What does Yahoo buy overture mean?

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July 14, Yahoo announced the acquisition of the world's most expensive search engine provider Overture, the deal is worth 1.63 billion of dollars. If it were three years ago, a billion of dollars would not be a big number, but in the midst of a slump in the internet industry, that figure is a bit worth thinking about.

Why do Overture sell?

Since it is a trade, to have to buy and sell, then why Overture to sell it? There is a saying that "good business is never sold," does this mean that overture is a rubbish, in other words, Yahoo's money is not worth the cost?

Let's take a look at Overture's qualifications: Last year's overture annual turnover of 688 million U.S. dollars, one times more than Google, but low profit margins. Because there is no independent flow of their own, the spending on the purchase of traffic has risen sharply. According to its first-quarter financial report, the first quarter of this year's turnover was 224.7 million U.S. dollars, with a profit of $11.1 million and a profit margin of only 5% per cent, despite a sharp increase in turnover, but at a much lower profit than the 29.3 million dollars last year. After the announcement of the financial report, Overture's share price fell by 25% in a few hours. Technically, overture in just a few months to contact the acquisition of second-line search engines, including AltaVista and fast Search & TRANSFE, to improve their capabilities in technology, to deal with Google's enormous pressure.

In combination, overture is on the decline. Despite all the hard work, the company is wary of Yahoo and Microsoft's potential rivals in the face of Google's pressure, and Overture is now a best bet to sell himself.

Why does Yahoo buy?

Yahoo, one of the biggest losses of the dotcom bust, fell 95% from its peak. Yahoo's huge traffic can not be effectively converted into its own income, which is the most painful place for it. Although Yahoo now through various means to achieve the profit, but the main profit point did not find that the income of online advertising can not support Yahoo's share price.

In addition, Yahoo is increasingly weak in search technology, despite relying on search to build a good brand image in the eyes of the search users, but people are increasingly accustomed to search directly on Google, the user's adherence to Yahoo far behind Google. Yahoo needs to take steps to stop this, and in the past six months Yahoo has been bombarded by billboards, radio and television in major U.S. cities for its newly upgraded web search technology, Yahoo's move is aimed at recapturing the lost land occupied by rival Google and attracting new visitors. One of the most striking gimmicks is Yahoo's establishment of an Internet-connected billboard in Times Square, which is 22 stories tall, showing users searching.

In fact, the acquisition of Overture is only a step in Yahoo's overall strategic plan, through the acquisition, Yahoo can improve its operating income, in the financial statements look more good-looking, after all, overture this year can contribute more than 1 billion U.S. dollars for Yahoo turnover. And because of the combination of the two, overture can save a large amount of the cost of the purchase of traffic, help improve profitability.

What will Google do?

The hardest thing to do now is Google, which has been on the market for less than a few years and has been under intense pressure to compromise. Google's path has two, one is to continue to maintain its independent status, one is like Overture by other Giants to buy. In fact, it's hard to keep a separate position, even though Google's profits are substantial and cash flow is plentiful, but--his final opponent is not overture, not Yahoo, but Microsoft!

Microsoft, which holds 50 billion of cash, is a nightmare for almost every innovation company. It does not matter, Microsoft can slowly drag any company, far from IE and Netscape, near to Windows Media Player and RealPlayer, as long as Microsoft wants to enter a market, there is nothing to block its footsteps. If it does not enter, it is because the market is too small to meet Gates's huge appetite. Right, the fast-growing search market can satisfy Microsoft's appetite, but the market is still not enough to bring Google to rival Microsoft's strength, but to increase the amount of Bill Gates can eat.

So even people in the industry say it's not a matter of discussing what Google should do, but about who it should be.

Their weaknesses and strengths

Overture interesting in addition to its technology, more valuable is its 88,000 customers, the weakness is the flow problem.

Yahoo has a global marketing capacity, a huge customer base, a resounding brand effect and traffic, so can use this acquisition to overture truly become a global business search service provider, which in every branch of the world can do for overture sales agent.

Google has become a myth in a sense, and he has even become a representative of culture. By contrast, Google's marketing capabilities are among the weakest of all competitors, and even if its brand is strong and technology is effective, the lack of global marketing capabilities limits Google's continued growth.

Don't ignore Microsoft in any market that can make a huge profit, it has enough money to hold you down, as long as Microsoft's president is not stupid enough to be hopeless, the chances of success for others are quite small. It is said that Microsoft's next plan is to integrate web search on all software.

Impact on China

The real impact of this big merger on the Chinese market is very small, more reflected in the direction of the Internet development. Chinese Internet companies are lucky to keep a bright glow in the midst of the global slump, but how long can this particular market environment last, simply by saying that texting and online gaming can support the Chinese internet for how long? Therefore, in China's search market is also Shiji, we all see the potential of the market and high growth.

Now China's search market is still in a relatively nurturing development period, whether it is the old brand search market Sohu, Sina or rookie baidu.com, their revenue and the U.S. counterparts is far from an order of magnitude, even if the best baidu.com, is also in between the profit and loss. Although Google has provided Chinese search, but the promotion of the market and related businesses did not follow, the current Google in China is still in a pure investment phase, and Yahoo China and Sina Search recent revision has fully explained the two companies to the search market attention.

From the overture was helpless mergers and acquisitions, flow-that is, Zhang said the "eyeball" is still the most important of the Internet economy, as long as the flow of their own, no matter what to do is downwind. Overture is merged and Google can survive, they are overture without their own fixed user base, no brand, followed by no traffic, and Google with its own technology fully adhered to a large number of fixed users, set up their own brand, Even if Google's technology lags behind some search engines, its brand impact can keep users on their side for a while, which is enough time for Google to develop better search techniques. This is somewhat similar to the competition between Intel and AMD.

Brand + eyeball + technology = Victory, this is perhaps the most close to the truth of the Internet equation.