmates.com, with its subscription-driven business model and earth-bound growth rates, couldn’t fully capture the buzz. United Online said it will take a $4.5-$5.5 million charge in Q4 associated with the aborted process. Release.

A recent report from Cowen & Co. analyst Jim Friedland spells out exactly why United Online couldn’t cash in with Classmates. One line sums up his thesis: “We expect the Classmates.com subscriber base to peak in the first half of 2008, followed by a steady decline to zero by 2012.” Much of the report hones in on the fact that Classmates is no Facebook. The biggest difference is that Facebook is free and offers far more robust features. Other factors weighing on Classmates.

According to analyst Joe Weisenthal, the following were the most critical deficiencies in sizing up a prospective Classmates IPO.

– Classmates has little value for young users, since there’s no need for them to re-connect; they’re already connected through other sites. Meanwhile, Facebook is making major inroads into Classmates’ adult demographic.
– User engagement is 95 percent lower than on Facebook, suggesting that users see little value in the service they’re paying for
– The company’s auto-renewal system has come under investigation at the FTC, potentially causing churn to spike.

Whrrl is a new service that allows mobile phone users to chronicle every social activity in their lives — writing reviews of movies or restaurants or uploading photos from concerts and sporting events. It then plots that information on a map and combines it with similar content from friends, creating a personal mobile city guide. It also provides the real-time locations of people as they wander from place to place in a city, tracking chosen friends as dots on a map.

Whrrl — not to be confused with a competing service called Whirrl — is the first offering from Pelago, a Seattle startup that scored $7.4 million from Kleiner Perkins Caufield & Byers, Amazon.com founder Jeff Bezos and Trilogy Equity Partners last year.

Led by Jeff Holden and Darren Erik Vengroff, both of whom previously held high-ranking positions at Amazon.com, Pelago is one of a number of companies trying to tap the emerging arena of location-based services. The idea is that mobile phone users will want to locate friends — who may be at a nearby restaurant — or at the very least get a review of the restaurant that a friend wrote a few weeks ago. The service is also accessible on a PC.

Google also is moving into the arena with the purchase of Jaiku, a company that allows mobile-phone users to create a running Web log of events, recommendations and other information. Jaiku describes its mobile product as “a live phone book that displays the activity streams, availability, and location of your Jaiku contacts right in your phone contact list.” Twitter, which also allows people to share small tidbits of information with friends, also is a potential threat.

Whrrl is not available to all mobile phone users. Only subscribers to AT&T, Sprint and T-Mobile — on about eight to 10 phone models — can download Whrrl. A portion of the service is free, though Pelago plans to charge less than $3 a month for the location-based service. Pelago, which plans to pursue more funding early next year, employs 34 people.

<http://www.whrrl.com/

Seattle social networking startup Blue Dot is scrapping its name and repositioning the service — now dubbed Faves.com.Users of the new site can create a personalized Web page populated with their favorite news topics. For example, a Seattle Mariners’ fan who also enjoys surfing and cooking could sign up to receive information about those specific topics from other users who have bookmarked related content. That puts Faves.com in direct competition with sites such as Topix.net, Digg and Stumble Upon. The concept also is similar to what Seattle’s SportsUltra is trying with its customized sports news service.

<http://faves.com/home>

Online Revenue News relates an interesting case study on why now is a great time to convert a popular, parked domain name into a retail business with an Amazon aStore.

The aStore model allows you to setup a site with any number of products or categories of products from Amazon;s inventory. There’s lots of room to add a creative touch with customization including colors, links, and sections that are displayed.

You can create an aStore in as little as 5-10 minutes. In this case, the stores are:

* GPSOnline.net - A GPS Superstore
* WCWineCellars.com - Wine Cellars & Wine Accessories
* MamasGiftBaskets.com - A Great Selection of Gift Baskets Online

It would be interesting if Amazon allowed the actual domain name instead of having to 301 redirect the name or implement them in a frame.

Speaking of Amazon, the world’s largest Web retailer launched Askville.com, an information-sharing Web site where users can ask questions and answer queries from others, today.

The site, open to all of its customers, has been in beta testing since December 2006 and has already been open to a few users, Amazon said. Similar services are offered by Yahoo Inc’s Answers and other Web sites such as AnswerBank. Google Inc also had an “Answers” section, which has been discontinued.