Thursday, April 08, 2010

Ubuntu Switches to Google...again...

I see that Yahoo! is getting replaced by another party. First, my former colleagues at T-Mobile realized how much Yahoo! was losing them in content sales and not producing in search revenue, now I see Ubuntu is probably realizing the same thing...or...they are realizing that since the Yahoo! Bing deal has passed federal acceptance, they now realize that Microsoft, and not some non-evil empire will be giving results. Although, since the Bing folks are also my former colleagues, I can honestly state Bing and Microsoft are just related remotely. Sure, there are some old school has-beens in the Bing group, but once they hired in more talent from other search companies and bought a few others, the ideals in Bellevue (where the OSD group/Bing is located) is quite different than in Redmond. Sure, it is only 20 minutes away in traffic, but the leadership at Bing understands it isn't about brute force.

The money part, well that I can understand. Having gone head to head with Google on search with Mobile, I can honestly say that Google's pockets are way deeper than Microsoft...shocking isn't? I know what MSFT paid Dell and HP for their placement, I know what MSFT paid Verizon for that deal, however I am not going to publish the numbers for many reasons (I can spell NDA and LCA), I know that in both cases Google was offering more. What MSFT brought to desktop were most likely (I didn't do that deal myself, so guessing) concessions on other items. For mobile, we offered a flexible platform, that would continue to promote content, ringtones, games and internal feeds, where Google treats all data on its relevancy. Why does that matter?

In Mobile, it isn't yet about search ad revenue, there just are not enough clicks and users generally to get the CPS model to a high value. Users just don't have enough space on the screens to be bothered by enough ads to get people interested in clicking them. So content, albeit a slowly decreasing and since Apple/Android started their own markets, just make more money than what search can offer. Verizon makes more on content in one year that all the revenue that could be offered over many years from search. Rumors were that Yahoo! cost T-Mobile 25% of sales on content. This would put it in the magnitude of $100-200 million a year. I would estimate even on a good solid year that Yahoo! might have done $5-10 million in ads in that time frame, possibly up to $20 million if they did something amazing...they didn't. That is reserved for the iPhone.

So what is left? Since Yahoo! killed off a majority of their search group with the Microsoft partnership, I would imagine more groups will go to Google. Yahoo! owned mobile space, with at least 10x all the other partnerships combined. Where are those deals now? My bet would be towards Google as I know what Microsoft can handle and willing to step up for...Sorry Yahoo!Bing, seems that open source will be closed to you, not that it really matters, your 24% just doesn't grow there.

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