Is Yahoo a fit for Microsoft?

Sarah StottsberryConnie SkomraPhil Laube

Overview

Should Microsoft buy Yahoo? Why?

What is the future of computing? What about Yahoo? – what do they bring? MS has what they need already to meet

the future

Future of computing

Movement from “PC” to small devices – everything is a device

Less tapping – interface differently

Quantum leap – every aspect “Habitative computing”

Future of computing

What’s at the base?Information

People can’t use information if they can’t find it

Search is what brings the information to the

consumer

New World of searching

Devices searching without prompt (object level search)

Information will find the user Highly accurate / more relevant results

Search & advertising:Matches businesses to end users

Cost: free

Cost: $$

Matching customers to businesses: Priceless

Getting to the future

Search Services

Information consumer (End User)

Ad Services

Information Provider

(Business)

RELEVANCY

Can Yahoo get MS to the future?

What does Yahoo bring?

Web search #1 in users

500 million users 88 million home page

visits(source: Yahoo! Corporate Overview August 2007)

Ad Services

Does it add to MS?

MSN But

Not #1 in search Brand loyalty?

MS has that too

Yahoo search doesn’t add value

Page level search engine like MSNSearching text strings

Results (relevancy) is not any better

Yahoo has a lot of users, but it’s not the search market Google gets most

searches now With existing search

technology Yahoo (and MSN)

now have the same, but too late

A better search can win them all

Worldwide Search Market Share

010203040506070

Mar-06

Apr-06

May-06

Jun-06

Jul-06

Aug-06

Sep-06

Oct-06

Nov-06

Dec-06

Jan-07

Feb-07

Mar-07

%

Google Yahoo MSN

Panama Yahoo’s ad ranking engine

Determines what ads show up in an end user’s search

Spent a lot of time and development $$ Released 1Q 2007 Hasn’t been the home run that was anticipated

Revenue is not up substantially Did not exceed it’s target - Google

MSN’s AdCenter = Panama + demographic filtering

Other ad services

Yahoo does offer other ad services that MS was lacking Statistical toolsConsultingPublishing wizardsAmong others

Purchase of aQuantive in May, 2007 filled this gap

MS Business Model

Steve Ballmer, CEO Stated vision

“Help people reach their potential” Innovation – passion for technology

Reality – innovation in a way Take existing technology

Repackage it Enhance it Build it into a platform Make it all more accessible & relevant

Summary“I skate to where the puck is going to be, not

where it has been.” -Wayne Gretzky

Yahoo offers current technology at an expensive price ($32 B market cap.)

MS has and can develop what is needed for the future without spending the money for Yahoo!