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Y!, Google, Ink, and the art of war
commentary, not news
littleman




msg:825053
 6:33 am on Dec 24, 2002 (gmt 0)

Jun 29 2000, Yahoo announced that it is switching from Inktomi to Google. The news was spun by Inktomi as no big deal and only 2% of all of their revenue source.

Without Yahoo, the company has 125 remaining search customers, including five of the top 10 portal sites: Microsoft (MSFT) Network, America Online (dossier), Lycos (LCOS), iWon and GoTo. Yahoo revenues made up about 2 percent of Inktomi's total search income.

Despite their spin, the bad news made Inktomi's stock fell from $143 to $114.

October 11, 2002 - Google and Yahoo Renew Their Vows
Inktomi is trading at $0.31.
In the last few months, Inktomi got out of their lease, laid off a bunch of people, and sold off the enterprise search section for $25 million.

This bumps the Inktomi stock up above $1 again, and probably keeps them from being delisted. IMO, that gave the small window of an opportunity to get bought out before the stock slides back down below $1.

"knock, knock, MS, please buy us out.." -ink
"but why should we buy you? we got you right where you can serve us best" -ms

"knock, knock, Yahoo, please buy us out.." -ink
"hmm, Google is starting to be a problem for us..." -y!
"we could use some leverage..." -y!
"pfi...trusted feed..." -y!
"all right, we'll give you a buck sixty" -y!

Y! played a major role in driving down the value of Inktomi (they devalued it by going with Google). So, today Y! bought Inktomi for $235 million, or less than 1% if what Inktomi was valued at in it's peak.

The Art of War...
Inktomi lost, the management was handed their *ss by Yahoo, they get to walk away with pennies on the dollar.

Now there is Y! and Google as the two major players without a captive (subscription based) market. Grab your bag of Microwave popcorn and place your bets.

 

Marcia




msg:825054
 6:53 am on Dec 24, 2002 (gmt 0)

>>two major players without a captive (subscription based) market.

Prodigy/SBC is now SBC/Yahoo - and it isn't minor, they've got some baby Bells and then some, and they're now investing in advertising. The captive audience will grow - maybe not to the point that MSN and AOL are at, but they could be a logical contender if quality is a criteria, since the SBC is a superior service by far. Google doesn't have a captive audience except for the ISPs they contract with, but Yahoo is trying to head there.

Last Spring there was an article online that Yahoo's two biggest sources of revenue were two inhouse properties - dating and another, if I remember correctly. Something to the effect was said then that Yahoo was looking to acquire more inhouse properties and avoid use of contracted services.

I can see your point, LM. If Yahoo had contrived in advance to deliberately drive Ink to its knees to the point of vulnerability so they could jump in and capitalize on it at the point of lowest weakness they couldn't have done a better job.

You think it was a deliberate gambit from the start, with this being the end in mind and they've now won?

vitaplease




msg:825055
 8:08 am on Dec 24, 2002 (gmt 0)

I like your art of war thinking Littleman,

at the time Google won Yahoo, I was more suprised by them being aloud to create such a monopoly [webmasterworld.com] and that therefore they would have to sooner or later mix results with a third party.

If third party results have to be included why not take someone who can provide the Pay for inclusion such as Inktomi. (it can still take two months to be included into Google).

I do not see a logic in going Google world wide, and dropping them the next day completely.

rafalk




msg:825056
 8:47 am on Dec 24, 2002 (gmt 0)

IMO, that gave the small window of an opportunity to get bought out before the stock slides back down below $1.

Google could have bought out Inktomi just the same if it was delisted from the exchange. Actually if Yahoo wanted to be really evil they could have tried to drive INK into Chapter 7 bankruptcy and then they could have bought INK's assets for penny on the dollar.

Brett_Tabke




msg:825057
 10:49 am on Dec 24, 2002 (gmt 0)

Ink dumping caching and enterprise search was probably a condition of the Yahoo sale. That's why I think this has been in process for a long time (most of the year).

I will remember this date: Dec 23, 2002 as independence day for Google.

Keep your friends close, your enemies closer.

So many questions at this point:

- Will Yahoo string along Google and go with some form of meta search via Ink and Google.
- Will Yahoo just grab Ink, gut it, and use it's tech to drive their own inhouse directory with Google still providing back fills?
- Will Yahoo just dump Google and go with a pure Ink setup?

Whichever of the above happens, it will pointout just how Yahoo really feels about Google. It's impossible to say at what they have decided to do because the intangibles.

Aside from the obvious service implications for Yahoo, there is all the back room stuff that goes on. Many of the same investors in Google have a interest in Yahoo and Yahoo reportedly owns up to 5% of Google. It's the definition of a Torn, Tired, Tattered, and a Twisted relationship.

Even if Yahoo has offered them some form of token to keep them on board, I hope Google cuts free of the mothers milk and grows up on it's own. Google has the people, the tech, the creativity, the mission statement, and now the will to dethrone Yahoo. They have made all the right moves up to this point - no reason to doubt them now.

If Google does go portal, they have a huge advantage at this point in time over what Yahoo had to do. All those services that Yahoo paid big bucks for, are now mature and a fraction the cost (news, weather, tv listings, etc). When you think about it, Google already is a portal:

- search, image, crawler and directory.
- discussion, the largest usenet archive on the net.
- shopping, from both the catalog searches and Froogle.
- news, although not complete, it's a nice gateway setup.
- xml feeds and services.
- killer advertising setup.

Then you get into the side lights like wireless search, the voice search toys, the api search - Yahoo doesn't have these things and Google is poised to "flip the big red portal switch" - it's almost all setup.

Go portal? They already are one.

4eyes




msg:825058
 11:27 am on Dec 24, 2002 (gmt 0)

LM

I like your 'art of war' scenario, but I suspect the truth is more complex.

If MSN has said 'yes, we'll buy' when asked (as they should have done IMO) then the whole plan went south.

I suspect the plan was more along the lines of 'keep as many doors open as possible and strike when an opportunity appears'.

This would have been one of many plans ready to swing into action
eg. If MSN had bought Ink then the Yahoo/Google deal would have taken a very different form

Presumably they 'struck' sometime during the last 6 months when the backroom deals were being done.

I like it when things change. Collectively, our unique selling point has to be based on reacting to change quicker than the others.

jeremy goodrich




msg:825059
 5:40 pm on Dec 24, 2002 (gmt 0)

Littleman - one of my favorite books, and I must read it again :)

The art of war, eh? Yahoo might have been in the works on this for a long, long time...

Especially given that INK has Y! dumped them, been the pioneer in monetizing regular serps...

As far as the potential of MSN to have considered an INK buy, it just would not have fit.

The platform of the stuff that INK runs on is counter to Bill Gates vision of the world - eg, it doesn't run on IIS and Windows.
However, WiseNut [wisenut.com] is the first SE of that scale to be run entirely on Windows software.

And - it was LookSmart that snatched them up, though they haven't done much with it -yet.

I see it too - the more I mull it over, Yahoo might have been thinking about this for a while - and as Brett mentioned, perhaps the only reason they went with Google in the first place was the venture capital / Stanford connections.

With a family member of my own from there (though in a completely unrelated field) it's easy for me to see how a unverisity might try as much as they could to foster connections, if they fit, between two of the biggest names in the internet.

Google the portal next, and Yahoo the full service consulting shop. We talked about Yahoo! offering consulting services before, if you poke around their help pages, etc. they have been priming for something like 'submit url to engines' for a while - but they didn't have that compelling reason.

Now, they have a pretty well lined up range of services for the new online merchant - only thing they need is a small group of people to sell it & maximize the revenue.

Winooski




msg:825060
 7:09 pm on Dec 30, 2002 (gmt 0)

If anyone needs evidence of Brett's statement that Google has the will to "dethrone" Yahoo, look at the introduction of Froogle.com. It's a shot across the bow at Yahoo! Shopping. A service which competes with Yahoo! Store itself --"Google Store"?-- can't be far behind.

Dante_Maure




msg:825061
 9:23 pm on Dec 30, 2002 (gmt 0)

"Google Store"?-- can't be far behind.

I disagree entirely. While no one can say for sure... if there's going to be a "Google Store" service it's likely to be way down the road.

Froogle is a natural extension of Google's core competency which is indexing and organizing the enormous amount of information available online.

Assuming that they are going to start a Google Store program because of Froogle's launch is similar to suggesting that they will be hiring their own editorial staff to compete with CNN.com since they launched Google News.

Sure it could happen... but I highly doubt it will anytime soon, if ever.

Brett_Tabke




msg:825062
 5:38 pm on Jun 27, 2003 (gmt 0)

This thread was referenced in a few other threads recently - worth another kick to the top of the active list.

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