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Today (29th July 2009) Yahoo & Microsoft have combined forces to create an agreement that will take on the might of Google.

So what does this mean to you and I ?

Well at last Google may have some credible competition in the search space and this is no bad thing – Some of the best products and services are delivered when there is competition (remember the world with DOS and no Microsoft Windows before Apple produced their graphical interface!).

Web advertising revenue amounted to $6.1 Billion in Q4 2008 and this is set to grow exponentially as companies realise the power of the web and the ability to closely track any advertising carried out within this medium. When you compare this to traditional forms of advertising like newspaper or TV, there is an almost limitless supply of data and statistics that give the marketers an unprecedented level of control. This is a huge market and so far Microsoft has failed to make an impact (remember MSN & Microsoft Search). Yahoo were once great and to be honest do have a great product but they have been slowly trampeled upon by Google.

That said, Google got to where it is with a superior search engine and Bing is still way short of this… but things can change.

The other key dimension at play here is Google Apps. Where Google was once a Search Engine, they have recently introduced a full suite of applications with similar functionality to Word, Excel & Outlook. This puts them on a collision course with Microsoft and this deal is one way for Microsoft to gain some more fire-power in the wider market.

Whilst this news is hot off the press, it has still to be ratified so the reality is that the ink will not dry until 2010 but Microsoft, being Microsoft will be making changes now.

And to quote…

In simple terms, Microsoft will now power Yahoo! Search while Yahoo! will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers. For Web users and advertisers, this deal will accelerate the pace and breadth of innovation by combining both companies’ complementary strengths and search platforms into a market competitor with the scale to fuel sustained development in search and search advertising. Users will find what they care about faster and with more personal relevance. Microsoft’s competitive search platforms will lead to more value for advertisers, better results for web publishers, and increased innovation and efficiency across the Internet.

Under this agreement, Yahoo! will focus on its core business of providing consumers with great experiences with the world’s favourite online destinations and Web products.

“This agreement comes with boatloads of value for Yahoo!, our users, and the industry. And I believe it establishes the foundation for a new era of Internet innovation and development,” said Yahoo! CEO Carol Bartz. “Users will continue to experience search as a vital part of their Yahoo! experiences and will enjoy increased innovation thanks to the scale and resources this deal provides. Advertisers will also benefit from scale and enjoy greater ease of use and efficiencies working with a single platform and sales team for premium advertisers. Finally, this deal will help us increase our investments in priority areas in winning audience properties, display advertising capabilities, and mobile experiences.”

Microsoft CEO Steve Ballmer said the agreement will provide Microsoft’s search engine, Bing, the scale necessary to more effectively compete, attracting more users and advertisers, which in turn will lead to more relevant ads and search results.

The companies have established a website at www.choicevalueinnovation.com to provide consumers, advertisers and publishers with additional information about agreement.

Angus Kerr – Computer Support Edinburgh