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by Mike Masnick

Mon, Dec 23rd 2002 9:48am





Yahoo To Buy Inktomi

from the sorry-Google dept

In a slightly surprising move, Yahoo has acquired Inktomi for not very much money. Inktomi, of course, used to provide search services for Yahoo, but lost that contract to Google a few years ago. It would seem that this deal would put Google's Yahoo relationship at risk as well. Of course, if Yahoo did ditch Google for Inktomi, it would be a mistake, since Inktomi's search is much weaker than Google's, and users might revolt. Now, the final purchase price is $235 million, but just three months ago, Inktomi was forced to purchase the building they are housed in (though, it's mostly empty) for over $100 million - so I wonder how that gets sorted out in the deal. Inktomi, also has two (very nice looking) buildings down the street from me, that they built in the past two years that are completely unoccupied. I'm sure Yahoo will help them get out of that lease, as wel, but I wonder how much of the purchase price goes to that.

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  1.  
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    Jeff Chan, Dec 23rd, 2002 @ 7:56pm

    Two reasons

    As I wrote on my weblog:

    1) Google is expanding their array of services and is already encroaching on Yahoo's territory with Google News and Froogle. It doesn't make sense to outsource your search services to your competitor.

    2) Search is extremely profitable, as Overture and Google have demonstrated. Yahoo wants to increase its share of the market before Google completely dominates the area.

     

    [ reply to this | link to this | view in thread ]

  2.  
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    Mike (profile), Dec 24th, 2002 @ 1:09am

    Re: Two reasons

    I agree with what you're saying... however, the simple fact is that Inktomi's search isn't particularly good. Unless Yahoo can seriously improve Inktomi's technology in a very short period of time they'll be offering their users a vastly inferior service from what they're used to. If anyone thinks that won't turn people off from using Yahoo, they're in for a bit of a surprise.

     

    [ reply to this | link to this | view in thread ]

  3.  
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    mhh5, Dec 24th, 2002 @ 10:11am

    Re: Two reasons

    aha! so you agree that yahoo and google are competitors?! :)

     

    [ reply to this | link to this | view in thread ]

  4.  
    icon
    Mike (profile), Dec 24th, 2002 @ 10:17am

    Re: Two reasons

    mhh5 and I have had this argument going on for a long time...

    Anyway, I still think Yahoo shouldn't look at Google as a competitor, and they should have moved their business on to a different area already, but it seems they do look at Google as a competitor, which explains why they made this very silly purchase of Inktomi, which will be considered a huge failure.

     

    [ reply to this | link to this | view in thread ]


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