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Yahoo! Acquires Inktomi. March 19 th , 2003. Yahoo!. Yahoo. A leading provider of comprehensive online products and services to consumers and business worldwide No.1 Internet brand globally No.3 most used search engine Headquarter: Sunnyvale, California - PowerPoint PPT Presentation
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Yahoo! Acquires Inktomi
March 19th, 2003
Yahoo!
YahooA leading provider of comprehensive
online products and services to consumers and business worldwide
No.1 Internet brand globallyNo.3 most used search engineHeadquarter: Sunnyvale, CaliforniaGlobal network is available in 13 languages
Leading search sites
Site Unique visitors (000)
Aver.daily unique
Visitors(000)
Total usage minutes (000,000)
Ave min spent per
month
MSN Search 49,686 7,315 542 10.9
Google Sites 41,328 8,348 849 20.6
Yahoo! Search 42,574 5,680 397 9.8
AOL Search 38,112 7,187 1,078 28.3
Yahoo and its search engineYahoo is named as an editorially produced
directory of websites But it never owned significant algorithmic
back-end search technology of its own It aggregates services and content to
pioneer the concept of a “portal” site Its search technology is outsourced
Yahoo
Search providersAltaVistaInktomi(1998)Google (June 2000)Inktomi (March, 19, 2003)
Yahoo’s strategies on its search business
Improve relevancy and comprehensiveness of search results
Enhance and improve quality of its most-searched terms
Increase marketing resources invested to continue building Yahoo!Search brand
Improve directory matches to offer consumers results within relevant categories
Inktomi
ServicesWWW search servicesContent networking productsEnterprise searchPaid inclusion services
HistoryEstablished in Contract with Yahoo 1998-2000 In 2000 stock traded at $234Yahoo switched from Inktomi to GoogleShortly Inktomi was traded at $1.50
Just Before the Merger Inktomi stock is traded at $1.50 Restructuring efforts
Sale of enterprise search software to Verity Reduce investments into content networking
products group Focus on the Web search services
Who needs Inktomi?
Microsoft – largest portal customer (20.8% of total Web search services revenue)
Contract expires in December 2005AOL – one of the largest portal customers (17.5% of revenues)
Ceased its contract with Inktomi in August 2002
CompetitionAltaVistaAsk JeevesFAST Search and TransferGoogleOvertureLook-SmartNorthern Light
Financial Performance
Revenues
0
50,000
100,000
150,000
200,000
250,000
2000 2001 2002
Year
$
0%
20%
40%
60%
80%
100%
% of r evenue
2000 2001 2002
Revenue SourcesOtherServices
MaintenanceServices
WebSearchServices
Licenses
Strategic Fit of Yahoo and Inktomi
A powerful combination Yahoo!’s global reach and commitment to and Inktomi’s outstanding engineering expertise and leading search technology, providing the best user experience on the Web
Strategic Fit of Yahoo and Inktomi
Achieve their mutual goal of making the Inktomi-Yahoo! search offering the standard bearer for searching on the Web
Strategic Fit of Yahoo and Inktomi
Create one of the most relevant, comprehensive and highest quality search offerings on the Web for both Yahoo!’s affiliate partners and Yahoo!
Strategic Fit of Yahoo and Inktomi
Offer more value to consumers and businesses through programs such as paid inclusion, which provide higher-quality commercial search results
Strategic Fit of Yahoo and Inktomi
A way of getting Google off of that page and being able to be more aggressive in trying differentiate and market themselves against Google
Strategic Fit of Yahoo and Inktomi
Give Yahoo! an important new tool and revenue source in an increasingly competitive marketplace
Strategic Fit of Yahoo and Inktomi
Unprecedented ability to monitor Internet users’ behavior and deluge them with tailor-made advertising based on one's surfing
Potential Risks and UncertaintiesReaction of customers of Yahoo! and Inkto
mi to the acquisitionYahoo!'s ability to successfully integrate In
ktomi's operations and employees Inktomi has never turned a profitGeneral economic conditions
Potential Risks and Uncertainties Yahoo’s directory is difficult to scale:
hundreds of thousand of people needs to be hired to try and comprehensively categorize the current Internet
Inktomi’s search has traditionally organizedpages automatically based on page content and meta information
How do the two systems work together?