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Saturday, May 31, 2003

More on the AOL-MS Lovefest

CNN/Money has posted yet another well-written piece about the implications of the recent deal signed by AOL and Microsoft in which AOL will continue using IE as the AOL browser for another seven years. But that's not the only outcome of the deal.

As writer Paul R. La Monica states in his lead paragraph: "When bitter rivals decide to call a truce, you have to wonder why."

Posted by Cory
| | Permalink

 

Google Acquisition Still Advertising on Google

Hey Applied Semantics, I think it might be OK for you to stop advertising on Google now. But I may be missing something...

Posted by Andrew
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PPC Margin Compression Thesis Influences Stock Traders

Bill Martin and Matt Ragas often write about companies like LookSmart, Ask Jeeves, Google and Overture in their subscriber-only FindProfit newsletter. On May 19 they mentioned that Google's recent deal with Ask Jeeves UK gave away as much as 70% of revenue, which offers further proof that pay-per-click middlemen will get squeezed as search and portal players play off the PPC providers against one another, or threaten to take it in-house. This reality is made plain to investors in Overture's public filings, which state that they expect "traffic acquisition costs" to increase each quarter by an estimated 0.25%.

Martin and Ragas call this the "PPC Margin Compression Thesis." It's a theory I've been holding forth on for some time now - I'm just glad it now has a name!

Google's fallback, of course, is that it gets to keep 100% of the revenues from advertising on Google. And it stands to reason that companies like LookSmart, and to a lesser extent FindWhat, will face the disintermediation problem. It's just this problem that caused Overture to snap up two search engines (AltaVista and FAST) just so it had some search franchises to call its own.

Thus we continue to feel that talk of Yahoo buying Overture is misguided. A more compatible scenario would be one of the major online ad networks such as DoubleClick merging with one of the top or second tier PPC players.

Posted by Andrew
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Addendum: AOL Signs 7-year Deal to Continue Using IE

One huge aspect of the AOL-MS deal I forgot to mention yesterday was that AOL also signed a seven-year agreement to continue using IE as the engine running AOL's browser. This is huge news. Why? Because AOL owns Netscape (currently in version 7.2).

Why is that important? Well, I'd wager that 95% of you out there would guess that this is probably the end of Netscape. Yes, sadly, it seems the end of a venerable Internet icon is at hand.

What a shame, but what an inevitability at the same time. When AOL acquired Netscape in 1998, many observers -- me included -- hoped it would mean a renaissance for the decaying browser. But, that never happened. AOL continued to use IE's browser engine, and AOL got a new version, 7.0, with lots of promise but weak promotion by A-O-Hell. If it's own parent company wouldn't use Netscape, why should anyone else?

Frankly, as a web developer worn out by the browser wars and all its incompatibilities that hindered progressive web development, I'm relieved that Netscape's end is near. I said my goodbyes to it in 1998, and once it's pulled off life support, I'm ready to let go for good.

Posted by Cory
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Friday, May 30, 2003

Dogs and Cats Living Together... Mass Hysteria!

Make that AOL and Microsoft living together, working to make the digital decade a reality. So says Bill Gates after yesterday's surprise announcement that Microsoft would pay American Online $750 million to settle the anti-trust suit filed against Microsoft for allegedly using illegal tactics to wipe out Netscape, which is now owned by AOL.

So, once again, Microsoft essentially admits wrongdoing and pays off the offended party to settle the matter. Sounds like Mr. Gates got away with another one and paid AOL hush money to leave it at that.

Still, there may actually be good news here. The two parties also said they would begin collaborating on a series of initiatives, such as finally making AOL Instant Messenger and MSN Messenger "talk" to each other. Gates says that this and other efforts will help make the "digital decade a reality."

While I applaud such sentiments, I remain skeptical that either company is truly interested in doing what's best for the consumer. Could it be that they finally understand that a rising tide floats all boats?

Posted by Cory
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Thou Shalt Track

The good deal about this bCentral article by Monte Enbysk, beyond the common-sense wisdom of looking harder at your company's web metrics, is that I get to see a picture of the guy who interviewed me, which doesn't always happen. Of course, he only quoted eight words out of our 20-minute talk, which must mean that Elizabeth Osmeloski talked to him for at least two hours!

Posted by Andrew
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Thursday, May 29, 2003

Maybe they Do Know What Time (Inc.) it Is, After All

As if on command, the latest issue of Fortune Small Business actually contains articles about small business: how the company that created the Foreman Grill got on the map and a little distributed search thing called Grub.

Posted by Andrew
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Wednesday, May 28, 2003

To Invest or Divest? Oh, the Whims of Media Moguls

It seems that the folks with the deep pockets never knew what to think of these big Internet portal plays. They overinvest, they underinvest, they shun, they embrace, all for reasons known only to themselves and their accountants.

Spanish telecom Telefonica, already a large shareholder in Terra Lycos, has bid $2 billion in cash to acquire the 62 per cent of the company it doesn't own, while AOL Time Warner was rumored to be considering spinning off the AOL unit it famously overpaid for (although it denies this).

Large media companies seem to have long term strategies that transcend mere earthly concerns like profit and loss in the short term. Thus there is always more to these mega-deals than meets the eye.

Elsewhere, in search engine news, Ask Jeeves shares jumped on the recommendations of analysts today. At the close, Jeeves announced it was raising $100 million in a debt offering to be used for "general corporate purposes." Ahh, the old run-up-to-a-financing trick. Yes indeed, there is always more to these things than meets the eye. Be careful out there, kids.

Finally, Jeeves is off the B2B bandwagon and back on the B2C train full bore. It just sold off its enterprise division for all of $4.25 million, which indicates that a large part of what they told reporters (like yours truly) about that division was exaggerated hogwash. Never believe what you read in the papers, kids.

Posted by Andrew
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Tuesday, May 27, 2003

Northern Light Should Stay Away from "General" Search

It's a well-known convetion in the comic book world that a character who dies, especially a main character, will never, ever stay dead. There will always be some writer with a kooky agenda who wants to bring them back to life in some dramatic and corny storyline. Remember when Superman "died" in 1993? Exactly. Now the search engine business is starting to "take a page" from comics and is emulating that goofy convention.

I received a press release via e-mail that proudly announced Northern Light's re-acquisition by former owner Dr. Seuss... I mean, C. David Seuss, former CEO of Northern Light. Seuss boasts that Northern Light will be making a comeback and will once again be a search engine, as opposed to whatever it was after Northern Light was acquired by Divine, which filed by bankruptcy protection.

Northern Light was hailed back in the day as one of the most powerful search engines, till Google came along, and set a new standard. However, I never found it to be very useful, and it became even less useful when it became a "research engine" for documents. Now that it's boldly going where many engines have gone before, to try to make a go of it as a general search engine.

As a search industry observer and webmaster, I say to Dr. Seuss: Don't go there. The world doesn't need another search engine that is no different than any of the others. If anything, what we do need are different types of search tools that perform specific tasks (vertical search engines or "vortals," if you will). Instead of search engine X trying to "be like Google," they should heed the lessons of Purple Cow and blaze a new trail, find a niche that's not being served and exploit it.

I doubt Northern Light will be wise enough to do that, and that's unfortunate. There's lots of room for search technology, but this "me-tooism" is just plain stupid.

Posted by Cory
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Monday, May 26, 2003

Why Google's Success is (Partly) Due to Microsoft

By now, the story of Google's success is legendary: Combine one part "revolutionary link popularity algorithm" with one part "distributed computing infrastructure built on thousands of regular PCs running open-source server software," and you have the ingredients for a ridiculously fast and relevant search engine beloved by millions worldwide.

So why do I say that Google's success is somewhat thanks to Microsoft? Simple -- Google's infrastructure would not have even been possible with Microsoft Windows server software, which is god-awfully expensive (depending on the terms, it can cost up to $2,000 per license), and SQL Server, Microsoft's industrial-strength database software costs about as much.

Google proved that it's more efficient and cost-effective to have lots of normal computers with open-source server software that distribute a server load rather than a few gargantuan, expensive supercomputers running enterprise server software from the likes of Microsoft or Sun.

If you do the math, you can see that it's prohibitively expensive to have thousands of computers running Microsoft server software, and thus, Google probably would not exist if Microsoft's products didn't cost so much. Lesson to Microsoft: Maybe you could make (even) more money if your products weren't so expensive. This is one of primary driving forces behind the burgeoning success of Linux.

On a related note, I recently had an engaging e-mail conversation with some e-colleagues about why I believe Microsoft is a monopoly that will one day be broken up into smaller companies by the U.S. government. They argued that there's plenty of competition in all sectors of the software industry, and that this proves Microsoft is not a monopoly.

However, even though Linux and other open-source players are nipping at Redmond's heels, Microsoft has something these guys will never have: a $30 billion war chest. Yes, $30 billion. I believe Microsoft is allowing Linux to develop into a competitive threat in order to get the feds of its back. No matter how successful Linux becomes, Microsoft simply has too much money in the bank, and therefore can do almost anything to stave off upstarts, like giving away its server software if the smaller guys get too big.

It's simply a matter of when, not if...

Posted by Cory
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Sunday, May 25, 2003

RageBoy's Tying the Knot: And Oh What a Knot it Is


Yeah, dueling paradigms. ;-)

nice to hear from you. hey, since I haven't sent it to the list yet, you can be the first to know that RB and I are getting married!!! yes, you heard right. we're so excited. we hope you'll give us a cool present.

Altar Egomania Wedding Registry

Drive safely.

chris

-----Original Message-----
From: Andrew Goodman [mailto:andrew@....]
Sent: Saturday, May 24, 2003 9:24 AM
To: Christopher Locke
Subject: RE: Re: EGR: Re-Booting Arizona (verification)


Ironically, I dug this out of my "Yahoo bulk mail" folder. :)

Christopher Locke <...@spamarrest.com> wrote:

Christopher Locke here,

I'm protecting myself from receiving junk mail.

Just this once, click the link below so I can receive your emails. You won't have to do this again.

[snip]

Posted by Andrew
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