Like most people, when I saw the headline “Google founder spooked by Microsoft bid” (because Microhoo dominance would stifle innovation on the Internet) my thoughts ran to pots and kettles, PR battle for proxy votes, confuse the enemy with antitrust and so forth.
Don’t the Google guys realise how big and dominant they have become? Sure they do, but “only the paranoid survive” and Microhoo does give some room for paranoia in the Googleplex.
These guys run the numbers and the numbers that scare them will say something like 49% and 56%. They will have access to way better data than I do; I have restricted myself to what is available free online. But even allowing for some margin of error these are “unnerving” to use Brin’s actual word.
Yes both data sets can have a pretty wide margin of error, but even discounting that, this would be cause for worry.
Sure, in the early adopter world we live in, Gmail rocks and who would be seen dead with AOL or Hotmail? But that 50% market share for Microhoo is what you will see in the real world.
Hotmail has lagged terribly. Most people who used it would not return, I cannot imagine who would switch (an AOL user maybe) and most people already have email. So it is a lost cause. One major reason it lagged IMHO was Microsoft fear of cannibalizing Outlook. So they won’t offer the features that users want that both Google and Yahoo have been rushing to fill. Yahoo is reputed to have the most “Outlook-like” interface and that matters massively to people making the switch.
Microsoft will probably do the smart thing and let the Yahoo team run with email. Hotmail will die as a separate brand, eventually.
Feature for feature, Google and Microhoo will slug it out for a long time. Today Gmail looks to be ahead but that position is not written in the stars. With the “don’t cannibalize Outlook” shackles off, its just needs some well-directed R&D dollars and they have plenty of that.
The real battle of course remains around search within email and thus monetization. Google is better at relevant ads in Gmail because they have a better search engine. But if Microhoo gets its act together in search, they have the bigger content/audience to monetize. Technically improving search is not that hard. Microsoft have all the R&D money they need and, more importantly, every search start-up looking to exit to them. If you really can improve search you have one fat valuation offer coming down the pike!
Here is the really interesting bit. Improving ad relevance within email does not require any searching behavior change. That is worth repeating. Say after me, “if we have 56% of 49% we have something like 25% of ad impressions and all we need to do is serve relevant ads”. Come on developers, you can fix that, right? Page rank is not relevant. Getting people to switch from Google to another search engine is not required.
So, in the final analysis, it is not really as much about search quality as it is about Ad Networks; both Microsoft and Yahoo have good Networks and advertisers always want a choice. So nobody can dominate this for too long. The Adwords auction model is brilliant but is self-limiting in the end; when the price gets too high, advertisers seek out alternatives.
However email is not just fodder for search it is the key to ad relevance, via the social graph. As Fred Wilson puts it, email is “the biggest social graph“. What is social networking except in-site messaging? Add in messaging within Facebook, where Microsoft has the ad deal, and I can see some 3am wake-ups among the Google team.
The social graph is key to ad relevance because it enables “SEO resistant search”. This is what Scoble calls it in this great series of Podcasts. Skip to # 3 if you know the basics. His closing remark (made in August 2007 for historical record) is kinda fun in the circumstances “watch Yahoo, they are the wild card”.
He is right, look at all Yahoo’s social assets. Massively underexploited but great. If the social graph is the key to SEO resistant search and thus search relevance and webmail is the key to the social graph….
When two gorillas duke it out, watch out! You can get crushed by accident - oops sorry, Chimp, did not see you there - but it is also full of opportunity for entrepreneurs.
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Initially Google may suffer, but I think many will switch from Microsoft/Yahoo altogether to Google once they see that weird clunky interface from Microsoft. Just the addition of new features almost every day makes Gmail a better product.
Posted by: Chris | February 23, 2008 3:49 AMIt should also be noted that Yahoo acquired Oddpost in 2004, which is now the foundation of their webmail platform (and note, Yahoo mail didn't spend long in beta, unlike Gmail which embarrassingly remains in beta mode even after the official launch in 2005.
Yahoo's email is superior to Gmail in almost every respect except for chat integration and email conversation grouping. Yahoo's feature set includes disposable email addresses, drag and drop, and tabbed viewing. As Lunn notes, the potential for monetization is there, both in displaying standard contextual ads as well as the option to pay Yahoo $20/year for increased storage and ad-free viewing. But what about email search?
Yahoo's email search is truly innovative. When you type a search term, a separate pane open up and gives you additional search refinement options. Here's a closeup of that search pane:
http://www.metablog.us/wp-content/uploads/2008/02/zoom-yahoomail.png
It's amazing how functional and useful this is after a while. It's also easy to see how this could be a vector for additional monetization. It's not hard to see how Yahoo could place ads below the preview pane and search-specific ad results in the search refinement pane, even for paying customers like me (free Yahoo mail puts ads at the top of the page, and inserts text on outgoing mail in the footer but obviously this hasn't impacted their market share.)
And as for integrated chat, since MS messenger and Yahoo Messenger already talk to each other, we can expect that the mail client won't be static on that front either.
Posted by: Aziz Poonawalla | February 23, 2008 5:48 AMI know this thread isn't about email but I too love yahoo mail, and the only thing that it doesn't have (yet) is the grouping or conversation threads that gmail does. I do notice however that lately I am getting more spam to my inbox in Yahoo, whereas I NEVER got spam before (I never get spam to my gmail). So yahoo is slipping on that front. And I use yahoo mail search all the time and it's great.
I hate the way gmail looks (and I'm an engineer). I integrate yahoo mail into about 20 different groups I belong to. I merged my yahoo and MSN IM's, mybloglog, and now just need to tweak a bit more and I'm in heaven.
I still ignore almost all online ads - email, websites, wherever.
Posted by: antje wilsch | February 23, 2008 10:11 AMThe dollars are all in search so this is where the bloodiest battles will occur. With users wanting more innovation a new wave of startups - lead by ManagedQ, the new search application startup in Palo Alto, should begin to take hold. Should be an exciting next 18 months in search.
Posted by: Joe | February 23, 2008 6:45 PMIts all about spam. I get 1-2 spam emails per week on gmail. Hotmail around 50, Yahoo around 10.
That says it all for me.
Plus gmails interface and usability is tops.
Posted by: Yosef | February 23, 2008 8:44 PMI agree that the battles will still be in the internet searches. Even if Microsoft buys Yahoo, I don't think they will have enough muscle to beat Google out of their throne.
Posted by: DerrickI like the new yahoo email very much, it is superior to gmail in many regards, especially its multi-tab interface and built-in RSS reader.
But email does not monetize as well as search, so I would doubt it would matter that much.
Posted by: October | February 24, 2008 10:06 PMMaybe I'm a bit jealous but I always hate it when the "big ones" almost effortlessly dominate the market. They even restrict the means to growth so that there is virtually little opportunities for the small new entrepreneurs. I thought that was what competition policy was supposed to prevent? Guess I was wrong.
Posted by: Medical Furniture | February 25, 2008 2:22 AMJust want to chime in that Yahoo! Mail is outstanding. Gmail seems so 2005, although I love their IMAP, POP features, which I think you still have to pay Yahoo! for (no sure, though). I do like Gmail, but the UI on Yahoo! Mail is much, much, much, much better.
Sadly, Microsoft will probably ruin it.
Posted by: Nathan | February 25, 2008 3:54 AMJust wanted to say, this is an excellent article
Posted by: Matt | February 26, 2008 12:58 AM