It looks like Microsoft’s attempted acquisition of Yahoo! has come to an end. Apparently, $46 billion wasn’t good enough, but $50 billion would have been. So what’s $4 billion between friends? Ah well. Mini already has a post up having popped a cork, and I’m sure MSFTExtremeMakeover will have something shortly. And I’m sure there will be plenty of analysis posts as to why, why it’s a good thing, why it’s a bad thing, what might have been, and so on.

So here’s mine!

First, so if I understand properly, Microsoft bid $41 billion, Yahoo! wanted $50 billion. So Microsoft came up $5B more, met ‘em halfway… Yahoo! still wanted the full $50B. OK… so if you can come up with $5, why not $10B? And yeah, I understand, these are scarily huge numbers. But hey, if you’re going to sit down at the World Cup of Poker, you know it’s not a $10 buy-in. I actually wonder if it’s too much of a bet-the-company move… e.g. Microsoft can currently afford anyone that’s $46B or less, but more… not so much.

Second… so what’s next? Well, let’s see….

Option 1: Keep at it! Keep at it! Keep at it!

Well, Satya, Brian, Harry, and the gang have to do something. And now that they won’t have too much of a distraction integrating Yahoo!. Plus, this means that most of Microsoft will now align very closely with services, focusing on ads and search. A search bar in every application, every desktop, every skin. And renewed focus on new frontiers, such as XBox and mobile - especially XBox.

Option 2: Buy! Buy! Buy!

Buy someone else! Or elses! But who? Well, how’s this little gem from comScore:

Baidu Ranked Third Largest Worldwide Search Property by comScore in December 2007

To aid in your research and coverage of Baidu’s recent announcement to enter the Japan market with www.baidu.jp, relevant comScore qSearch worldwide data are provided below.

In December 2007, 66.2 billion search queries were conducted worldwide.

In December 2007, Baidu.com Inc. was the third ranked search property worldwide with 3.4 billion searches, capturing 5.2 percent of worldwide search share.

Worldwide Search Top 10 December 2007 Total World Age 15+, Home and Work Locations* Source: comScore qSearch 2.0
	Searches (MM)	Share of Searches
Total Internet	66,221	100.0
Google Sites	41,345	62.4
Yahoo! Sites	8,505	12.8
Baidu.com Inc.	3,428	5.2
Microsoft Sites	1,940	2.9
NHN Corporation	1,572	2.4
eBay	1,428	2.2
Time Warner Network	1,062	1.6
Ask Network	728	1.1
Yandex	566	0.9
Alibaba.com Corporation	531	0.8

Baidu is the dominant engine in China, NHN is www.naver.com, which is the dominant engine in South Korea. Oh, and today, 5/4/2008, NHN is worth about $11.25B (current price, in KRW), and Baidu is worth $12.36B (current price in USD).

Naver hasn’t shown any propensity to move outside of Korea, and for the most part their stranglehold on South Korea is their huge question and answers site (which is what Yahoo! Answers, Microsoft QnA, and Baidu’s iKnow are based upon). Their search, last I knew, wasn’t terribly great.

But Baidu…. Baidu is doing real search. Baidu just launched in Japan earlier this month. And they have the currently dominant question and answer site, although TenCent, which runs QQ, the dominant instant messenger in China by far, is looking to create their own version that may cause some trouble. And Baidu has got heavy competition from Google.

Now, there are certainly issues with buying Baidu due to the Chinese government. But… well… at the end of the day, those Yahoo customers aren’t going anywhere quickly - not to Google, not to MSN. That’s one of the key reasons why, IMHO, Microsoft wanted to buy them. But that isn’t happening, so those customers stay with Yahoo. Now, Microsoft still needs to get some additional customers somehow, somewhere. If not from Yahoo, and if not from Google… well, for me, I’d start looking abroad really quickly myself.

I’m attending WWW2008 in Beijing this week. It’s turned into a big of a monster conference… nine simultaneous tracks over three days, not to mention a day of workshops and tutorials! Yow! And I’m seeing a number of colleagues from the usual haunts here as well. Both Kai-Fu Lee, head of Google China, and Harry Shum, head of Microsoft’s Live Search development, each gave keynotes, and I thought the themes on them was quite interesting and contrasting.

Kai-Fu Lee’s theme was Cloud Computing, or moving to a world where data and computation was handled on remote anonymous servers and applications then ran. He gave an overview of a number of Google applications that ran on this - Search, Mail, etc. I was struck by one comment he made, which is that cloud computing frees people from the monopoly of a single company controlling everything. Except, of course, the company that runs everything in the cloud for you…. Meet the New Boss…. Same as the Old Boss! But digs at Microsoft aside, the path outlined was clearly focused on Web applications built out on cloud computing, with those applications all leveraging large scale, reliability, and naturally massive amounts of data to handle things.

Harry’s talk was more of a Company Meeting talk, in which he handed the microphone to Graham Sheldon to show off some demos, in particular highlighting some of the cool things MSRA is doing as well as some of the latest on the Live Search release. They led off with what I thought was the best, which is some work from MSRA’s speech group that extracts speech from video and then enables you to see related videos while watching them. It was put together well, so it isn’t so much a “watch while on the Web” demo but “imagine you’re watching TV” video. I’ll see if I can’t find a link, but good stuff. Also shown was Guanxi, which tries to do a people / relationship search… in this case, it showed who was related to Bill Gates. They also showed a demo where you could do query-by-image, which would show images related to a target image. I need to ask some of my former UW colleagues who did things like QBIC (Query By Image Content). The demos of released Live Search features were focused on new features in the News and Local Verticals, including some cool stuff from the Maps team (which continuously produces some great stuff). Oh, and they have a few things on health they’re experimenting with, and trying to get things hooked up with the HealthVault.

OK… so we have two “My company is doing cool stuff, come work for us!” keynotes. But do we have any insight here?

Yes. Google, as widely reported often and everywhere, is busy making an operating system platform of cloud computing that they then build their services on. They’re not actually selling or providing a cloud - Amazon is, with EC2 and S3. But they’re creating the applications that depend on the cloud.

Microsoft, on the other hand, isn’t really pushing the cloud platform. They have a number of components for that, but the demos shown are all slices on search. But they’re certainly not talking about the power of their platform; they’re talking about cool features. But I worry along that line. The problem they have, which they and Google are trying to address, is user flow. Users don’t go to a vertical, they go to search. So now the problem is to discover intent on when it’s appropriate to show essentially a house ad for a vertical with some content, and then create a compelling, and consistent, experience as a user moves from “search” into “news” or “health exploration” or whatever they’re doing.

What I can’t help but wonder is why neither appears to be really pursuing differentiated domains and brands. For example, I still don’t think of Google, Yahoo, nor Microsoft when I think “news.” I think CNN. And really, I don’t think “news search” so much, I want more of a news paper. Archival search is great, but should be from within the news portal. To that degree, I wonder why “Live News” isn’t more MSNBC, or even just a different URL, such as www.livenews.com (it’s some random news site… probably buyable!). Certainly there’s lots of direct visitation to www.youtube.com, and I’m still more familiar with www.mapquest.com than the URLs for Google, Yahoo, or Live maps.

Anyway, food for thought… as always, I’ll lie about updating this later as the conference progresses.

Update 4/25: We (a number of anonymous conference delegates, and yours truly) now have short synopses on all the keynotes. In order:

• Kai-Fu Lee, Google: Use our stuff!
• Harry Shum, Microsoft: We have stuff!
• Sir Tim Berners-Lee, W3C: I invented stuff!
• Robin Li, Baidu: I paid for this stuff!
• David Belanger, AT&T Labs: We route stuff!

In fairness, we’re sort of making up Robin Li’s synopsis. Sir Tim’s keynote was somewhat, uh, long and rambly, and after about 30 minutes of it the audience in the Great Hall of the People got restless and started heading to the drink counters for more beer and wine. Sadly, by the time Robin got to the stage, the audience was in no mood to listen and was already engaged in conversation, so we’re not really sure what he said. But Baidu did sponsor the banquet, which rocked, so we thanked him for that.

David Belanger’s keynote was the best in my opinion… and not just because he didn’t do either a passive-aggressive product placement speech or an aggressive-aggressive product demo speech. He just talked about content, experience and devices, and networking to them and a lot of the challenges. For example, apparently as of 10 years ago when AT&T licensed out its rotary phone service, that was still upwards of a BILLION dollar business. For rotary phones. When a new touch-tone costs $10, or is often free. The main takeaways were that (a) there are loads of devices and enpoints, and it’s all increasing, and (b) the observation and re-iteration that old devices don’t go away slowly. The last is ignored at people’s peril… people hold on to things a lot longer than nearly everyone else would like.

Didn’t take long for Greg to spot my post! Excellent! Greg, we should do lunch sometime soon. Greg makes a couple excellent points, but I wanted to clarify them a bit:

Erik is saying that both Google and MSN want to make the computer do the work for you. The difference, Erik says, is that Google does this by taking away features and MSN will do it by adding features.

I see his point, but I can’t help but think of other Microsoft products. What happened to Microsoft Word as features were added for convenience? It became a complicated mess, so feature rich that even a technogeek like me doesn’t know or understand all the features. When I use MS Word, I spend most of my effort ignoring its features so I can get work done. The effort required to exploit its power exceeds the value received.

Greg is 100% right in talking about Microsoft Office… in particular, the next version of Office (version 12… scary that we’re up to 12) doesn’t have that many “new” features. Instead, it has a totally new UI to highlight all the features it already has. Apparently, when they did studies to ask people what they wanted in Office, some astoundingly high number of respondants (like 90%, but don’t rely on that as my memory is likely faulty) listed features that were already in Office — they just didn’t know it as the feature was buried under the advanced tab of a dialog box that you get to via some menu that you have to wait 2 seconds to expand. Silly users.

Here’s the crux of the matter… good design is really, really, really hard. It’s right up there with hard-core scientific research, and typically follows the same methodology to achieve its results. It’s easy to make something that only does a few things with a simple design… case in point, Google Search. You type words into a search box, you get results you want. However, GMail is another beast altogether… it has a radical new design, and some people love it, and some hate it. Working with mail is more complicated, and thus it’s harder to get it just right. And personally, I think they just botched up a great service in Google Groups with the GMail style interface they put on it a year ago… was using groups.google.ca for a while as they hadn’t rolled it out internationally for a bit.

The challenge for Microsoft with the entire Windows Live effort is how do we provide great features to our customers in a design that works. A great design won’t save a feature that doesn’t work (for example, I still can’t just copy an Excel table into Word without Word botching the fonts and whatnot… although cross-app Copy & Paste is the right way to go about it!), and a poor design will bury an otherwise great feature (ask the MSR guys that made the Office Help system how they felt about the paperclip). Melding great features and great design — that’s where we’re going… and again, spend some minutes with the new Image Search on Live.com to see what is possible when you get it right.

PS - Hey Greg, how about you get HaloScan or something set up so I can give you trackbacks to your blog?

OK… so I’m the last guy to blog about it, but we finally shipped a somewhat real version of Windows Live, or as I call it, just Live. The crown jewel is Image Search — the team just rocked out some great stuff there. Infinite scroll just rocks for images, and the preview pane is also a great way to view them. It’s totally kick ass.

Now, for those wondering about Web search… don’t worry too much about the UI for Web Search… the experienced eye will notice a ton of stuff is missing for no good reason (cached page anyone? and date updated?), and some things look very hacked together (overly small typography? weird scrollbar that doesn’t move, while the image search one does?), almost like they were hacked together at 4 AM in preparation for a demo that somehow turned into a beta. Hey, we couldn’t let our VP stand up there at ETech with nothing new for Web Search. But we’re not ready to show our Web Search coolness just yet…

Anyway, my pal Greg Linden wrote up a great article about how he sees Microsoft, Yahoo, and Google battling it out (also cribbed a bunch from ZDNet). Here’s a quick summary:

MSN (and, until recently, A9) wants to give you more powerful tools. Yahoo wants the community of users to help improve search. Google wants computers to do all the work to get you what you need.

I disagree with him here.

Yahoo is going down the content ownership path. The idea is to own the content — whether it be licensed from whomever actually makes it (such as music or movies), the other is to create technology that enables their customers to create content, which they’ll have and Microsoft and Google won’t. A super successful model for this is Naver.com in Korea, which dominates that market (Google is like 2% market share there) because of a huge community that answers peoples questions directly and provides all the other portal-like services. However, you have a huge cold-start problem (nobody will use what Yahoo has until they have critical mass) and a huge spam problem. I believe Naver solved it by being something for Koreans before there were any engines for Korea, and requiring their users to enter the equivalent of the Social Security Number (apparently a socially acceptable thing in Korea), so there is a ton of accountability there. I’m not sure if Yahoo will solve it though… and quite frankly I don’t think it matters. But more about that in a later post.

Google and Microsoft have generally the same idea, although Microsoft has been slow to coming around to it. The old saying is that a computer will give you what you ask for, not what you want. Both Google and Microsoft are trying to give you what you want, not what you ask for.

The difference is in approach. Google, like some other companies like Apple, are fans of making things easy. How do you make things easy? Remove choice. That single-button mouse Apple is famous for? Means you always know which button to push. The Google homepage is a model for simplicity guiding the user to what makes Google money… Web searches. There’s a big search box, and not much else. Hard to do something besides enter a query… and everytime they add something to it, it’s a big deal.

Microsoft wants to make its products useful. And how do you make a product useful? It’s all about features. That’s why Live.com is just chock-full of random features, such as RSS feeds and weather and all the other normal portal goodies. Greg got things a bit wrong in his article… it isn’t about changing what users do, but providing them with what they need to get their job done. If a simple search box will suffice, great. But sometimes other things are better suited, and Microsoft is looking at how to provide those as well.

Great thing for you? Search is gonna get better… much, much, much better. And you’re all going to benefit. Gotta love it.