Wednesday, January 25, 2006
Yahoo! gives up quest for search dominance
Yahoo! Inc., one of the first Internet search companies, has capitulated to Google Inc. in the battle for market dominance.
"We don't think it's reasonable to assume we're going to gain a lot of share from Google," Chief Financial Officer Susan Decker said in an interview. "It's not our goal to be No. 1 in Internet search. We would be very happy to maintain our market share."
Yahoo!'s comments underline the difficulties any Internet company faces in trying to challenge Google's dominance of the Web search industry. Google has at least double the market share of Yahoo! and Microsoft Corp. in Internet search, the largest and most profitable segment of online advertising.
"In some countries, it's already game over in search, with Google the clear victor," said RBC Capital Markets analyst Jordan Rohan in New York. "Google's product development pipeline runs at such a fast rate that it's very difficult for any company, Microsoft or Yahoo! to catch up."
Shares of Yahoo! fell as much as 13 percent Wednesday, the day after the Sunnyvale, Calif.-based company reported fourth-quarter profit that missed analysts' expectations. The stock rose 43 cents to $34.17 Monday in Nasdaq stock market composite trading.
"It kind of makes you wonder about how serious they are about search," said Danny Sullivan, editor of London-based SearchEngineWatch.com, which tracks the search industry. "It really ought to be their goal" to be No. 1, he said. "Whether it's realistic or not."
Yahoo! founded in 1994 as one of the first online directories of Web sites, switched from Google's search engine to its own technology two years ago.
To boost revenue from each search, Yahoo! plans to make ads more relevant to search terms, meaning people will be more likely to click on them. Advertisers pay Yahoo! a fee when Internet users click on the ads.
"We have held our own, and we should gain revenue share in the industry as we roll out these new initiatives," Decker said in the interview after the company reported earnings last week.
"Our goal has been to hold our share and to be a leading, if not the leading, total marketing platform, which would include both brand and search."
Yahoo! handled 19 percent of global Internet searches in November, a drop from 27 percent a year earlier, according to Web tracker ComScore Networks Inc.
Google's share, by contrast, rose to 60 percent from 47 percent.
Decker last week cautioned analysts on a conference call against taking the ComScore figures too literally, saying the data exclude Asian countries where Yahoo! is "exceptionally strong."
source:http://seattlepi.nwsource.com/business/256748_yahoo24.html
