Neither Bing nor Yahoo separately has had any luck cutting into Google's lead in the search market. Google captured 65.8 percent of the search market in July, according to market research company ComScore. Yahoo had 17.1 percent and Bing had 11 percent, ComScore reported.
The plan, then was for Bing and Yahoo to hitch their teams together and to make a reinforced assault on Google's gates.
"This probably saved Yahoo, who, without the removal of the cost related to search and the influx of Microsoft revenue, would likely be gone by now," said Rob Enderle, principal analyst at Enderle Group. "For Microsoft, it puts them in the search game but by creating a stronger competitor.... The onslaught against Google began when Microsoft basically wrote a blank check to Yahoo to fund the battle. But this [week's integration] will represent the biggest win Microsoft ever got in one move."
Olds said Google should look over its shoulder and pick up the pace on search innovation if it wants to maintain its expansive lead.
"Now that Microsoft and Yahoo's teaming up on search has become a reality, it's definitely something that Google will take notice of and react to," he added. "Both Microsoft and Yahoo have moved from also-ran status to a credible threat in terms of their traffic and technology."
Olds also noted that Microsoft has deep pockets and probably can afford to invest in the search competition for years.
"For Google, search is the cash cow that supports everything else they do," Olds noted. "Microsoft's situation and perspective is different. They have their existing software franchises to generate money. This will put more pressure on Google's profitability over time."
Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, or subscribe to Sharon's RSS feed. Her email address is firstname.lastname@example.org.
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