Thursday, December 22, 2005

Search wars - part II

There was this recent story about the AOL deal. Although Microsoft would have been stronger had it won the deal - Microsoft still won in this round. It made Google cough up some money and more importantly give up 300 million from its future revenue as credit for AOL.

This deal made Microsoft stock go down and Google stock go up. At first brush, it may appear as though Google won this round, in the long term, this may not matter as much. AOL's internet access business is in decline as more people migrate to broadband and its graphic intensive websites won't drive traffic to google. If Time Warner shares advertising in all of its web properties ( such as, etc. ) it would be a bigger win for Google.

As I mentioned in my prior post - Microsoft is a formidable competitor with oodles of cash- expect it to mount a strong challenge for the number two slot in the coming few years. The online ad revenue is going to total around fifty-five billion dollars by 2010 and Microsoft will definitely want a piece of this pie. Cnn published an article commenting on the deal -

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