by Charlene Li

There was an audible collective sigh of relief that the Microsoft-Yahoo! acquisition soap opera was finally at an end. For three months, the tech world has been paralyzed by the prospect of “Microhoo”, believing that the deal was inevitable. Sanity prevailed on Saturday, as the two giants couldn’t come to an agreement on price and Microsoft declined to pursue a hostile bid that could have proven ruinous to both companies. (Full text of the Microsoft announcement and the Yahoo! response are available.)

A year ago, I wrote about why such a deal wouldn't work, and also how Google would act as Yahoo!'s savior. An acquisiition may still come to pass in the future, but at a significantly lower price. But the world continues to turn and both companies will have to explain themselves to investors, employees, advertisers, and consumers.

Microsoft must define and deliver on a strategy that shows how they can “win” now without Yahoo! as a search jump start. (Frankly, we were skeptical that Microsoft could have integrated Yahoo quickly and effectively to realize the full value and vision of the acquisition). Rather than continue to chase Google’s dominant search position, Microsoft should redefine the “battle” to one where search is an integrated part of the marketing mix. Microsoft has assets and relationships that GOOG doesn’t have: 400 million users relationships through communication tools like Hotmail and Messenger, the aQuantive acquisition, strong display advertising business, and investments/relationships like Facebook. Moreover, AdCenter is well positioned to service advertisers on both the display and search sides, although actual offeringDeal is offs that tie the two together are still in the works. But the thing they don't have today is a strong search user experience, the root of the problem.

With the Microsoft acquisition threat fading, Yahoo! has been given a reprieve but it must explain and execute on a strategy that supports their belief that the company is worth $37 a share – or face another round of acquisition attempts and shareholder revolt. Yahoo!’s three-pronged strategy of being the starting point, advertising platform for the Web, and openness is sound but it has been muddled due to poor communication and tactical steps. At the core, Yahoo! has to convince advertisers that it still believes in its advertising platform, especially in light of the tests it was conducting with Google’s search marketing platform. If Yahoo! ends up trading in its Panama search platform for higher search revenues from Google, it will be giving up any potential for a workable integrated ad platform.  Yahoo!'s advantages especially in behavioral marketing could strongly tie together display and search marketing and the foundation for new marketing solutions and revenues. And it's new Yahoo! Open strategy could position it well regain the engagement of users.

And let's take a quick look at Google. From any perspective, Google was going to come out strong from this three-month soap opera. A dispirited Microsoft and floundering Yahoo mean Google can point to itself as the safe haven for both marketers and consumers.

What do you think about each company's positioning and strategy -- does each company have the right game plan and assets in place? And if not, what should they be doing?

My previous posts:

May 4, 2007: Why Microsoft + Yahoo! makes sense -- and why it won't work

Feb 1, 2008: Microsoft's bid for Yahoo!: What it means

My pick of the best analysis thus far:

Paul Kedrosky: Analysis of the Microsoft Decision, Plus Yahoo's Hari-Kari

Michael Arrington: Yahoo's Tough Week Ahead

Om Malik: Microsoft to Yahoo: Take A Hike

Kara Swisher: Yahoo's Nightmare Scenario: I'm from Google And I'm Here To Help!

Joe Wilcox: The Microsoft-Yahoo Blame Game

Lots of press about Google's acquisition of Doubleclick. I agree with Steve Rubel's assessment that this means that Google owns the end-to-end marketing relationship, from branding through to search. But also remember Google Checkout, which allows Google to close the loop on not only search but also display ads all the way through to transactions. There are privacy concerns, but if advertisers and publishers agree to this -- and they will because they will each benefit from the synergies created -- it won't be a problem.

(Updated: see below for some thoughts on user privacy)

In my mind, this is the reason why Google was willing to pay the price they did -- I frankly think they would have paid even more in order to make sure they could buy their way into this market. Otherwise, it would have taken YEARS for them to develop a presence in display/brand advertising.

Having locked up the online space, it also means that they can now focus on other areas of advertising -- like their nacent video, radio, and print ad networks.

Updated: Please also see the blog post by my colleague, Shar VanBoskirk on the deal.

Also, a clarification on user privacy. Google has a strong and clear privacy policy, and has taken steps to make clear its intentions on how it will use and store user data. There's been rational points made from some voices in the privacy advocacy community -- namely Lauren Weinstein from the California Initiative For Internet Privacy -- that Google would refrain from creating detailed user profiles, especially to stay in the good graces of its users. My point above is that Google can create user profiles only with the permission of the publishers and advertisers that it serves -- and can benefit from them only if those same parties participate. It's unlikely that anyone in that value chain will want to risk violating user privacy, so only minimal data -- if any -- will be passed between parties.

And as Shar puts so well in our blog post, users in the end are in control. If Google and its partners act inappropriately with our data, we'll take our business elsewhere. Google may be powerful, but there are still many other players and alternatives on the Internet.

The anticipated Yahoo! reorg hit tonight -- the press release with all of the details is up on Yahoo!'s site, as well as stories in the WSJ and CNET. Here's a quick summary and my take of the announcement.

Yahoo! will be reorged into three groups:

1) Audience Group, focused on audience building. Note that this is not about content creation, but instead, "focused on building the largest and most valuable audiences and relationships on and off the Yahoo! network". Kudos to Yahoo! for understanding that this is not about creating more and more content destinations a la Yahoo! Food, but creating new experiences, especially with social media. Despite Yahoo!'s acquisitions of Web 2.0 darlings like Flickr and del.icio.us, Yahoo!'s social media initiatives remain mostly isolated, siloed products like Yahoo! Answers. The key to their success: spreading the social media mindset far and wide into all of the dark corners of Yahoo!.

One other key thing to note: Yahoo! recognizes that the audience relationships are key both "on and off the Yahoo! network". I think this is a huge recognition that the world does not revolve around the the yahoo.com domain and is moving into the mobile and devices space. I'm also looking forward to seeing the expansion of Yahoo! Widgets beyond desktop widgets and into more Web-based widgets a la Google Gadgets for Web pages.

Of all the groups, I think this is the one that will make or break Yahoo!'s strategy. In the end, the race is not to be the best search engine technology-wise, or to have the most advertisers. It's about being relevant to your audience, no matter where they go or what they do. This has always been Yahoo!'s core strength and I'm glad to see they are putting it front and center where it belongs. Now, they have this small detail of hiring an executive to lead this group....

2) Advertisers & Publishers Group. In what is being seen as a CEO-grooming move, current Yahoo! CFO Susan Decker will be shifting over to the revenue generating side of the business. A key challenge: regaining momentum lost with the delay in launching the new search advertising platform. But even more important will be the integration of Yahoo!'s leading brand advertising solutions with search -- a potentially powerful and potent advertising offering that ties bridges the consideration gap between brand awareness and purchase.

3) Technology Group. This group centralizes technology development under CTO Farzad Nazem. This means that core platform infrastructure -- like social media, search, communication, and very importantly, profile/identity management will be under one unified roof. In the past, there appeared to be individual product teams developing these core technologies in isolation of each other. The most glaring example is identity. I actually have TWO profiles on Yahoo! -- one that's associated with my Yahoo! account and another that's part of my Yahoo! 360 page. The new centralized technology group will certainly help rationalize such inconsistencies, but a key challenge will be maintaining that consistency while giving enough room to allow developers to innovate broadly -- and quickly.

One last thing of note: the press release contained a coherent mission statement for Yahoo! -- "to connect people to their passions, their communities, and the world's knowledge." I really like this because it puts "people" at the center of Yahoo!'s strategy. Compare this to Google's mission "to organize the world's information" and you get an idea of how each company's battle plan. I have been a long-time Yahoo! user and this past year saw my slow defection from Yahoo! Mail to Gmail and Yahoo! Calendar to Google Calendar. I still use Yahoo! Maps for local searches, but am finding my loyalty shifting there as well to Google Maps simply because of the availability of the Google search box in my browser. It breaks my heart, because I do have this emotional attachment to Yahoo! and would love to give them a chance to win back more of my online experiences.

So kudos to Yahoo! for taking the bold, tough move -- I'm looking forward to seeing what transpires in the next few months. I'd love to hear what you think of the reorg -- and what you think Yahoo!'s biggest challenges going forward will be. How could Yahoo! win *your* loyalty?


Technorati Tags: yahoo, reorg, google

So here’s the next big rumor – that Google will buy YouTube for $1.6 billionM. The WSJ article, the TechCrunch post had some of the early takes, but rather than add to the furor of whether the rumor is true or not, I’m going to focus on why Google and YouTube would be interested in working together.

Here’s my quick take on the rumored acquisition:

Why would Google buy YouTube? To start, 35 million users in the US and 100 million daily video views. But it’s not just the sheer numbers that grabs Google’s attention. YouTube is a gem because it figured out what Google, Yahoo!, MSN, AOL, and all of the other video players in the marketplace couldn’t – that it’s not about the video. It’s really about the community that’s around the video.

Take a look at the screenshot below of the same “Extreme Diet Coke And Mentos Experiment” video on YouTube and Google Video. You’ll notice that YouTube has many things you can do with the video – rate it, save it to favorites, comment on it, share it, see other related videos, and view the user’s playlists, etc. I think you get the idea.

Then take a look at the Google screenshot. Let’s see… you can add a comment (that’s new). There are a few other additional features like browsing related videos or via tags. But clearly, the focus is on the big, dominant video player.

YouTube is winning the hearts of the audience because video search simply doesn’t work. You have to instead rely on the opinions, ratings, and playlist compilations of others to discover good video. 

Why would YouTube want to be bought by Google? My colleagues, Josh Bernoff and Ted Schadler, discussed earlier this week in their blogs that earlier this week that YouTube faces substantial risk with lawsuits coming from music and video copyright holders, and how they could potentially address those concerns – namely by developing technologies to identify copyrighted materials against a body of work provided by the copyright holders. But who is in a better position to develop that technology – 60 burnt out people at YouTube or the legendary technical minds at Google?

Moreover, Josh points out that YouTube faces potential “cease and decease” actions from copyright holders, and risks following in the footsteps of Napster where it could its activities can be seriously compromised. But this morning, Josh and I discussed that a copyright holder would be much more likely to negotiate and partner with Google than a start-up like YouTube. Update: Josh just posted his thoughts on the rumored acquisition as well.

Is YouTube worth $1.6B? You betcha. That’s 4 cents per video stream ($1.6B divided by 100 million daily views * 365 days) and it’s still growing. Another way to think of it is that YouTube has roughly 50 million users (35M in the US according to Nielsen NetRatings, and probably another 15M worldwide) which comes out to $32 per user. It’s high, but it’s also reasonable.

Granted, YouTube is just beginning to monetize its audience, but having access to  Google’s über-ad network gives it a huge leg up. But this is where I hope YouTube stays the course in not cluttering up its unique interface with sponsored text ads, or its video experience with pre- and post-roll video ads.

The real opportunity for YouTube is to create a completely different kind of advertising form, one that is based on community engagement and involvement, rather than the traditional interruptive style of advertising. Take a look at their home page – here’s a screenshot from today. There’s a small text link to a “Follow the Finger” video contest sponsored by Butterfinger (screenshot also included). Advertisers are loathed to develop these special campaigns together – they would much rather slap on existing banners and promotions. But given the size and attractiveness of the YouTube audience, the site can command not only top dollar with exclusiveness, but also demand that advertisers adhere to specific standards that guarantee the best user experience.

If the acquisition goes forward, Google will be pressured to quickly realize a return on its first major investment. My hope is that Google will resist the temptation to turn YouTube into yet another cluttered ad space and allow the company to push advertisers into this new, engaged form of advertising.

My first grade daughter has been bringing a swim bag to camp most days this summer -- it was one of those tchotchkes that I got at an industry event. So last weekend she was getting ready to go to a swim birthday party and asked, "Mom, where's my Google bag?"

I stopped dead in my tracks and said, "Honey, it's a Yahoo! bag."

"Oh yeah, that's right. Well, do you know where it is?"

My daughter is your typical Silicon Valley kid who knows how to use the Internet, can type in URLs, and has heard me and my husband talk endlessly about companies like Google and Yahoo!. What struck me dumb was that even though she was carrying around this large purple swim bag emblazoned with Yahoo!'s name on it all summer, she thought it was her Google bag. It's incredible to me that the Google brand carries such weight that it became top of mind for my six year old.

Just to double check, I asked her later if she knew what the difference was between Google and Yahoo. "Yahoo! is the place where you go to play games (she uses Yahooligans)," while "Google is what shows up on your screen when something doesn't work." (Google is the default search engine on the kids' computer so it appears to the side of the Web browser when a page can't be found). My son (a second grader) chimed in that Google was good for finding stuff you needed to know about, while Yahoo! was the place you go to find pictures, play games, and check your email.

So while Yahoo! doesn't appear to be top of mind for my daughter, she definitely has a more positive opinion of Yahoo! than of Google. There's hope yet for Yahoo! to win the mind as well as the heart of my daughter.

What struck me is that my informal, anecdotal survey of my children closely mirrors the brand perception of the major portals. Hitwise recently published some data about the brand attributes of three major search engines – Google, Yahoo!, and MSN (collectively known as GYM). Hitwise took the top twenty search queries across all search engines that contained the name of these three sites to gauge their respective brand attributes. Hitwise GM Bill Tanner wrote:

Google's queries center on finding things, be that information, geographical location or multimedia content. This confirms what we've seen with our breakdown post, that Google, despite building some very attractive "portal-like" tools, maintains in consumers minds as a brand that helps you locate things.

Yahoo! in contrast, demonstrates a clear portal identity with well rounded interest on a variety of their channels or portal offerings. There is a clear difference when we compare Google's terms with Yahoo's... search versus engage in an activity or consume a specific type of content.

MSN queries are clearly distinct from both Google and Yahoo!, with their queries dominated by specific tools such as the new Messenger download, but also showing some portal characteristics with Music, Games and Money.

The data also shows how far Google still has to go to shed it’s one-trick pony image with consumers -- even though I believe they are starting to make progress in this area.

I’ve long called Google a “one-trick pony” because so much of their business comes from one primary revenue stream – online search ads. This has been further reinforced by recent articles like Businessweek’s article, “So Much Fanfare, So Few Hits” where the uses traffic data to show that most of Google’s new products haven’t gained traction in the market (with the exceptions of Google Maps and Google News). Paul Kedrosky also takes an excellent look at the Hitwise data to reinforce this point.

I don’t dispute the facts, but make a different conclusion – I think Google is actually making progress in diversifying out of search and into new businesses – yes, the pony is learning new tricks. But just like training a real animal, it takes time, patience, and the pony performs some tricks better than others.

I took a look at Google’s most recent traffic data from Nielsen//NetRatings but looked specifically at Google’s unique users and page view data. I wanted to see what percent of Google’s users were using search versus its other properties. I also compared the traffic between June 2006 with traffic from June 2005. I found that traffic to Google Search accounted for 88% of Google’s unique users in 2006, down from 91% in 2005, and drew 49% of total page views in 2006 versus 62% of page views in 2005 (see the figure below). More importantly, properties like Gmail almost doubled in unique users from 4.3 million uniques in the US in June 2005 to 8.3 million uniques in June 2006.

Note that there problems with this methodology: I don’t know how NNR categorizes the properties or if they were consistent from 2005 to 2006; the data from NNR wasn’t available for Google Local/Google Maps, and I don’t know half of Google’s page view traffic is going if it’s not going to Google Search. But I still think it provides a different, temporal look at Google’s portfolio.

So, Google’s done a decent job in building momentum behind a few of its properties and will likely continue to gain steam. Its biggest problem was pointed out in the Businessweek article – that there’s only so much that you can push through a single search query box. Google understandly doesn’t want to clutter the home page, but it should take a close look at Ask.com’s new home page redesign which pushes its most popular tools to the surface – and allows users to customize the interface as well.

The other problem is actually diversifying the revenue base. Pay per click search ads remains the mainstay, but Google has been busy developing cost per impression display ad options, cost per action ads, and extending into offline markets like radio. None of these products will be run away hits, but with billions of cash on hand, Google can afford to be patient as these markets develop.

My point is that we should give Google’s product team a break. Before you think I’ve gone soft on Google I haven’t – I’m just asking for a bit of realism in thinking about new product development at Google. It took Google several years to become the dominant search player – and this is for a product where there are very few switching costs. As I wrote in March about Google Finance, it’s going to take a long time to tear users away from highly involved, personalized services. It’s only been four and a half months since Google Finance – it’s going to take a while for it to gain traction against Yahoo! Finance’s ten year lead! But you gotta start somewhere and at least Google’s getting started.

Google unveiled its long-awaited wallet service, codenamed “GBuy” and officially called “Google Checkout”. While frequently described as an “eBay killer”, I believe that it’s actually positioned to solve a perplexing and core problem at Google – how to drive more search ad revenues, especially in the retail sector where search spending is plateauing for top keywords.

Here are the basics of Google Checkout:

-          Increase conversions with a better checkout process. The goal is to make it easier for buyers to checkout with retailers. Retailers today often see users abandon their shopping carts, so anything they can do to help potential buyers finish the transaction will increase their conversion rates. Google Checkout stores billing, shipping, and credit card information to enable speedier checkouts. Better conversion rates mean that retailers will be able to spend more money on advertising and marketing – for example, search ads – which is great for Google.

-          Build trust for merchants. AdWords advertisers using Google Checkout will have a “badge” (which looks like a shopping cart) appear in their search ads. Over time, Google hopes that consumers will see this as a signal that the transaction will be safe and secure. Why does it matter? Think about the last time you bought something from a no-name retailer – did you hesitate when it came time to enter your credit card? For many consumers, concern about security and privacy are major reasons why they didn’t buy with a specific retailer. Smaller, less established retailers in particular will benefit from using Google Checkout.

-          Provides a discount for AdWord advertisers. And AdWords advertisers will get some of their transactions processed for free. The standard flat rate for Google Checkout will be 2% of transaction value plus 20 cents per transaction. Compare that to PayPal’s lowest rate of 1.9% plus 30 cents per transaction for monthly payments over $100K and PayPal’s standard rate of 2.9% plus 30 cents per transaction for up to $3k in monthly payments received. So not only will Google’s rate be lower for most retailers, but participating merchants also get 10 times the value of their AdWords spending for free transaction processing. So if you spent $100 last month on AdWords, you’d get $1000 worth of transaction processing (which translates into $20) for free. Do the math, and that’s a 20% effective discount on your AdWords buy. And yes, Google hopes that retailers will plow that savings back into more search spending.

So hopefully you’re beginning to see the virtuous circle that Google is building with Checkout and how it supports the core search business. It’s brilliant – by tying the wallet service to search, Google creates a huge incentive for its retail advertisers to participate. This is what differentiates Google Checkout from other wallet services like Yahoo’s now defunct PayDirect, AOL’s Quick Checkout, or Chase’s I4 Commerce's Bill Me Later.

While smaller merchants are the natural targets for Google Checkout, don’t count the larger retailers out. While some may be reluctant to “turn over” the customer relationship to Google, in the end, I think they will try and stick with anything that will result in better conversions.

What It Means For eBay

Poor eBay – its stock took a beating today on the anticipated news of Checkout's launch. The money on the street is that eBay/PayPal will be the losers in this, but I’m not so sure. PayPal is a payment method which fills a big needs in P2P transactions, especially for auctions. Will some eBay sellers defect and start using Google Checkout instead? Not if they want to remain fully integrated with eBay AND also offer non-credit card options (which Google Checkout currently does not offer). The battle will be with the merchants – PayPal will have to step up its efforts to get retailers to accept PayPal as a payment system along side traditional payments like credit cards – and hope that they can do this before Google launches its own payment system (more on that later). If eBay can convince enough merchants to accept PayPal, those merchants will eventually push Google Checkout to accept PayPal as well.

And I fully expect that the current eBay/Yahoo! partnership will launch a competing product to Google Checkout that mirrors the search advertising tie-in. So this battle is far from over – stay tuned.

One of the side “benefits” of Google Checkout is that consumers will be able to see their full transaction history. This isn’t a problem as long as you’re comfortable having all of that information reside with one player, which I anticipate will be the case. But now we have Google tracking our search history with personalized search, email with Gmail, and online spending with Checkout. At what point do consumers get that squishy feeling in their gut that Google knows too much? Our research shows that while consumers have a great concern about privacy, they aren’t willing to do very much and in many cases, willingly provide personal data as a fair exchange for a valued product or service.

All of this would be honky-dory for Google given its strong brand and trust it's built with consumers. But what happens when the inevitable phishing attacks begin, or payment problems ensue? In the pre-briefing of this announcement, Google did not discuss customer service issues, but clearly, it’s one thing to serve several hundred thousand advertisers paying for their search ads, and quite another to serve potentially millions of consumers.

I suspect that “all things Google” will soon start to wear at the edges, in much the same way that “all things Microsoft” came to be seen as a monopoly of the desktop. But instead of dominating operating systems and software, Google is instead dominating our information. So at what point does Google step over the line and extend its products and services too far?

I’m eager to get reactions to Google Checkout, if you would use it as a consumer and especially, if you take payments, if you’d use it as an alternative checkout solution.

Additional materials:

- Powerpoint presentation with screenshots of Google Checkout Download google_checkout_screenshots.ppt .

- Buyer demo and merchant demo

Update: Google Blog's official post on Checkout is available.

Just in - Steve Berkowitz, CEO of Ask.com (acquired by InterActiveCorp last year) is moving to Microsoft to head up their MSN.com, search monetization, and new Live.com platform. Below is a copy of the email I received from Microsoft confirming the rumors that had been circulating around the Web.

Steve will specifically heading up MSN.com, MSNTV, MSN Internet Access, and most importantly, the business side of the new Live.com platform. Most of the reactions to the announcement have been "Wow". I thought I'd extend the discussion with a couple of quick thoughts:

- This is not necessarily a loss for Ask.com. It's recent gains in traffic (thanks to some nice interface innovation and neato technology in search refinement) shows that Steve is leaving on a high note. I don't think Ask.com is going to be at a loss without him, primarily because he's done such a good job there in building a team.

- This is a logical move for Steve, especially now that Ask.com is moving into a new role at IAC. He's built a solid team at Ask.com, but it is going to become more of a platform and technology base for IAC, in addition to its role as a search destination. What he did well at Ask.com is exactly what he needs to do at Microsoft -- come from behind and take on the big guys at Google and Yahoo. The big difference -- he'll have a MUCH bigger budget and talent pool at his disposal!

- This is a high visibility move for Microsoft, showing that it's investing in leadership for its search and portal products. MSN.com has languished for years, especially in its branding and positioning of the portal against Yahoo.com and AOL.com. Bringing in a high profile outside hire like Steve is going to further bolster MSN.com and Live.com's status within the Microsoft organization. It's a smart move -- it was expected that someone would be named soon since David Cole (who runs MSN.com) had announced that he was leaving for a year-long sabbatical. But by hiring someone with Steve's experience and status, rather than promoting from within, Microsoft is showing that it wants to do things differently.

- Most importantly, Microsoft is taking a very important step in putting ALL of the hot consumer products under one team. Live.com is at the core of Microsoft's turnaround -- it represents fast development cycles and a totally new approach to addressing the marketplace. At the same time, Microsoft can't turn its back on the advertising juggernaut of MSN.com. In the past year, there's been uncertainty about how MSN.com and Live.com will work together. Having them all come together under Steve will be a first step in addressing the concerns of the MSN.com group while maintaining Live.com's momentum.

So, what do you think? Was this a good move on Microsoft's part and will it make any difference to have Steve leading the charge?

Email from Microsoft's PR firm, Waggner Edstrom:

I am so sorry for the Friday afternoon fire-drill, but rumors are circulating about a new MSN hire and I wanted to get you accurate information as soon as possible.  Microsoft has hired Steve Berkowitz as SVP of the Online Business Group. He will be responsible for running the Online Business group, which includes include MSN.com, MSNTV and MSN Internet Access programming, advertising sales, business development, and marketing for Live Platforms, MSN and Windows Live.  This team’s mission is to deliver world-class go to market leadership, that wins customers to our services and builds a world leading advertising business.  The responsibility for the monetization of our Live Platform, MSN and Windows Live assets is owned by this team, and includes end-to-end management of the online P&L.

As you know, Steve is an accomplished senior executive with a rich skill set, including brand building, marketing operations, people management, finance and tech.  Please know that PressPass will be updated shortly with additional information, so please check back shortly.  Feel free to call if you have any questions. 

MAIL FROM KEVIN JOHNSON
I am pleased to announce that Steve Berkowitz will be joining the Platforms and Services Division (PSD) as Senior Vice President, Online Business Group, reporting to me. Steve succeeds David Cole, who will begin his leave of absence in May.

Most recently, Steve was the CEO of Ask.com, a division of IAC/InterActiveCorp. At Ask, Steve is credited with building the management team that orchestrated the turnaround of Ask.com, grew their user base, increased customer satisfaction, and gained share in the search market over the last year.

Steve is an accomplished senior executive with a rich skill set, including consumer brand building, media, marketing, operations, people management, finance, and technology. He also brings a great blend of start-up and high growth business experiences. Prior to joining Ask, Steve was the President and COO of IDG Books, where he successfully built a consumer brand by expanding the "Dummies" series of books to cover topics ranging from C++ to pet care.

Steve’s management experience, deep functional knowledge of the search and Internet space, and understanding of both the offline and online publishing worlds make him a great choice to lead the Online Business Group. He is a proven leader, and is excited by the opportunity to take the assets we’ve built in MSN and drive our software + services vision forward.

Steve will start this assignment on May 8^th. David Cole and I will work together to ensure a smooth transition to Steve.

Please join me in welcoming Steve to Microsoft, and thanking David for his contribution to the company and to MSN.

Google Finance launched tonight – I had a sneak peak from Google last week and got a chance to play with it a bit after it went live tonight. I also had a chance to speak with a Yahoo! spokesperson after the Google site launched and was able to get their reaction. Here’s my quick take on the new service and what it means:

There are three new features in Google Finance that stood out for me:

-         Search. No need to know the ticker symbol of a company. I could type in company names like Home Depot and Target, and get the full information page in a wink. On Yahoo! Finance, MSN Money, and Marketwatch.com, I have to know the ticker symbol. And even when I use the lookup, especially for Target, I get a long list of companies with the name “target” in them. Finally, I don’t feel like a dummy when trying to look up companies!

-         Charts. Google took a page from its Maps product and makes the charts interactive – you can drag them back and forth over time to see how prices have changed, without having to wait for the page to refresh. Another nice feature – key new s stories are mapped out on the chart (see the screenshot above).

-         Community advocates on message boards. Google will have as part of every publicly traded company, a message board that is a part of Google Groups. Taking a page from the popular Yahoo! Finance message boards, Google has created a discussion area for every publicly traded company (or so it appears). Inappropriate and spam postings have always been the bane of the Yahoo! boards, so Google’s put in place a few things, most notably the use of employees (yes, employees!) who will police the boards. What strikes me as ironic is that rather than employ technology to solve the problem, Google is using people to monitor the boards, in much the same way they review the content for search ads. Amazingly, there is no ability for users to flag posts for review – if quality is important, why doesn’t Google leverage its users to be the front lines in the fight for quality?

So overall, Google has done a very, very nice job pulling together a financial portal. Oops, did I just say “portal”? Sure looks like Google is pursuing that strategy now, doesn’t it! And rightly so – just take a look at the discussion board about Google and you’ll see person after person saying that they are defecting from their current finance site (mostly Yahoo!) to use Google.

But I frankly think that we won’t be seeing a mass migration of people from other finance sites to Google anytime soon. The most obvious defectors will be Google enthusiasts – they won’t be able to wait to add Google Finance to their personalized home page. But I believe that most mainstream financial site users will stick with their current sources for now, primarily because it’s simply a pain to have to re-enter your detailed portfolio information again! Are nice charts and company look-ups enough to shift people over to Google Finance? And don’t forget that Yahoo! and MSN have invested heavily in producing their own content, and I fully expect that they will improve their search, charts, and boards quickly as well.

But these features are all window dressing. In the end, Google Finance is a definite improvement on existing services, but it didn’t blow me away. It felt like it was incremental improvements rather than something that fundamentally changed the financial site game.

I believe that Yahoo! actually has the opportunity to change the game, but only if it taps into its nascent social computing strategy. For example, it may give users the technology to rank posts on quality or flag inappropriate posts. But also think about the power of tags on posts, or the ability to see rich profiles that enable users to connect with each other based on their similar investment goals. Think of a social network where I could find working moms who have to balance saving for college, retirement -- and are in the midst of building a house.

So kudos to Google for launching a nice new site that ups the ante, but don’t rest on your laurels for long – your competitors will quickly match you feature for feature, and raise you with their larger installed user bases.

We just published a new report, "Social Computing: How Networks Erode Institutional Power, And What To Do About It" (available to clients only, but it's getting some good distribution as I'm getting pinged about it left and right). Here's the Executive Summary:

"Easy connections brought about by cheap devices, modular content, and shared computing resources are having a profound impact on our global economy and social structure. Individuals increasingly take cues from one another rather than from institutional sources like corporations, media outlets, religions, and political bodies. To thrive in an era of Social Computing, companies must abandon top-down management and communication tactics, weave communities into their products and services, use employees and partners as marketers, and become part of a living fabric of brand loyalists."

Forrester defines social computing as "A social structure in which technology puts power in communities, not institutions." We also believe that three tenets define social computing:

1) innovation will shift from top-down to bottom-up;
2) value will shift from ownership to experience; and
3) power will shift from institutions to communities?

Now, this sounds all simplistic and theoretical, but I think there's a great deal of power in the idea of social computing. With full respect to the definition of Web 2.0, I believe that the concept of social computing is the underpinning of much of the pain that companies are feeling around new technologies like blogging and RSS. But as I often stress, it's not about the technologies but about the new relationships that users will form. Technologies will come and go, but the power built on the relationships created by social computing will endure.

To fully appreciate the value of social computing, companies have to let go of control. That means letting customers control the brand if you're a marketer, and it means enabling new enterprise tools that IT can't easily control to attract and support employees with high social computing needs. In many ways, this is the source of the great distress that I routinely hear from corporate managers.

The goal of the report is to be the foundation piece for a key area of research for Forrester. So if you've had a chance to read the report, I'd love to hear what you think of it.

I'll be moderating a panel at a SDForum Search SIG meeting this Tuesday (yes, tomorrow) on social search. This is a favorite topic of mine as it represents the intersection of two of my research areas, seach and social computing. I think it's also an important battleground in the next phase of search, especially because companies like Yahoo! and Microsoft are eons ahead of Google in terms of personalization and established relationships with consumers.

I hope you'll be able to join me and a very interesting panel as we explore how social search is transforming the user experience. Personally, I've been using all of the services from our panelists -- Del.icio.us, Digg, Kaboodle, and Wink -- and recently purchased a laptop sleeve (after weeks of online shopping) thanks to a tag on Wink. 

Aside: After his CES keynote, I asked Larry Page how Google felt about personalization -- it seems there's a love/hate relationship in the way Google uses registration and cookies -- they know it's necessary to provide a personalized experience but make it pretty cumbersome to do so. Larry gave a typical Google non-answer, but acknowledged that Yahoo! and Microsoft were significant competitors in this area (they have a bit of a head start).

SDForum Search SIG - Search Different: Tagging, Social Bookmarking and Sharing - Jan 10th @ Yahoo - Featuring Del.icio.us, Digg, Kaboodle & Wink

Here’s a quick overview of some of the things I picked up after two days at CES.

-         A Tale Of Two Keynotes. I attended both the Yahoo! and Google keynotes and Friday and the contrast was obvious, starting from the music and ending with the celebrities. I have to say, I really enjoyed seeing Tom Cruise during the Yahoo! speech, but felt that it was fairly canned, especially Ellen DeGeneres’ “monologue” about the technical problems she had. The Yahoo! speakers were well rehearsed, but they were, well, rehearsed. In contrast, Larry Page was far from the most dynamic speaker, frequently checking his paper notes. But there was a down to earth quality of his presentation, and the fact that he took many questions from audience members brought a man of the people quality to the keynote. But by far the best part of the Google keynote was Robin Williams’ co-hosting of the Q&A (I thankfully escaped any ribbing when I asked a question!). You couldn’t have asked for better entertainment than the parody of our own questions.

-         Getting trampled. Just one other observation about the keynotes. Maybe it was the 9am start time, maybe it was the company, but the Yahoo! keynote wasn’t full and while the audience was attentive, it wasn’t energized. I was able to walk in, and have nobody else sitting next to me in the balcony. Contrast to the Google keynote, which was near mayhem outside the theater doors just before the start of the keynote. I showed up 15 minutes early, stood in the wrong line (with ticket holders instead of press) and proceeded to get pushed, shoved, and almost trampled by irate ticket holders who couldn’t get in because they had all shown up past the deadline. And there were about 200 more people without tickets hoping to get in anyway at the last minute. The result: I felt very fortunate to finally get in, but was pretty shaken from the mayhem. I knew that the Google keynote was the hottest ticket at CES, but didn’t anticipate just how aggressive people could be.

-         Convergence? Didn’t see it. This show was supposed to be about “convergence” but darn if I couldn’t find it at the show. I haven’t been to CES since 1995, primarily because my research focus is on media and marketing – you know, the stuff that convergence is supposed to bring to devices. The Yahoo! and Google keynotes gave me the excuse to come to Las Vegas and indulge my gadget-loving side, but there was little convergence happening outside of Yahoo’s announcements. The only other interesting example was TiVo’s current online offerings, available on the Series 2 machines (I just ordered one so I’m eager to try it out). TiVo’s CEO Tom Rogers eagerly discussed with a group of reporters its anticipated high definition product (scheduled to be introduced mid-year) which will take advantage of its broadband connection to provide even more online services. While I anticipate more devices to integrate online services, it will be deals like the one between TiVo and Yahoo! that will be core to making such convergence services work for consumers.

-         My favorite gadget. I heard about this one when a TV crew picked me out while I was noshing my lunch outside the main hall with some Forrester colleagues. Interestingly, they wanted to interview me and not my other (male) colleagues because I was a woman. The device: the Connect Io Intelligent Oven that turns on by the Internet or cell phone (and can keep food cool before it turns on). What, were you expecting me to pick a cell phone or HDTV? As a working mom, I thought this was just the coolest thing – I can throw the frozen pizza in the oven in the morning, ping it to preheat and cook the pizza when I pick up my kids, and have pizza on the table in 5 minutes. Now, I just need an applicance that will wash, peel, and cook the veggies for me too!

-         Pedal power in Las Vegas. I rented a bike to get around (photo proof is below) and it totally made the CES experience enjoyable. (My collegue Josh Bernoff did the same). I was able to get from my hotel on the Strip (Harrah’s) to the convention center in 10 minutes – and that includes abiding by all traffic lights. Racking the bike is easy – there are stands right outside Central Hall (Sands is a bit trickier – the only rack I could find was in the back in the service entrance). And visiting other hotels around town is easy – simply check the back in at the Bell Desk. Las Vegas Cyclery makes it easy by dropping off/picking up the bike from your hotel. Only other recommendations: bring your own helmet and wear reflective clothing.

On Friday at CES, Google unveiled Google Pack (along with the new Google Video Store – for more details on the video announcement, check out my colleague Josh Bernoff’s blog post). Besides downloading a whole suite of useful security, communication, and entertainment utilities, Pack also happens to make available all of Google’s applications, from Toolbar to Picasa.

What’s interesting to me about Pack is that it’s an innovation on an existing practice – the bundling of third-party software by ISPs like AOL, Earthlink, MSN, and Yahoo!. But in this case, Google is offering Pack free and unbundled from any ISP service, all in the name of improving the user experience.

But the real beauty behind Pack is Updater, the little program that automatically installs and updates the software. (In fact, it’s installing Pack right now as I’m writing this post I Word and posting it via TypePad – the computer hangs every once in a while, which is annoying, but for the most part, I see no degradation in my PC’s performance.) Once installed on the PC, Google has a direct conduit to the user’s desktop, which will be extremely valuable in pushing its own applications (current and future). Think of it as the next front in the portal/search wars to tie in user loyalty.

I believe that this opens up some interesting opportunities. First, software makers will be clamoring to be included in Pack, but will have to first get through Google’s review. In addition, companies like Dell may be interested in including Updater on new PCs to make that initial install of software much easier. Lastly, I fully expect AOL, Yahoo!, and Microsoft (which has Windows Updater already) to jump into the fray. After all, they already have existing relationships with third-party software providers that they can turn to.

But most significantly, I believe this changes the nature of the relationship between Google and the user. As I mentioned at the end of my last post, I believe that Google has up to this point been regarded more as a utility (albeit, a really, really useful one) than as the lynchpin of an online experience. But with Pack and Updater specifically, the user now not only becomes dependent on Google to smooth the experience, but also places a great deal of trust in Google to do the right thing – everything from choosing the right software to include to making sure that updates are bug-free.

One thing I think that will ensure that Google maintains that user trust is to increase the scope of the software being offered, and to be more transparent about why it decided to include one software option over the other. In a post-CES speech press conference, Larry Page couldn’t give a definitive reason why Pack decided to include only RealNetwork’s RealPlayer – but he did say that Google was open to including multiple software types in an area like media players to enable consumer choices. I would love to see iTunes and Internet Explorer included – I have to use IE for work-related applications – but I wonder just how open Google would be to including competitors products. In the end, if Google is truly committed to improving the end user’s experience, it would strike deals with the most popular and useful applications, regardless of whether it comes from a competitor or not.

Yahoo! announced its new Yahoo! Go suite, which consists of Yahoo! Go Mobile, Yahoo! Go TV, and Yahoo! Go Desktop. I think it’s significant because Yahoo! shows how a traditional Internet content and service provider can link to devices like phones and TVs. Here’s a quick overview and specific highlights:

-         The Yahoo! Go concept: Anything that you can access on Yahoo! through your browser will also be available on your desktop (outside of your browser), on your phone, and on your TV.

-         Yahoo! Go Mobile is a really nice connection between your phone and your Yahoo service. Snap a photo and have it appear on Yahoo! Photos (Finally! An easy way to get photos off of my camera phone). A phone number you enter on Yahoo! Addresses shows up on your phone’s address book. I personally LOVE this idea of a universal contact list, especially as I am prone to losing my cell phone!

-         Yahoo! Go Desktop is a repositioning of Yahoo! Widgets (a.k.a. Konfabulator) to puts individual services directly on the desktop. Yahoo! also announced Dashboard, which is very similar to Google Sidebar and MSN’s Dashboard (available only to MSN ISP customers). One key improvement: the user can see activities from people on their buddy lists, for example, a new post on Yahoo! 360 or Web page tagged via Yahoo! My Web. This is similar to the connectivity within Windows Live which taps into Messenger to show “gleams” of activity by your buddies.

-         Yahoo! Go TV which puts music playlists and Yahoo’s video search on the TV. It’s great especially for showing a slideshow of your Yahoo! Photos on the big screen. I didn’t find this rendition that compelling (nice, just not compelling). But tucked away in the corner of the demonstrations was a concept screen that showed how content like RSS feeds and Yahoo! entertainment content could be integrated on to the television. For example, if you’re watching a football game, go and check your sports feeds. If you’re watching a movie, go and get more information about the star, what other movies they are in, or even purchase the DVD on Yahoo! shopping (see the screenshots I’ve uploaded below -- note that one of the screenshots includes an in-line add for a Howard Stern show.) The compelling idea is that you can customize the television experience with content from the Web.   

A few thoughts on these announcements:

-         Compared to the reported announcements (via WSJ) from Google later today, Yahoo!’s Go announcements have a strong connection to consumer electronics and will have a much bigger impact over time than either Google Video or Google Pack. This is because it sets off a race among phone and device makers to tap into the Yahoo!’s large user base. But it’s also worrying because the investment that service providers have made in their own services is now to tie in users becomes less important if the user can take their services with them from phone to phone, provider to provider. I believe that device manufacturers will be more willing than their provider counterparts to let users choose between Yahoo!, Microsoft, and Google mobile solutions – or mix and match as they please.

-         Go Mobile in particular expands Yahoo’s reach beyond the desktop – Yahoo! stated that there are 2 billion mobile phone users around the world, compared to 900 million Internet users). To this point, Yahoo! allows for the first time new sign-ups to a Yahoo! account via Go Mobile.

-         Yahoo!’s promise to keep the platform open will be closely watched. At the conclusion of his speech, Terry Semel said “Personally, I believe that walled gardens are a thing of the past.” But what Yahoo! is doing is in many ways constructing a different kind of walled garden, albeit, one where Yahoo! serves as the gateway to the world of Internet content. For example, Yahoo! Go Mobile will allows users to access non-Yahoo! email accounts, as long as they are POP enabled. But this has to be set up via Yahoo! Mail and in this case, through Yahoo!’s paid Mail Plus service.

To put all of these announcements in perspective, I had an interesting discussion with Cammie Dunaway, Yahoo!’s CMO. She said, “Users don’t have an emotional bond with Google. But they have one with us.” To some degree, I agree with her on this. Google has a strong brand and has built a great deal of trust and goodwill thanks to its great search experience. But I don’t have my have my life on Google – it’s actually on Yahoo!. (Disclosure: My photos are on Yahoo! and Flickr, tags are on del.icio.us, personal email (and domain) are on Yahoo!, and I use Yahoo! Local and Maps regularly.) This could change as Google and Microsoft increase and improve their services, but it will take a lot to tear me away from my established habits. Having Yahoo! now also available on my devices potentially increases that stickiness.

My colleague Josh Bernoff, who is here at CES with me, used a car analogy to illustrate this. Yahoo! is like a tricked out Lincoln Navigator – it has everything you could ever want, from the DVD player and is comfortable to boot. You practically live in that car. Google’s car representation would be the Prius, which is environmental – its users have an emotional attachment to it for a completely different reason.

So here’s my question to you, dear blog readers. Do you have an emotional attachment to Google, or any other portal/search service? To what degree