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Good For Google Does Not Equal Bad For Inktomi

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Good For Google Does Not Equal Bad For Inktomi

From The Search Engine Report
July 5, 2000

Inktomi's stock plunged after last week's announcement that the company had lost the Yahoo web search contract to Google, as investors wondered if the Yahoo deal was a harbinger of future Inktomi defections. Maybe, but the loss of a big portal doesn't necessarily mean Inktomi is a big loser, just because Google is a big winner.

To understand, you have to realize that Google and Inktomi are at different points in their evolutions as companies. I explained to one publication that Google is like a teenager getting its first job, while Inktomi is more a seasoned business executive. That's not meant as insulting to Google nor meant to take away from its achievements, which are considerable. It merely means to demonstrate the difference in how long they've been doing business. Google has been at it for less than two years, while Inktomi has been selling search for over four long Internet years.

Google's first big win was the Netscape contract last year, and while it now powers a wide-range of smaller sites like Virgin.Net and the Washington Post, adding Yahoo to its roster of clients is going to open even more doors for the company. After all, if you power Yahoo, what's left to prove? But Inktomi doesn't need to prove anything. The company currently powers well over 100 different search partners, including heavy-weights like MSN Search, AOL Search and iWon.com, and it has successfully done so for years. Another six European portal partners and a new Korean partner were just announced last month.

Additionally, Inktomi is no longer focused on just powering large, general purpose portals. Over the past year, it has picked up a number of smaller portal and vertical portal partners. With its acquisition of Ultraseek last month, Inktomi is now also in the corporate search business -- and the new deal to power Corporate Yahoo should only strengthen its hand here. Inktomi has already come through being bumped as the primary provider at HotBot and losing the MSN Search account, which was regained last December. Powering Yahoo's secondary web search would have been great, but Inktomi's search operations are broad and diverse enough that this should be easily survivable.

I also fielded numerous calls from reporters, wanting to know if Google's high relevancy was an Inktomi killer. Certainly, Google says its accuracy gave it the edge in winning Yahoo from Inktomi. "The number one thing was the relevance, from talking with those guys [at Yahoo”," said Google president Sergey Brin. However, Inktomi suggests that it was a better business decision for Yahoo. "Google, being a private company, probably has the flexibility to do something, said Troy Toman, Director of Business Development for Inktomi's search division. "We are not in the business of winning search at any cost."

I would suspect that Google's deal with Yahoo was better than Inktomi's, because the company would have greatly wanted the coup that the Yahoo account has become. I would also suspect that the business aspect was ultimately the major factor. Yahoo previously picked Inktomi over AltaVista for business reasons. Additionally, while Google's relevancy is great, the role of Yahoo's secondary web search partner is to provide comprehensiveness. Ideally, relevancy comes out of Yahoo's own listings. It's the more unusual or obscure searches that fall through to the secondary partner. For those types of queries, relevancy becomes less important. Given this, Inktomi would have been a perfectly good choice for Yahoo to satisfy these queries, especially as the company has both increased the relevancy of its results over the past year and recently boosted its coverage.

Having said that, Google's relevancy definitely would have been right up there with any business aspect as an edge. There is absolutely no way Yahoo would have gone with someone solely because the business deal was good. Best of breed quality would be a must, and Google is able to deliver this. Additionally, Google's search site has gained a reputation that is so strong that Yahoo actually gains from being associated with them. That's ironic, because it's one of those rare cases where Inktomi's behind-the-scenes strategy works against it (the short-lived AltaVista-MSN Search deal was another example). It's harder for consumers to recognize they are searching with Inktomi and thus demand it, in the way Yahoo executives say their users were demanding that Google be an option at Yahoo.

Neither Yahoo or Google are disclosing the terms of the business deal, which is standard procedure with these partnerships. Yahoo didn't name relevancy as the key point for choosing Google in its press release, but its executives have given it the nod in follow up statements. "We've chosen Google as a partner because we think they are the best search out there," said Srinija Srinivasan, Yahoo's editor in chief. "That this was a good business deal was a good factor, but it wasn't the driving factor," she said. "It would be incredibly short sighted to make a deal of this type based only on the business metrics."

As for dropping Inktomi, Srinivasan said it was more a matter of all the positives Google had to offer that something wrong with Inktomi. "I don't think they are bad at all," she said. "I don't think you can single out one factor [against them”."

Of course, no one has raised what the true killer factor against Inktomi might have been. Yahoo and Google were born out of Stanford University, while Inktomi emerged out of Stanford's cross-Valley rival, the University of California, Berkeley. Perhaps this was just being true to your school :)

In conclusion, there is always going to be great competition for the major portals, especially by new players seeking the name recognition they can provide. The Yahoo changeover is more business as usual rather than a major shake-up in the search space. The success of both Google and Inktomi alike won't depend on whether they can wrap up and maintain contracts with the relatively few mega-portals that exist. Rather, it will depend on how broadly they can build a customer base among the smaller players.

Yahoo Partners With Google
The Search Engine Report, July 5, 2000

Yahoo has selected Google to take over from Inktomi in powering Yahoo's secondary results. These are the listings that appear in the "Web Pages" area of Yahoo's results, after any hits from Yahoo's own human-compiled listings.

Search Engines Alliances Charts
Freshly updated, it shows who powers whom at all the major services.

Yahoo's Switch to Google Won't Sink Inktomi
The Standard, June 29, 2000
http://www.thestandard.com/article/display/0,1151,16455,00.html
(this is the correct URL, but for whatever reason, the Standard's not resolving it right. Keep trying or search for "Google" at the Standard's home page)

Summary of the Yahoo-Google deal, with quotes and stats on the estimated minor impact on Inktomi.

Do you ... Google? Yahoo does -- to Inktomi's dismay
Redherring.com, June 27, 2000
http://www.herring.com/investor/2000/0627/inv-inktomi062700.html

More analyst quotes about the deal.

Yahoo Goes Google
On24, June 27, 2000
http://www.on24.com/vuwindow/scripts/vuwin.asp?id=28607&type=av

Excellent webcast interview with Google CEO Larry Page.

Market Misses Big Picture With Inktomi
Internet Stock Report, June 26, 2000
http://www.internetstockreport.com/tracker/article/0,1785,1711_402701,00.html

Defence of Inktomi, in the face of its stock drop.

Yahoo Rolls Out Corporate Portal Services
InternetNews.com, June 26, 2000
http://www.internetnews.com/intra-news/article/0,2171,7_402861,00.html

More about Corporate Yahoo, where Inktomi is Yahoo's search vendor.

AltaVista To Go Public, Partner With Microsoft
The Search Engine Report, February 2, 1999
http://searchenginewatch.com/sereport/99/02-altavista.html

Story on Inktomi losing the MSN Search partnership. By the end of the year, Inktomi was back in.

HotBot Integrates Popularity Into Top Results
The Search Engine Report, March 3, 1999

Covers Inktomi being bumped by as HotBot's primary search provider by Direct Hit, a new player at the time, now owned by Ask Jeeves.

Inktomi Picked By Yahoo, Snap
The Search Engine Report, June 3, 1998

How Inktomi won out over AltaVista through its business model.


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