Thursday, July 30, 2009

Indian Search Industry to experience stronger competition

Despite the search market in India being very small and amounting to less than $40 million in a year but the market is growing rapidly at about 33% yearly and so the Microsoft-Yahoo! deal is significant to India, Praveen Bhadada, engagement manager, Zinnov Management Consulting.

Speaking on the Microsoft-Yahoo! deal and its impact on India, Bhadada said, “Google is the dominant search engine in India and there are about 15 plus local search engines that have emerged in the last 2 years, for e.g. asklaila.com, justdial, guruji.com, mapmyindia.com, tolmolbol.com etc. covering niche areas. Unlike Baidu (search engine in China), they do not directly compete with the global giants such as Google, Yahoo or Microsoft.”

With presence of more than 35 million SMBs in India, and some of them relying heavily on search engine marketing to push their products across the globe, the

Microsoft-Yahoo partnerships can provide them a better second alternative, he said.
The rapid pace of broadband penetration in India will help both Google and Microsoft-Yahoo in the long run and help them gain larger share in markets such as India and China.

The deal will help both Microsoft and Yahoo! put a strong battle against Google, which currently enjoys more than 65% market share in the $25 billion plus global market for search engine marketing, said Bhadada.

In fact, Yahoo! globally accounts for close to 20% while Microsoft, with its new Bing search platform enjoys about 9% market share.

In the exclusive agreements, Microsoft will acquire a 10 year license to Yahoo’s core search technology and Bing will be the exclusive platform for all Yahoo! sites.

According to the official statement, Microsoft will compensate Yahoo! at an initial rate of 88% of search revenue generated on Yahoo!’s sites during the first 5 years of the agreement.

He said Microsoft will guarantee Yahoo!’s revenue per search in each country for the first 18 months following initial implementation in that country. “Complete integration may take anywhere between 18-24 months.”

The two will continue to compete in other common business areas such as email, web products, messaging etc.

However, dominance of Google may or may not be hampered, he said. Search major Google may be less worried with this agreement with Yahoo and Microsoft Google enjoys a big share in the market and the customer confidence is high on Google as compared to Yahoo and Microsoft. “Unless the actual number of searches increase for the user, this deal may not bring in any fruitful results for the two and the complete integration will only happen by 2011-2012 timeframe,” he said.

But some believe that the Bing platform for advertisers is relatively inferior to that of Yahoo and but alternatively, users will now have a stronger alternative that will provide them scale and if the combined search can provide users a better experience, then they may potentially eat up into Google’s share in the future.

CXOtoday.com

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