Yahoo Channelizes to Battle Microsoft, Ichan

Yahoo is getting bossy in its battle to stave off Microsoft’s takeover ambitions. According to published reports, Yahool is launching its “build your own search service” project—or BOSS—through which it will partner with third-party search engines to take share away from Google.

In other words, Yahoo is building a search channel.

It’s an ingenious solution to the Microsoft cloud that Yahoo and CEO Jerry Yang just can’t get out from under. Even as Microsoft CEO Steve Ballmer continues to play coy about whether his company is still interested in buying Yahoo, renegade investor Carl Icahn continues to press for a deal because of Yahoo’s perceived weaknesses to Google in the market.

 By opening its search platform and vast data center capacity to smaller search engine companies, Yahoo believes the whole alliance will be greater than the sum of its individual parts and able to represent a larger offering than Google, the world’s largest search engine, or Microsoft, the number three search player.

"Today, the search market is generally limited to three major search engines to drive innovation and growth," said Prabhakar Raghavan, chief strategist for Yahoo! Search, in a statement. "BOSS opens up the playing field for developers and companies to disrupt the search market, become principals in search and build new Web search experiences that offer more choice for users."

Yahoo and Google are not strangers to the channel. Google has been selling its search appliance through channel partners for several years. Google is also working with partner OEMs and software companies—such as Business Objects (now owned by SAP)—to incorporate its search technology into their analytics applications. And Google has allowed partners to customize its search results.  Yahoo has long worked with developer partners to create tools and applications for its vast network of portals and Web sites.

What makes Yahoo’s BOSS different is the opening of search code and data center capacity to third-party search engines. According to the New York Times, Yahoo estimates the cost of building a search business at $300 million – an investment that is prohibitive give that Google owns nearly two-thirds of the market and continues to take share away from Yahoo and Microsoft Live. By opening up its code and platform, Yahoo is betting that its partners will grow faster. While this strategy has the potential for taking share away from Yahoo, too, Yahoo executives believe Google will be hurt more because of its larger presence.

Details of how the BOSS alliance will work or distribute revenue opportunities are still being worked out, but the concept is sound. Microsoft was built on the development of a vast array of channel partners comprised of resellers, solution providers, distributors, developers and independent software vendors. Google is attempting a similar strategy with Android, its project to develop mobile applications for cell phones. And Salesforce.com extended its reach with its AppExchange network of developers who build modules that augment the functionality of its CRM software-as-a-service offering.

Yahoo and its future partners still need to overcome a problem that plagues everyone going up against Google: breaking user search habits. Several reports have cited that even Yahoo users (myself included) will use Yahoo portal for news and e-mail, but then go to Google for search. The phenomena explains why Yahoo is the world’s largest source for news distribution (36 million unique visitors monthly for news).  Google is a hard habit to break; perhaps the channel is the antidote.

Lawrence M. Walsh is vice president and group publisher of Channel Insider. How are you building the next generation network: with or without cable? Share your experiences with Larry at lawrence.walsh@ziffdavisenterprise.com.