Plenty of people covering the Ask Jeeves acquisition and most of the sentiment seems to be supportive, but very cautious, given the fractured nature of both companies.
“Some practical and conceptual problems with the deal: Barry Diller wants to build an Internet empire with search as the doorway to all of the online assets he’s cobbled together. But, as Bambi writes, too many goals and too many differing approaches on how to reach them will lead to competing priorities. That typically results in relatively lagging performances across all business units.”
The company with a bazillion brands just bought a ton more. Diller’s empire is already poorly integrated online — I imagine there are internal issues as well as Bambi points out — and this would seem to make matters (much) worse.
The only real alternative, building his own — not being a player is not an option for someone like Diller — must look amazingly unattractive, seeing how long it’s taking mighty Microsoft to field a full stack (with everything under concurrent development, and a core competency in scalable systems architecture and development, no less).
Diller has looked at the cost of disintermediation, and the rapid buildout of competitive vertical search/transaction offerings, and decided that 6% of the general search market (add Ask + Excite) is worth $1.85B, or ~$308MM per point. ($1.2B of it in cash, one third the company’s cash reserves.)
While not a fair direct comparison, it’s interesting to note that Google’s 35% share would cost you $49.5B, or ~$1.4B per point, today…
Brilliant if it works. Lots of soft-dollar introductions for his vertical search/transaction offerings and a tax on his competitors. Hmm, similar to the A9 strategy?
Instead of beating the “can Diller pull it off” drum, here are some other thoughts to add to the conversation:
- With all the money he’s spent, it’s still not clear Diller owns a bidded marketplace (let alone a vibrant one). CitySearch has something going on in that department, but it’s been rumored to be FindWhat-powered for so long that I just assume it is. (Anyone know different?)
- With his eye already on travel and entertainment, how long do you think it’ll take for Diller to move into digital goods and services (music, movies, etc)?
- A9, which made a strong meta play with OpenSearch (still need to write something about that…) last week feels even more like a cool science project after this buy. Strong third-party developer integration could drive A9 usage… but when?!
- It’s long been rumored that the big Newspaper chains have considered a JV buyout of Ask Jeeves. Years of indecision has now cost them that opportunity. It seems almost certain now that they’ll be relegated to the sidelines.