Looking for Googhoo!

My friend Ashkan Karbasfrooshan recently wrote a fascinating article wondering whether Google should buy Yahoo!. In an email, he wondered about my position on this topic, so I thought I would take a whack at it, speaking as an ordinary investor. [On the other hand, if you're serious about investing, you should ditch my article and read Jeff Matthews' series of long articles about his pilgrimage to Omaha to observe the world's greatest investor - yes, he (Jeff) isn't making it up!]

The Upside

For what it's worth, I think there are good reasons why Google should consider this idea seriously:

1. Stock price: In my opinion, Google is overvalued and Yahoo! is undervalued at this point - making it the perfect time to buy market share (and traffic) at a low price.

 

 

2. Traffic: Yahoo! still outdoes Google in pure traffic. And the quality of the traffic is intrinsically different. The predominant portion of Google's traffic comes from its flagship search engine site. Is this traffic defensible? Since the cost of switching is trivial for individual users, there's no lock-in and little loyalty. Remember Alta Vista? How long before someone comes up with a better mousetrap [i.e. search algorithm]?

At the same time, Yahoo! has really broad, deep content, which makes it far more defensible IMHO. Content really is king!

 

 

3. Mind share: Google and Yahoo! are still neck-and-neck in terms of user mind share. Microsoft is a somewhat distant third, however the folks from Redmond are far from out of the race. A combined G/Y! company that offers powerful algorithms (Google search), rich applications (Google Apps) and wide-ranging quality content (Yahoo! web properties) would present Microsoft with a formidable competitor indeed!

 

 

The Downside

1. Culture: Looking from the outside, I imagine that the cultures of these two companies are quite different!
2. Anti-trust concerns: Will the DOJ cause hang-ups on issues of search monopoly?
3. Financials: Will the numbers work? I have no idea - I'm no corporate deal-maker. (Ashkan's post throws some light on this issue.)

A rant about Google's search

Is Google peaking in Search? A couple of search events this week made me consider this possibility.

First, Google's Marissa Mayer gave a wide-ranging talk about the Future of Search, highlighting eight initiatives that Google is focusing on to improve search. All of these search improvements seem to be incremental - honestly, which of these eight are truly revolutionary?

Second, I had the opportunity to attend the blogger/tech-media event at much-hyped search startup Powerset. By implementing natural-language processing techniques, Powerset has the potential to improve the relevance of search results radically by matching the semantics of the content in its index with that of the query. This is a great example of an approach that, if effective, will certainly offer more than incremental improvement!

It remains to be seen if a Google-killer will emerge soon in the world of search; if history is any guide, we should see long periods of incremental development, punctuated by sudden, unexpected, discontinuous changes.

Conclusion:

I for one, would welcome our new search overlords from Googhoo!

[Disclosure: I have no positions in either Yahoo! or Google.]

---

Comments

[Impotence causes]

Will there be a bigger problem than traffic?. Greetings to all readers. My name is Bradd, my opinion is that this problem is something that will always exist, although they do best streets, this is because the number of people becoming more and more. On several occasions, each person in the world has hit waiting behind a long line of cars. Thanks for letting me express myself.

[Cheap viagra]

All have very nice day! a very special greeting to the artist who created this article was great, I think some criticism on blogs are what give it that spicy that makes them interesting, which is why I bring my little criticism. Many thanks.

[Ugg Boots Deutschland]

they were a little skeptical, the practice methodology and schemes were a bit different than they were used to, but in the end the kids had a blast and the team did well.

[Carrie27Rosa]

This is great that people are able to get the mortgage loans moreover, it opens up new opportunities.

[Canada Goose Montebello CG55]

These articles written too great,they rich contents ma le scarpe non ti donano. meglio dei sandali con stringe più sottili e caviglia libera Perfect! they are help to me.I expect to see your new share.

[Thomas Page]

Thanks to a brilliant effort in publishing your article. One can be more informative as this. There are many things I can know only after reading your wonderful article.