Microsoft’s delicious Yahoo! takeover attempt

So it’s not the first time we’ve seen Microsoft make an offer to buy out Yahoo!, although last time the offer was much higher than the US$44.6 billion stock and cash on offer this time around.

It does make sense though.

There is the increased market share. There’s also been plenty of figures thrown around, so lets break it down a little:

US Search Marketshare Jan 08:

• 68.98% - Google.com
• 20.94% - Yahoo.com
• 6.90%* - msn.com
• 4.21% - ask.com

* Excludes live.com

Also some of the other major traffic properties are webmail and news. Courtesy of Hitwise (as is the above), here’s the current sparks:

UK Marketshare of Google, Yahoo! & MSN (Microsoft Live) Webmail

UK Marketshare of Google, Yahoo! & MSN (Microsoft Live) News & Media

But of more importance than the market share - and missed by most commentators - is the strategic value of the companies owned by Yahoo inc. Del.icio.us is the most obvious of those and represents the solution to a major gap in Microsoft’s search technology future.

Google has not really managed to challenge del.icio.us despite putting a fair amount of weight behind it’s rival offering Co-Op and Notebook.

User habits are likely part of the reason why Google’s made such little headway. Interestingly, reluctance to change is also likely to be a problem for Open Social and has been widely disseminated in the media while Notebook has sailed past wihout comment.

Why should del.icio.us be seen as strategically important?

Google’s push for Universal Search has been forced. Ask got there first with 3D, and Google’s natural dislike of rolling out a fully featured product in one go has caused their ‘onebox’ features to be undervalued. The power of personalised search, combined with Universal search will create the foundations of “Search 2.0″.

If Microsoft is behind Google by 62.08% in Search 1.0, they are barely in the same game when it comes to 2.0. Del.icio.us will prove to be the key to changing that before it’s too late.