Yahoo CEO Jerry Yang adds to his signature in his weblog posts the moniker "Chief Yahoo," a label that seems to be more of an epithet in the mouths of some shareholders and dealmakers disappointed by Yahoo's recent and apparently final rejection of a potential Microsoft takeover. With Yahoo stock plummeting on the first market day after the deal fell through the sore attitudes towards Jerry Yang's rejection of Microsoft's offer claims of needing some Prozac seem to be at least tied with the claimed "high fives" amongst some Yahoo executives when news of the deal failure came through. Even Yang himself on Yahoo's corporate weblog claimed that "No one is celebrating about the outcome of these past three months… and no one should." It was a tough battle with bad blood generated both inside and outside of Yahoo in the process.

But there's no doubt in my mind that Yang made the right decision for Yahoo shareholders as well as for the company itself. While there were some important synergies that would have come out of a Microsoft deal, in general it would have been an acquisition by a company driven by old concepts of intellectual property value of a company that is starting to move far more aggressively into new concepts for realizing the value of intellectual property. CNET News notes that Yang is betting heavily that its more open approach to content integration using its own APIs as well as emerging APIs such as OpenSocial will increase significantly the exposure of Yahoo content to audiences in increasingly valuable contexts. Combine that with a completed deal to use Google's ad networks and to integrate in AOL's user base and you have the makings of a company that will shine in building highly engaged audiences using content from many sources. Think of Yahoo as an enormous warehouse of content, commerce and community that can be rejiggered into countless social media applications. Sounds like the man has a plan to me.

In the meantime Microsoft is left licking its wounds from what was perhaps their last great opportunity to leverage their way into more secure online revenues in the face of stagnating income from its traditional product lines and modest growth from its online ventures. The Yahoo acquisition would have brought them some synergies but at the end of the day it was largely a cash flow fix and an attempt to buy an audience for Microsoft's online tools that may or may not have succeeded, given their history of coming in very strong and proprietary with such efforts. By the time they would have focused on Yahoo's existing efforts to open up their content and to focus on contextualization rather than IP ownership as the key to revenues it's not likely that they would have survived Microsoft's more traditional outlook on IP value generation.

In this parting of the ways Yang will face angry shareholders and some shell-shocked employees for some period of time and softened share prices as the new(er) Yahoo takes shape. It's unclear that he will survive this unsettled environment in his current position but hopefully his vision for a Yahoo more in tune with today's most valuable opportunities for content will continue to move on. In the meantime Microsoft needs to consider both new cash cows and new stars on its matrix of properties to help it make a transition to a future that is moving away steadily from proprietary software on proprietary platforms as the most certain long-term bet for steady and growing revenues.

Labels: Deals Partnerships and Sales, Microsoft, Yahoo

In war it's said sometimes that the enemy of my enemy is my friend. If business deals are a form of warfare then we're seeing some interesting friendships in Silicon Valley these days. The Wall Street Journal covers an emerging wrinkle in the battle for Yahoo as they march closer to a deal to replace their ad network with ads from Google's more powerful stock of advertisers. WSJ speculates that this will make it harder for regulators to approve other acquisition offers from Microsoft and News Corporation to take over Yahoo - or at least slow down a potential re-upping of a bid from them. That may be the case, but it seems as if step by step Yahoo is navigating to a peaceful conclusion to its current woes - and forming a more healthy revenue picture that could help it to define a more comfortable independent future.

With the USD billion -plus boost it's likely to receive from Google's ad networks for ads displayed on its search pages and other page inventory and a potential pickup of already Google-friendly AOL, we're beginning to see the outlines of a duopoly to counterbalance the strong push of Microsoft and News Corp to dominate online media. In broad terms, think of Google as the search, video, database/API and ad backbone for the commercial Web and Yahoo as the media licensing, aggregation and community backbone. Each of these specific domains will overlap, of course, but in broad terms there's a symbiosis between them that offers each a path to revenue growth and the industry as a whole two distinct partners with two distinct strength sets.

This is probably the way that it should have been a while ago. I don't think that there was ever really a strong rivalry in many ways between Yahoo and Google on the product level. Each has always had their specific strengths, and probably both would have benefited greatly for earlier cooperation of this kind. Google was never going to "do media" as well as Yahoo and Yahoo was never going to "do technology" with quite the intensity and neutrality as Google. But between the two of them they both do online content very well indeed. And between the two of them they will have oodles of page inventory for ads to help them weather tougher economic times with fewer concerns - hopefully a key factor that can appeal to Yahoo shareholders being faced with choices.

More to the point, perhaps, such a duopoly would restore some natural balance to the Web that would enable marketers and publishers to understand who to deal with more effectively. There have been too many players with designs to be a "new number one," too much time wasted on kingmaking and not enough time spent on product development. It still leaves Microsoft plenty of room to focus on new and better platforms for content with mobile operators, auto manufacturers and appliance makers and to try to lock up entertainment deals for those platforms. News Corp may prove to be a stepchild in this situation for the moment, but with MySpace still chugging along healthily I doubt that it will be out of the game in any long-term sense.

The key loser in this deal would seem to be not so much Microsoft as Microsoft's strategy of domination by selling intellectual property. Be it software or content, Microsoft's continuing focus on proprietary consumer goods and services is distinct in many ways from the more open and collaborative assembly of value found in many Web-oriented environments. This may work to Microsoft's advantage where they can provide new and powerful platforms for content, such as in their Sync line of automobile communications technologies, but with ownership of content being more at the mercy of companies that own contexts it tends to be a strategy that conflicts with successful online media. It's that conflict that seems to be at the heart of their failure to convince Yahoo that a marriage would be good. At its heart, after more than a decade of online development, Microsoft still doesn't "get" the Web in some fundamental ways - nor does it seem to want to.

I'd be very happy if this path towards collaborative independence for Yahoo works out the way that it's headed currently. None of the acquisition paths for Yahoo were looking very positive for either Yahoo or the industry as a whole, even if they would have been good portfolio matches for potential stockholders. Here's hoping that we can let this deal fracas die off so that we can get back to focusing on the growth of the Web's greatest strengths - great content and powerful contexts.

Labels: AOL, Deals Partnerships and Sales, Google, Microsoft, News Corp, Yahoo

TechCrunch notes along with others the possible bidding war brewing between Google and Microsoft to acquire social bookmarking service Digg, which sounds probable given the relentless march for each of these companies to build market share. I wonder whether the prices will really accelerate that much off of last year's earlier possible bids for Digg, though, given the soft ad economy and the stabilization of Digg's audience. Mind you I am sure that either Google or Microsoft would love to have 20 million monthly visitors but the real issue is how one of these majors can recover from the flattened prospects of a Facebook deal in a down economy.

With Facebook seeming more interested in improving their platform as of late than cashing in their chips perhaps to some degree both Google and Microsoft have been played off against one another by Facebook via their high asking price to keep either of them from getting stronger through another social media property acquisition. Certainly the stock buzz has been off of both of these properties since the Facebook deal went cold, so perhaps with quarterly earnings calls looming around the corner both Google and Microsoft are eager to have at least some social media story to tell.

Google's Orkut platform was always an also-ran in traffic and is suffering from declining traffic, in part perhaps due to losses to new local-market social media platforms in India and other regional markets, so it's about time for Google to pony up for a bona fide social media community. From the Microsoft side its ad deal with Digg would go away in all likelihood with a Google acquisition so a Microsoft deal would help to shore up momentum for its still-young ad network, but with only a tiny finger into social media via MSNBC.com's Newsvine property it has a lot of catching up to do as well

On balance, though, Google's needs would seem to make this deal a "must do" at this point to ensure that it can get some flesh-and-blood "wisdom of the crowds" that's been managed largely through their search algorithms to date. Search is still an important tool, but as the word "curate" begins to trip off more and more tongues this year Google needs to step up its ability to curate content with a human eye as well as through machine intelligence. While its audience doesnt' stretch down deeply into specialty topics Digg's ability to lend weight to what really interests people on the most popular topics for a younger audience that starts and ends their day with social media is an important factor for Google to address. Combine that with the potential to marry Google search algorithms with Digg's increasingly sophisticated curation of bookmarked articles a and there could be some very interesting news products in the offing.

The other factor that Google seems to need to address through such an acquisition is a cultural issue. Google's presence to the world is friendly oftentimes but not very conversational. A brand like Digg is by its very essence a conversational brand, one that creates most of its value through people interacting as a group. Google needs that more open approach to brand building in its DNA more deeply. It's good to at listening to geeks and getting a bit better at listening to real-world people, but folks in the Web 2.0 world like Kevin Rose who are just far more accessible can become effective bridges to that more open collaborative culture. Microsoft could certainly benefit in similar ways, but the cultural divide between most of the Web 2.0 world and the corporate culture of Microsoft would seem to be a pretty wide gap to fill in.

This could be just one more social media deal that goes sour after the earnings calls but somehow this one has a heft to it that may lead it to completion. The prices being bandied about are far less steep than Facebook's earlier numbers - USD 200 million or so - and as fine a job as Digg has done with refining its platform it's not clear that it can go much further as a standalone product. Social bookmarking is still an important social media capability, but the future probably belongs to those services which can blend generic platforms such as Digg with services that can use that technology to build enthusiast communities that may carry a publisher's brand or a product brand. We'll see where this goes but hopefully one of these players finally gets off the dime and starts embracing social media communities more fully in an open Web environment.

Labels: Deals Partnerships and Sales, Digg, Google, Microsoft, Social Media

What does it mean when a company announces disappointing earnings and has no strategic plan to move forward? It means that you've been shopping your company like crazy and you're waiting to see what comes out of it. It should come as no major surprise that Microsoft finally made an offer for Yahoo that it will in all likelihood not refuse - USD 44.6 billion to be exact, more than double Yahoo's closing shares value. With an expected 23 percent drop in earnings over Q406, Yahoo's ability to fund a better position in the marketplace in the face of a looming recession was dimming rapidly. Microsoft wisely waited to buy low.

Six months ago I poured cold water on such a merger, seeing News Corp as a far better partner in the long run. I still believe that a News Corp acquisition would have been a great exit for Yahoo in many ways, as the negatives in a Microsoft deal that I pointed out in that earlier post still stand. But at the end of the day this is a merger of necessity, not of opportunity. Neither Microsoft nor Yahoo can compete with Google effectively at this point, a factor that's only going to be exacerbated as Google's mobile strategy begins to unfold this year.

While one can crow about "the merger of content and technology" or some such meme and marvel at the combined online audiences that these two megaportal providers can offer advertisers through the powerful combination of Microsoft's ad-brokeraging system and Yahoo's own ad marketing services there's one key and overarching problem for both companies: they've been slow to bring hit products to the marketplace. Old media and old technology product cycles are not Web product cycles, and neither company has done well in figuring out how to build online hits as effectively as they know how to buy them. Google may not pop out perfectly conceived products and has product issues of its own, but they're constantly letting new things hit the fan to see what new markets they can open up while others spent time trying to build perfect products for old markets.

The big plus of the deal - there is now going to be only one dominant portal for established content brands and marketers looking to position their own brand advertising - is certainly important, but for an upcoming generation of Twitterers who see their own Facebook homepages or newsreaders as the portals that matter most to them it's not clear that this will be a great solution for either company as the new generation of content consumers gains pruchasing power. If you want corporate content and corporate advertising on corporate technology, one certainly knows where to go now. But in three to five years corporations eager to eliminate the "middle man" of media to manage their own market conversations directly may not see as much value in this union as they might today.

The potential feather in the cap for this deal could be the opening of mobile broadband. With a strong position already in mobile devices and now armed with tons of content and a great ad network Microsoft could stake out an early advantage in broadband mobile frequencies now being opened to all devices based on their existing momentum alone. The struggling Vista platform will continue to be refined for enterprise purposes but Microsoft's mobile Windows CE operating system may become instead the default Windows platform for Microsoft's media efforts as home entertainment shifts between mobile gizmos and HDTVs. This is likely to bring strong profits over the next few years and is a very viable strategy overall.

But in the meantime one wonders whether there will be enough focus to make this happen. Having just survived a failed marriage between Hollywood media culture and Silicon Valley culture Yahoo must now adopt to Redmond ways. Microsoft has been redefining its own culture and focus rapidly in postitive directions as the Ballmer period fades away, but the scale of this merger is going to require some major dust settling. All this as a looming recession slows down both enterprise and media markets cannot be helpful.

It's a "Brangelina" marriage that's bound to eat up media cycles, but at the end of the day the fame of these brands is not necessarily going to yield substance out of thin air. This will benefit Microsoft in the short run, to be sure, if it can get to the short run issues in time, but in the long run onie wonders whether two overripe old brands can make a fresh and effective new brand. Time will tell, but at least we can read about this openly now and watch it play out.

Labels: Deals Partnerships and Sales, Google, Microsoft, Yahoo

Sometimes two distressful situations can combine to create relief, rare though that might be. Such seems to be the lucky break that both Microsoft and FAST Search and Transfer caught in the recent acquisition of FAST by Microsoft. FAST needed fast relief from crippling cash flow problems generated in part from a sales strategy that reached beyond their ability to deliver on ambitious promises. Microsoft on the other hand had failed to create any significant sales momentum behind its own enterprise search efforts, with players such as Google beginning to breathe down their necks more warmly with each passing day. So a mere USD 1.2 billion in cash works quite nicely to bring together two impressive partners that promise to dominate enterprise platforms for some time to come.

FAST's rapid growth over the past few years into an increasingly dominant position in enterprise search markets is just the ticket that Microsoft needs to position itself in increasingly competitive enterprise platform markets. With ever more content being consumed in enterprises via non-Microsoft platforms, domination requires a more agnostic approach to assembling on-demand content than Microsoft has been able to manage recently. FAST offers both solid enterprise search technology and an installed base of global corporate clients that Microsoft can leverage very effectively with the combination of FAST search capabilities to gather content and Microsoft's Sharepoint servers to store and aggregate content.

This last point is especially important for Microsoft's future revenues. With its Vista operating system rendered a ho-hum at best by most enterprise users and panned widely in consumer markets Microsoft needs to shift the center of its profits to platforms sy uch as search engines that are more central to what drives internal publishing in today's enterprises. Each page of search results can become in effect a purpose-built portal: in effect, the database is now, the content that's required to solve immediate business problems. Search technology such as that offered by FAST holds out the promise of search engines becoming the focal point for Microsoft's enterprise publishing strategy, offering Microsoft more opportunity to have offerings that scale effectively to both global and mid-sized corporations. That $1.2 billlion make look like relative pocket change today, but in terms of the market share secured and the future market positioning that will be required to counter slowing sales on its aging operating systems it's a major investment in securing Microsoft's future cash flow.

Labels: Deals Partnerships and Sales, enterprise, FAST Search and Transfer, Microsoft, search

Google may not always be great at creating products, but they sure do know how to create markets. In introducing its new Android open-source mobile phone platform via the Open Handset Alliance, Google has opened the gates for any and all software developers to develop new applications that can take advantage of Android's capabilities - already impressive in demo form.

This could catapult Andriod into a competitive position with Microsoft and Apple in relatively short time frame for mobile platforms if ambitious developers take up Google's challenge - and Google is making it easier for them to consider that challenge with USD 10 million in prize money for them to consider. The question is, though, will mobile carriers intent on maintaining proprietary control over their platforms to control services be willing to take on such an open platform?

According to Engadget the likely candidate for early adoption of Android for mobile devices in the U.S. is Sprint, which is the American telecoms carrier most aggressive in building out high-bandwidth, long-distance WiMax mobile Intenet infrastructure that could bring the mobile Web to the masses. Engadget speculates that perhaps Google would acquire Sprint to help accelerate WiMax growth, services fueled by Google mobile advertising revenues that might make mobile more affordable or, perhaps, free. Nice thinking, but with so many different communications technologies in play, including the impending action of soon-to-be-former analog television frequencies in the U.S. it's far more likely that Google will be looking towards an alliance with Sprint that would still leave the door open for Android via other carriers.

In the meantime Sprint has much to gain in working aggressively with Google. Slow to the mobile services dance as it grew incompatible network scale via its Nextel acquisition, Sprint needs an edge to catch up with rivals well entrenched with iPhones, Blackberries and other intelligent handsets. In doing so Sprint may be able to catch the next wave of mobile communications focused on both full-screen Web services and advanced messaging capabilities that can leverage WiMax efficiently while other technologies fall into place for even more mobile Web access.

The Zune-sized touch-screen demo unit with a Blackberry-like keyboard that Google's Sergey Brin used to show off Android certainly underscores that Android has the potential to develop features that can run with the current mobile big dogs very quickly - and begin to create a price war between Android-equipped units and currently pricey iPhones and Blackberries that might be just the trick to unlock the chicken-egg equation that seems to have slowed the growth of mobile Web services.

This is a long way of saying that we should expect Android to open up highly affordable Web access via mobile units far more quickly than other platforms are likely to do via telecommunication partners seeking to maintain status quo services pricing. While high-end content services will certainly find a home on Android it's the prospect of reaching people for whom a mobile phone is a necessity and high-speed Internet access via a PC a luxury that content producers and advertisers should consider most important in this rollout of content technologies.

The Web is about to get that much more powerful and affordable via Android-enabled devices and networks - and that much more important to marketers seeking audiences with limited attention spans. Pop in Google's OpenSocial initiative for social media services on top of an Android-enabled device and you have a thoroughly compelling platform for content development that other platform providers are going to be hard-pressed to match soon. Google's definitely in catch-up mode in mobile services but it looks like through Android they might be catching a big break at last.

Labels: Android, broadband wireless, Google, Microsoft, mobile, Sprint, WiMax

Let's face it, for an enormous company Microsoft is not lining up many hits today. Its Vista operating system has had tepid reception at best, the EU has brought it to its knees on monopolistic practices, its Zune portable is praying for a second life this holiday season and the Xbox's shaky quality record makes a win for the new Halo 3 game a must to be kept in contention with competitive platforms. Ouch. But with oodles of cash and a well-focused online advertising strategy Microsoft is gearing up to exploit the gaps in Google's game plan that will give it a leg up in online content markets.

One of Google's key gaps to date has been social networking. While its Orkut platform has been successful in Brazil and certain other countries and rumblings of a greater social networking plan for Google grow larger, it's Facebook that's attracting both college-age folks and seasoned professionals who are willing to hang their hats up online on Facebook's increasingly robust social media platform. As noted by The New York Times and others, then, Microsoft's USD 240 million investment for a mere 1.6 percent of Facebook ownership is a significant win for Facebook and an opportunity for Microsoft to regain some sorely needed lost ground. The transaction scales Facebook's ultimate market value to a breathtaking but highly speculative USD 15 billion, making Rupert Murdoch's USD 583 million investment in MySpace seem like a bargain basement transaction in retrospect.

The New York Times article notes that the initial investment will secure Microsoft a platform for its ad network's growth, which is certainly a key component of making sure that it can leverage the highly valuable contexts available in social media. With the high level of personal endorsement and interaction available in Facebook Microsoft advertisers will be very pleased to find an alternative to search engine results and typical media outlets through which to build relationships with their markets. But the real underlying move by Microsoft is to have a dibs on Facebook's evolving social media-oriented computer operating system environment, a must-have for Microsoft in light of Google's evolving plans to have a Web-oriented OS of its own that will help drive its social media plans.

With more people than ever using the Web as their primary repository for both personal content and their own publishing endeavors Microsoft is at a dangerous juncture in its evolution, perhaps even more dangerous than when Netscape's browser began to threaten the supremacy of Microsoft's PC platform as a staging ground for content applications. Facebook has demonstrated with its rapidly growing array of embeddable applications that whole classes of content infrastructre that are at the heart of Microsoft's long-term cash flow may be rendered moot by social media environments such as Facebook's that enable people to build and share highly personalized portals with no or limited technical expertise. Applications such as its Business 3.0 module enable B2B communication that may provide a new way for businesses to develop 1-to-1 relationships via Facebook in ways that will make today's B2B advertising and supply chain management seem very ill targeted over time. All in all, Microsoft needs to get a revenue stream from social media badly - far moreso than either Google or Yahoo.

Will Facebook wind up being the dominant social media platform for both personal and business personal publishing? Once people set up shop in a social media environment there's a certain entropy that sets in which is likely to discourage any radical shifts: you want to keep your "peeps" around you as much as possible, and Facebook offers an increasingly compelling environment to enable open publishing and content integration. Most importantly unlike some other social media environments Facebook is designed for people's true identity as opposed to any number of avatars or pseudonyms that they may use in other social media environments. The emphaisis in Facebook is on knowing who you know, not gaming them for PR or other ulterior motives. This makes environments such as Facebook and LinkedIn that enable people to present their real selves the hottest marketing environments available in social media. By contrast, what's the value of selling to someone wearing green wings and fishnet stockings in Second Life? Good for a quick buck, but not relationship selling by any degree.

Realistically Facebook is by far the greater winner in this deal, having established an awesome figure for its market value and strong leverage for any other subsequent deals to help it gain market momentum. It's perhaps not as one-sided as the deal that Bill Gates cut with IBM to get rights to sell Mircosoft's PC operating systems on other platforms, but it's about equally clear who's behind the curve and who is able to help them get back in the game. And like that earlier deal this may be a sign that Microsoft is waning in its ability to influence electronic publishing effectively. But with an advertising strategy that is well-adapted to playing on multiple platforms to service multiple ad networks the Facebook deal is as good a shot a any that Microsoft is likely to have to use social media as a leverage point for future revenues. Don't expect miracles from either partner as a result of this alliance, but to expect their competitors to sweat it a little harder to get a foot in the door of compelling online communities.

Labels: Deals Partnerships and Sales, facebook, media, Microsoft, Social Media, Technology

With much ballyhoo Microsoft unveiled its new HealthVault beta portal recently, a big push by the Microsoft to get a leg up on Google's position as a source for health information. The HealthVault portal itself could hardly be called a portal: it's a landing page that invites you to use a special version of Microsoft's Live Search, set up a portfolio of private health information that can be shared with trusted sources and a link to software that can enable one to download information from health monitoring devices into your HealthVault data. Once you've selected any of these options there's no navigating back to the main portal page. So what you get right now is more of a showcase for potential partners than an online presence that's going to attract an audience.

The Live Search tuned up for HealthVault has a number of useful features, many of which have been used for a long time already in Google's health-oriented searches and in Amazon's A9 search portal. The latter similarities are no coincidence, given Amazon's decision a while back to dump Google as a search partner in favor of Microsoft and the highlighting of Amazon's content in the HealthVault portal. Search results are pretty good in HealthVault, with some being downright rich in content and others being merely comparable to Google search results. Put in a broad terms such as "Autism" and HealthVault Live Search returns a column labeled "Articles" with Wikipedia content - kind of a mini-Answers.com - a column of Web search results and a column of sponsored content from Amazon with contextual ads beneath it. Atop this is a category-based navigation similar to Google's Co-Op feature.

Something a bit more off the beaten track like "pancreatic cancer ductal tumors"
ditches the Wikipedia articles and draws in more scholarly content in search results than one would find in Google, which tends to segregate scholarly resources off in its Google Scholar search. That may or may not be a good thing depending on who is using this feature, but if you're trying to dig deeper into a health issue you definitely have some contrasts between Google and Microsoft to consider. There are also some interesting differences when you try a term that may not be thought of immediately as a health resource, such as "cinnamon," which is now being used as a resource for blood sugar and cholesterol management. In Google there is no health-oriented Co-Op category information available for this search whereas HealthVault provides a very useful taxonomy. However, again HealthVault comes out a little heavy on the hardcore health information and a little light on more consumer-accessible informaiton.

If you see an article that interests you in search results you can bookmark it into your HealthVault secure account information via the "Add to Scrapbook" feature, but in doing so you'll have to pass through a login screen and some other screens that were just plain frightening - I had no idea what would happen if I said "yes" to the questions asked, but went along anyway - just to get a bookmark into my HealthVault account. I'll allow that this is a Beta product and that such oddities are likely to be worked out in time, but it's one of those typical instances of Microsoft features that sound great on paper and wind up never working the way that you hoped that they would.

The HealthVault Account feature allows a member to use their HealthVault information in association with a number of health screening services and online medical records services, presumably to make it easier for people to give you proper medical care and advice. This is obviously the big corporate hook for HealthVault, with doubtless the hope that major HealthCare providers would default to HealthVault as a common provider of this type of service and enable them in time to deliver streamlined services and benefits based on HealthVault as a common interface. That may very well be, but right out of the box don't expect too many consumers to be jumping head over heels for this service. The non-friendly home page for HealthVault says in essence to the consumer "Hi, we're Microsoft, give us all of your health history details and we'll make it easy for corporations to look at them." Thanks, but I think that we've been there already with Microsoft Wallet, an earlier stab by Microsoft to become the universal online payment service for ecommerce. You'd think that they'd learn from that experience that it helps to look at things from the consumer's perspective first.

One of the more promising features of the beta HealthVault is the HealthVault Connection Center, which highlights software that makes it easy for people using health monitoring equipment to collect data from these devices in HealthVault and to make it available to physicians who can scan that information as needed. This plays into Microsoft's strengths as a provider of gizmo interfaces and offers some potential long-term benefits for wellness monitoring services. But even here it's early days for the beta product: the HealthVault Connection Center at this point is just a set of links to Microsoft's device driver and software download pages on the main Microsoft Site. There's no integration to speak of.

Microsoft has carved out an ambitious vision for HealthVault, tying in personal, Web and device-driven content into a framework that may make it easier for health care professionals to provide services to patients and wellness enthusiasts. In the still-sketchy outlines of this product you can see how Microsoft sees a huge opportunity to become a master repository for health information that could make it a power player in the health care industry as a result. With the far more competitive and commoditized media marketplace looking less and less like a winner for Microsoft this leveraging of its strengths in both the consumer marketplace and the corporate marketplace may be a great way for Microsoft to firm up its established but threatened footholds in both markets.

But clearly this ambitious vision has a long way to go. The Live Seach results are very well designed and promising, but they are not so clearly superior to Google's existing health care offerings that it is likely to create an immediate stampede to Live's view of health information. The corporate feel of the site and the utter lack of deftness in making people feel that there's something in it for them to provide highly sensitive personal information puts a damper on the potentially strong value-add features that could be built off of it. The device integration is a nice concept, but there's a long way to go before we see dashboards built off of this information that will be useful to both consumers and health professionals. There was enough goodness in all of this to get at least one news cycle of positive spin, but there's a long road ahead to make this a viable hit for Microsoft.

Still, it's more than its major competitors have done lately to offer a vision of how personal, Web, scholarly and device-driven medical content can come together to improve health care for both consumers and professionals. Microsoft would claim that the've stolen the march from Google with this initiative, and from a vision standpoint they may have a reason to crow a bit. But from an execution standpoint it's a clumsy enough start with typical Microsoft over-hyping of fairly modest features and partner relationships that potential heavyweight content partners are not going to get bowled over immediately as they have been in days past. This may buy Google and others time to come up with their own approaches that may have a more consumer-friendly appeal that will be essential for the long-term success of any such initiative. In the meantime HealthVault's visionary offering gives both content producers and medical professionals a lot to think about in how they plan to make better use of the Web to improve their services to consumers.

Labels: collaboration, consumers, enterprise, HealthVault, Microsoft, STM

I have enjoyed using the Compete.com traffic analysis service, which provides some useful data to compare Web site traffic performance more accurately and finely than the oft-bashed Alexa statistics. While Compete offers a more limited range of sites for analysis and only a year's worth of data to mull through it's able to track real visitors, audience engagement and growth with more meaningful data. On the Compete blog recently was a post that looked at how major search engines are performing in comparison to one another for both traffic and performance. While Google leads Yahoo and Microsoft with 67 percent of market share, the Compete stats claim that Yahoo comes out on top in terms of search fulfillment - the percentage of searches that actually result in someone clicking on a link in a search results page. Compete claims that Yahoo's search fulfillment rate is 75 percent, compared with Google's 64 percent and Microsoft's 61 percent.

Does this mean that Yahoo's search results are more "clickable" than Yahoo's? Maybe so, but it's a rather ambiguous claim to make. One has to assume that with only 20 percent of people using Yahoo for searching to start with that a minority find its search results to be more useful than Google's. So for that minority they seem to use them more effectively. Overall, Yahoo searches are more optimized for people in a purchasing mode than Google search results, which tend to be optimized more for people seeing general information. With this in mind it could be that Yahoo tends to lead shoppers somewhat more specifically to product information that they're seeking - a factor that's likely to attract the brand advertisers that are at the core of Yahoo's marketing strategy.

Yahoo search benefits from doing fewer things better for fewer people, but Compete also shows that Yahoo as a whole performs far better than Google in the total attention that it gets from audiences:



While Yahoo's strong destination content helps to bolster its attention ratings it's losing ground to Microsoft in total page views as Microsoft bolsters its Live.com search engine:



In the middle of this is Google, still the overall search leader but beginning to stagnate as a destination as other search-oriented sites bolster content that transforms search portals more into destination content sites. Google has these abilities also but focuses more on solving a broader array of requirements for a broader search audience. Google also has more partners using its search technology as well as mashups and other API-based services so to some degree the Compete statistics are not revealing the full strength of Google's market presence. Google's growth as a destination search engine may have slowed, but its presence as a technology platform that influences where and how people find content in valuable contexts is growing in highly profitable directions.

All of this should serve to remind us that there is no longer one clear answer to how to create marketable value through search. You can focus on becoming more portal-like, you can focus on being more embeddable, you can focus more on a specific function such as ecommerce or you can focus on a range of functions - but regardless of the focus it's no longer a matter of just having great ranking algorithms or great server farms. Search has become just one of many tools for contextualizing Web content effectively on demand, one that will continue to grow in importance but just one tool in an arsenal of methods to be used for more effective audience engagement.

Labels: Compete.com, Google, Microsoft, search, Yahoo

CNET News reports in the past tense on the net neutrality movement, the effort by a coalition of online publishers and technology companies to keep U.S. telecommunications companies from charging different rates for Internet access based on arrangements with content partners. CNET notes that in the wake of last year's successes in stalling changes to current policies and new focus on carving up the 700 MHz radio spectrum for wireless broadband access the movement has become fragmented. The original "It's Our Net" group has reformed as the Open Internet Coalition, trimmed down from 148 to 74 members, with major technology and portal players such as Microsoft and Yahoo out of the picture. Notably Apple was never a part of this coalition, a fact underscored by its interests in acting as a "toll gate" of its own sort as it uses its iPod and iPhone proprietary platforms to pressure media companies into price cuts for premium content.

All of this could be relatively moot except that while legislators and companies may be focused on other things the communications companies who have so much at stake have certainly not forgotten their original goals in opposing net neutrality. In a parting gift to communications companies outgoing U.S. Attorney General Alberto Gonzales filed an ex parte filing (PDF) with the U.S. Federal Communications Commission suggesting that net neutrality regulations were not necessary to ensure open competition. The absence of Yahoo and Microsoft from the coalition and their advancing plans to develop premium content services may also imply that they see themselves becoming more like Apple and being able to dictate content pricing and licensing terms to a broader array of content providers through alliances with communications companies.

In the bigger picture, then, the fight for neutral access to publications over public infrastructure
is far from over and in fact widening with the 700 MHz spectrum also in play. In all of this traditional publishers have been largely in the background, with no apparent major role in the lobbying efforts. This seems to be wishful thinking at best, akin to the efforts of publishers to ignore the Web in its early days, but now only worse since such a large percentage of their growth depends on it. The New York Times reported dwindling revenues from their ever-smaller print editions yet a 28 percent increase in online revenues, to cite one example of robust online revenue growth. If there were a chance that newsprint or mailing costs would go up publishers would be all over it: why do they ignore potential regulations that may have a huge impact on the profit margins of their most promising new source of revenues?

In the meantime the opting out of Microsoft and Yahoo from the net neutrality movement and the non-participation of Apple points towards what many publishers hope: that a handful of major portals can help along with communications providers to re-create the cable television model and create a brand advertising Nirvana where consumers behave as they ought to and pay for premium access. Yet with user-generated content and search engines providing more context for content than ever before it's not clear why consumers will be persuaded easily to opt for being charged premium prices for access to specific sources when flat-rate access has been such a successful way for them to determine for themselves what's worthwhile content.

In largely ignoring the net neutrality debate publishers' hopes for controlled access are more likely to fall prey to communications companies and portals who will take higher percentages of their revenues from their online content through access channels that are not optimized for audience growth and that will give them less autonomy on pricing. The open Web may be a bit more of a wild and wooly place for some publishers but for those that have embraced it most efficiently it has been the most promising revenue and profit driver in an era where many channels are becoming far leaner and meaner. It's time for publishers to think about what's really in their best long-term interests and to begin to embrace net neutrality as an essential component for both audience and margin growth.

Labels: apple, Congress, FCC, Google, Justice Department, Microsoft, net neutrality, publishers, Trends, U.S., Yahoo

CNET News chronicles Microsoft CEO Steve Ballmer's assertion that the software and services giant would be making a big noise in online advertising - an assertion that's been backed up by two short-term deals and likely to be followed by other major announcements. Forbes covers Microsoft's deal with social media portal Digg to use Microsoft for most of their online advertising, a deal that displaces John Battelle's FM publishing in large part for now - though based on John Battelle's upbeat assessment of the deal FM is gaining some inroads into Microsoft. Such a deal would be good for both partners: FM has done well with a number of major social media properties but has lacked the ability to fill available ad inventories effectively oftentimes, whereas Microsoft, ever late to the game, needs to start finding some leverage in social media as soon as possible. Both deals could presage exit plans that result in Microsoft acquisitions, but Microsoft may be learning from Google that it's more important to own the context than the content.

The other deal announced by Microsoft is the acquisition of ad auctioning technology from AdECN, a capability that should enable Microsoft to succeed more effectively against self-service ad placement services such as AdSense. AdECN is modeled after stock exchanges used in financial securities markets, requiring matching sellers' inventories against offers from advertisers, dealing only with existing ad networks as its members. So in effect demand for advertising coming in from one ad network could flow over to match inventory on another ad network, with each network receiving a portion of the buyer's ad fee proportionate to their role in the brokered transaction for the end publisher's sold inventory. AdECN takes a proportionately small piece of each transaction as a processing fee, in addition to up-front membership fees to cover basic infrastructure costs.

One can see how AdECN can be used by Microsoft to match inventory from ad networks such as FM Publishing to a greater universe of advertisers being glued together by Microsoft, giving FM-affiliated properties a broader universe of buyers without having to expand its direct sales presence. One can also see how this will enable Microsoft to enable traditional publishers and advertising agencies to gain access to a wider array of online properties without having to resort to the legwork required to cut deals with an ever-expanding universe of online niche market players and advertising networks. This will become increasingly important as more micropublishers begin to service niche markets more effectively online in B2B and consumer markets. So Microsoft can play "middle man" now with any number of media players, making easy money in the process and developing more direct sales and marketing relationships where it is most profitable for them to do so.

Given Microsoft's relatively late moves into trying to dominate online advertising a brokered market approach is a good strategic move. It enables Microsoft to gain the benefits of broad market penetration while enabling advertisers and publishers to work directly with the ad networks that make the most sense for their industry profiles. Given the increasingly niche-oriented nature of online advertising this may offer Microsoft more flexibility than a one-size-fits-all network like Google's AdSense network or its potential acquisition DoubleClick. The main weakness in this strategy is that it doesn't help Microsoft reach the "long tail" of advertisers as effectively as Google and Yahoo straight off, but in time Microsoft is likely to make inroads there as well. As its software revenues from tools that create content weaken Microsoft has little choice but to seek revenue from the content that's created by publishing tools. It's early days but expect Microsoft to develop some increasingly savvy solutions for ad buyers and sellers in search of the most premium online content markets.

Labels: adecn, advertising, Deals Partnerships and Sales, fm publishing, john battelle, Microsoft, steve ballmer

Bloomberg News covers Stanford Group analyst Clayton Moran's claims that the seeming listlessness of Yahoo's management since Terry Semel's departure and sinking share prices are laying the groundwork for an inevitable and likely sale of Yahoo. Moran cites Microsoft as the likely bidder and beneficiary of online synergies that would boost both properties into a newly competitive position against rival Google. There are a lot of things that still argue for this combination - invigorated search technology and online office components from Microsoft, advertising know-how and effective destination content development from Yahoo - and a such sale is certainly not improbable. Yet I can't help thinking that this may be one of those "perfect" marriages that would go south far more quickly than people may imagine.

The main rub that I see is that both companies suffer from two similar maladies: weakening market mindshare for their brands and dysfunctional product development cultures. Microsoft has had a remarkable string of product introductions that have been flops, duds or near-misses, in spite of having a near lock on many key technologies. Its Internet Explorer browser, once the unchallenged ruler of online Web content consumption, now boasts only about 70 percent of the European marketplace, a problem only exacerbated by mobile content markets moving further away from Microsoft technologies. Yahoo has many comparatively healthy and innovative initiatives, but some of its most innovative properties such as Flickr, del.icio.us and