| 12:07 am on Dec 17, 2005 (gmt 0)|
Man, that is bad news! I would still be vary if I were Google, it is Microsoft they are competing against.
| 12:14 am on Dec 17, 2005 (gmt 0)|
"AOL would have been a huge opportunity and a natural fit to jump start that business for Microsoft," said independent analyst Richard Greenfield. "If Google has boxed Microsoft out, it begs the question: How is Microsoft going to flourish online?"
Brett, what do you mean by the plot thickening?
| 12:43 am on Dec 17, 2005 (gmt 0)|
I think Brett means that MSN must have a purpose somewhere. They cannot be ignored. Why did they bail on this deal?
| 12:45 am on Dec 17, 2005 (gmt 0)|
did you guys see this quote from the New York Times?
"Google, which prides itself on the purity of its search results, agreed to give favored placement to content from AOL throughout its site, something it has never done before."
Gulp. Am I reading this correctly? They're going to skew the serps TOWARDS AOL CONTENT to get this deal done?
| 12:52 am on Dec 17, 2005 (gmt 0)|
And, of course, are G and AOL / WB about to join forces?
| 1:06 am on Dec 17, 2005 (gmt 0)|
I don't get it Google is paying $1 Billion for a 5% stake in AOL. Does that mean AOL is worth $20 Billion. I have a hard time believing that. $1 Billion is a lot of money. Seems like way to much for what they get. It takes a while to make back $1 Billion. Isn't AOL going down the tubes. I'm sure MSN bailed on the deal becasue a lot of what Google is getting from AOL they already got. Remember MS is a huge company that dominates the world in other things. This whole search thing is just another toy for them. If MS just absorbed Google it would not even scratch the profits they make elsewhere.
[edited by: ogletree at 1:10 am (utc) on Dec. 17, 2005]
| 1:08 am on Dec 17, 2005 (gmt 0)|
Does AOL have content? I thought the site was one big advertisement!?!?
| 1:24 am on Dec 17, 2005 (gmt 0)|
They have some content, but it is exclusive to aol members in many cases. Internal message boards, etc.
| 1:52 am on Dec 17, 2005 (gmt 0)|
This was Microsoft's chance to gain actual share. They have 25+ bil. in the bank and Google came to the table with about 4 bil.
MS had a chance to knock Google to under 40% of search share while promoting their share to Yahoo range.
They have to accept now they will always be #3 at best. The search war was lost today and all SEM cheering the deal will someday lament that Google has them by the nuts.
All business serves the market better under competitive stress......what was MSFT thinking here?
| 2:18 am on Dec 17, 2005 (gmt 0)|
>>what was MSFT thinking here?
I'm guessing it's more that AOL is thinking. If I were doing the presentation for Google, I would be all over MS Search's 'issues'. AOL's forte is that they hold users' hands that need guidance. Skipping them along to the brink of the current MS Search is Lemming suicide.
| 2:28 am on Dec 17, 2005 (gmt 0)|
Maybe MS suckered G into thinking they HAD to make this deal. LOL
| 2:56 am on Dec 17, 2005 (gmt 0)|
This is unimportnat IMO and a giant waste of money. If GOOG paid $1 billion (25% of their cash or so, nothing to MSFT), they are mental. AOL is losing craploads of customers every second, pretty soon they'll be down to 0 customers. Good play on MSFT's part by bumping up the deal into high figured and then not taking.
| 3:03 am on Dec 17, 2005 (gmt 0)|
A glance at your AOL traffic should tell you MS wasn't bluffing.
| 3:07 am on Dec 17, 2005 (gmt 0)|
high speed technology and such.... all the SE's want to be first to give you the news via search and a whole lotta more.
that's what they are working on.
| 4:42 am on Dec 17, 2005 (gmt 0)|
don't think we are reading this correctly.
it's not about who "wanted" the deal.
it's about who "needed" the deal.
and google is ultimately still a "one trick pony" as far as revenue is concerned.
They NEED THIS DEAL.
Microsoft does not.
Don't forget...we have Vista launching later this year.
| 5:08 am on Dec 17, 2005 (gmt 0)|
The San Jose Mercury News is treating it as an essentially done deal, but not quite...
Link may require free registration
|Google to buy 5 percent of AOL for $1 billion |
SEARCH BEHEMOTH BEATS OUT MICROSOFT FOR DEAL
...As of this afternoon, the deal was not yet final. The source characterized it as a "handshake agreement over a term sheet," agreed to Thursday night in the offices of Time Warner, AOL's parent company.
But the source said both parties planned to hammer out the final details over the weekend in the hopes of making an announcement Tuesday. Time Warner's board of directors is scheduled to meet Tuesday to discuss the deal.
| 5:32 am on Dec 17, 2005 (gmt 0)|
|"Microsoft is probably unhappy and hurt," a source familiar with the long-running talks said - WashingtonPost |
MS should not have let this go. I wonder if they didn't offer cash this time for antitrust reasons.
| 5:39 am on Dec 17, 2005 (gmt 0)|
to the person who said that AOL has most of its content like messageboards, chats, etc internally.....not anymore...AOL has pushed all of that stuff to the public and now anyone can access it.
| 2:00 pm on Dec 17, 2005 (gmt 0)|
Apparently wants to keep AOL over the long haul. If so, partnering with Google is much more logical and less likely to be suicidal, given
1. MS's "winner takes all" philosophy and its history of crushing other market participants,
2. The fact that Google really isn't a portal, and the relatively small extent to which Google offers its own content. It simply doesn't compete with AOL to the same extent as Yahoo and MSN, and thus there is less risk that a deal with Google would backfire.
Bottom line: A deal with MS may have seemed more risky; AOL may have been worried that MS is focused on taking the market away from AOL, along with Google and Yahoo.
| 3:01 pm on Dec 17, 2005 (gmt 0)|
Interesting to me is that the discussion here is what MS or G should or should not do. What about AOL? What should AOL do? What are they now, an ISP or a portal?
With a partnership with AOL, G could be more like Y. But, then, Y keep evolving and I don't really know what that means.
AOL and G should work together well enough. They are both married to the idea that whatever the web becomes, they want to be the major players in that model. It's all about scale.
| 3:14 pm on Dec 17, 2005 (gmt 0)|
If MS invest the $1b that they didn't spend buying into cr*ppy AOL, into developing a *cool* new version of their existing search engine they can still bury Google.
MS are much much more experienced in business the G.
| 3:18 pm on Dec 17, 2005 (gmt 0)|
This must sound really dense, and I admit that.
What can AOL possibly have that Google needs?
(AOL and G are at opposite ends of the intellectual spectrum after all)
I shudder when fan-mail comes in from an AOL address.
A B-B-B-Billion dollars worth? I must have really missed something. -Larry
| 3:24 pm on Dec 17, 2005 (gmt 0)|
Google is about to buy a very expensive boat anchor, IMHO.
I think it will become a very heavy dead weight for them to carry around as AOL hemorrhages subscribers at an alarming rate.
What does Google see that we don't? That newbies click alot of ads? Hmmm.
Can we get an office pool going for how many chairs Ballmer will throw over this one? ;)
| 5:06 pm on Dec 17, 2005 (gmt 0)|
>>What does Google see that we don't?
What AOL can offer G is a sizable user base and more importantly user information. MSN and Y have this already and can capitalize on this. Say what you will about AOL going down the toilet in losing their base, they still have a formidable number and I doubt their new investors will just site ideally bye and let the company lose users.
Everyone's saying how MSN shouldn't have done this or that. AOL made this decision. G can offer AOL a lot more in ad revenue because of the existing technologies as compared to MSN's current technologies. Aside from a larger investment by MSN I don't know what else they could have done even if they were given the opportunity.
| 5:28 pm on Dec 17, 2005 (gmt 0)|
|MS are much much more experienced in business the G. |
Not the search business.
MSN's search results are horrible and their focus is fragmented from software to video games to search. Google has only one focus to catalog as much of the world's data in the most accurate and easy to use way possible.
A lot can be said for laser focus when going up against a bigger rival.
Google generates over 1 billion in revenue per quarter and according to their most recent financial statements have a cash value of $7.6 billion dollars. So even if they cut a check for a cool Billion it will be made up in less than a year.
We all think AOL stinks and it does but you can't ignore a user base of their size and when many of their subscribers do jump ship what search engine will they be familiar with and continue to use?
It won't be MSN.
Why not try to catch legions of "newbies" and techno phobes early and get them to trust and be loyal to the Google brand for the long haul?
If they can do this their market share will only grow while Microsoft's dips.
It's a battle for market share and long term supremacy. Maybe to Google that is worth a billion.
| 5:29 pm on Dec 17, 2005 (gmt 0)|
It's a good point, turn the question around
Let's say you had 1 billion dollars to spend in the search arena.
Would you spend it getting aol? Or would you spend it differently?
I wonder if Google didn't make this deal because they didn't want to have a big drop off in revenues which would take some of the bloom off that rose, or, in the words of bill, end the honeymoon phase.
| 5:47 pm on Dec 17, 2005 (gmt 0)|
Just a guess but...
I'm thinking this might have something to do with AIM. As the big I.M. providers start to move into VOIP, I.M. market share has suddenly become valuable.
Buying into 5% of the company that dominates the I.M. field, might just be worth 1 billion.
Google draws $480 million from placing ads in AOL. Under the current deal, that's 20% of the ad revenue.
Which means AOL is making $1.92 billion from those same ads.
Now add in revenue from their subscriber base.
Revenue from other ad streams. (Anyone here fired up AIM lately and seen the barrage of advertising that results?)
Revenue from "premium content" charges.
And on and on and on....
Plus the cloes ties to Time/Warner content. There's an absolute Gold Mine of content to be delivered from Time/Warners massive and deep inventory of copyrighted material.
$1 Billion for a 5% stake doesn't seem like that bad a deal.
Which is a shame. I wouldn't have minded seeing Google getting a bit of a bloody nose. I'm really sick of seeing a one search engine market.
| 5:55 pm on Dec 17, 2005 (gmt 0)|
I've heard from many SEO's, SEM's and search/affiliate arbitrageurs that AOL traffic converts way better than most due to AOL's demographic. Perhaps that's what Google was willing to pay for?
| 6:08 pm on Dec 17, 2005 (gmt 0)|
It seems a strange match but could possibly be related to free broadband internet access from G's dark fibre purchases over the last few years
all AOL subscribers get free broadband internet access on the move ,
also could AOL email be used to deliver adsense similar to GMAIL
Plus quick entry into IM with associated benefits
Plus as many have said the loss would have cost G's bottom line heavy and markets would have downgraded stock
Still I do not think it is a cost effective way to spend 1 billion dollars , and MSN were much cannier than many give them credit by forciing the price up this high for although G may feel they have won the battle is the cost so high that they could lose the War
| 6:52 pm on Dec 17, 2005 (gmt 0)|
G put the entire company on the line when they made the first deal with AOL that included a revenue guarantee. This time, AOL wanted another revenue guarantee so instead, G gave them the guarantee but got something back for it (5% of AOL). As some have on this thread have already posited, AOL and G will work alongside each other more closely under this deal (VOIP, IM interoperability to compete against MSN/Y, etc). I was raising my eyebrows when MSN made the IM deal with Y when they were trying to sew up AOL. Anyway, my opinion is that as a result of this deal, the negotiations between M and Y started yesterday. That is M's last chance in the space and after this loss, I expect them to pay through the nose for Y. Y probably goes out at $50 - 60 a share (75 - 90 bill) and then we have a two horse race and everyone is happy. Meanwhile, if I am G, I go after Apple to attack M on the Vista front while they are busy integrating Y. This is all '06 business.
| 7:10 pm on Dec 17, 2005 (gmt 0)|
What is 5% of AOL?
Someone bought air.
No one can say with certainty what percentage of Time Warner is AOL.
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