Feeds

Google's AOL win upsets Inktomi, Overture

Momentum

  • alert
  • submit to reddit

Choosing a cloud hosting partner with confidence

ComputerWire: IT Industry Intelligence

Google Inc has upset Inktomi Corp and Overture Services Inc by replacing both companies as the provider of web search and paid search listings at America Online Inc, the world's largest ISP,

Kevin Murphy writes

. The development took a huge chunk out of the share prices of both losing companies, even though Overture actually raised its revenue guidance yesterday.

Google, generally regarded as the best search engine out there, said it will provide its search index to AOL, CompuServe, AOL.com and Netscape.com. The company's new AdWords paid listings text ad systems will also be deployed at the four sites, reaching tens of millions of surfers.

Inktomi has provided the AOL search engine for several years, and stands to lose "less than 10%" of its revenue from losing the AOL contract. The company said that AOL continues to be an important customer of its content networking business - the ISP has Inktomi caches deployed all over its US network.

"This decision does not impact revenues for the current quarter," Inktomi said in a statement, observing that it is still "the leading OEM provider of web search services". The company's share price plummeted 24% anyway, which looks bad unless compared against Overture stock, which lost almost 36% of its value yesterday.

Overture CEO Ted Meisel said on a conference call with analysts: "AOL was far from our largest partner... this is a minor setback." The company will continue to provide its ad search services to AOL properties in Europe, he said, as well as its other partners, including MSN, Yahoo and AltaVista.

Meisel said he believes "the decision was not based on a comparison of Overture's pay-per-search to Google's pay-per-search, as we're confident we would win in that comparison, rather it would appear AOL is attempting to capitalize on Google as a search brand... and pay-per-search came as a part of that package."

Overture also took the opportunity to raise its guidance for the year and next year, mostly on the back of its deal with Yahoo saying it sees net income of between $0.97 and $1.05 per share on revenue of $530m to $570m. The company sees 2003 earnings of $0.53 cents to $0.83 cents per share, lower due to its first full year of taxes, on revenue of $640m to $690m.

Overture does have at least one trump card over Google, however, in the form of US patents protecting its paid search system. The company is suing Google and FindWhat.com Inc, its other main competitor, for patent infringement. Due to the length of time such cases take, however, the company is unlikely to see a major competitive advantage in the short term.

The next search battleground for Google is Yahoo, but this time the privately-held firm will be on the defensive. Yahoo has been using the company's web search since July 2000 when Google supplanted Inktomi in a major portal for the first time

Sources close to talks say Yahoo's agreement with Google is currently close to being up for renewal, and rival search engines, including Inktomi, have been pitching for the business. Last week, Overture announced it renewed its contract with Yahoo for three years, which indicates Google's chances of staying in Yahoo are not guaranteed.

Inktomi's unique selling point has always been that it does not have a consumer-facing web presence of its own, so it will never been in a position to compete for eyeballs with its portal customers. And the company has no property that competes against its customers for increasingly scarce online advertising dollars.

Two years ago when Google signed Yahoo, it was a one-year old site popular with geeks, only on the cusp of mainstream popularity. It also did not sell advertising space. Now it does sell ads, and a recent report from WebSideStory Inc said on April 24, Google accounted for 31.87% of all search referrals worldwide, compared to Yahoo's 36.35%.

© ComputerWire. All rights reserved.

Choosing a cloud hosting partner with confidence

More from The Register

next story
Facebook pays INFINITELY MORE UK corp tax than in 2012
Thanks for the £3k, Zuck. Doh! you're IN CREDIT. Guess not
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
Yes, yes, Steve Jobs. Look what I'VE done for you lately – Tim Cook
New iPhone biz baron points to Apple's (his) greatest successes
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Ex-US Navy fighter pilot MIT prof: Drones beat humans - I should know
'Missy' Cummings on UAVs, smartcars and dying from boredom
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
Edward who? GCHQ boss dodges Snowden topic during last speech
UK spies would rather 'walk' than do 'mass surveillance'
prev story

Whitepapers

Cloud and hybrid-cloud data protection for VMware
Learn how quick and easy it is to configure backups and perform restores for VMware environments.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.