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Yahoo – Microsoft and Yahoo Are Linked Up. Now What?

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Yahoo – Microsoft and Yahoo Are Linked Up. Now What?

Yahoo,  The bumpy, marathon mating dance between Microsoft and Yahoo finally concluded on Wednesday, when the two companies announced a partnership in Internet search and advertising to take on the industry powerhouse Google.

But there was plenty of skepticism about whether the new partners could make a serious dent in Google’s dominance.

Even with the deal, the Microsoft-Yahoo search operation will be dwarfed by Google — with a 28 percent market share in the United States, versus 65 percent — and will face an uphill struggle to try to wean people away from Google’s simple white search page.

If Yahoo and Microsoft cannot persuade people to switch, they will not build the larger audience that will bring in more revenue from ads tied to searches.

“This battle is won or lost as the user sits at the keyboard,” said Peter S. Fader, a professor at the Wharton School of the University of Pennsylvania and co-director of its Interactive Media Initiative. “Google is winning for good, consumer-friendly reasons. You can’t just buy that.”

The Microsoft-Yahoo pact represents a pragmatic division of duties between the two companies, instead of the blockbuster deal Microsoft, No. 3 in the search market, was shooting for last year when it bid $47.5 billion to buy Yahoo, No. 2 in search.

That hostile offer was ultimately withdrawn by Microsoft, and its collapse led to lots of soul-searching at Yahoo and the replacement of its co-founder Jerry Yang with an outsider, Carol Bartz, in the chief executive role.

Under the pact, Microsoft will provide the underlying search technology on Yahoo’s popular Web sites. The deal will give a lift to Microsoft’s search engine, which it recently overhauled and renamed Bing. Its search ads will have broader reach and become more lucrative.

Bing, which tries to put search results in better context than rivals, has won praise and favorable reviews, after Microsoft spent years falling farther and farther behind Google in search.

For Yahoo, the move furthers the strategy under Ms. Bartz to focus the company on its strengths as a publisher of Web media sites in areas like finance and sports, as a marketer and leader in online display advertising.

“This deal allows Yahoo to invest in what we should be investing in for the future — audience properties, display advertising and the mobile Internet experience,” Ms. Bartz said in an interview on Wednesday. “Our vision is to be the center of people’s lives online.”

The terms of the 10-year agreement give Microsoft access to Yahoo’s search technologies. Yahoo will receive a lucrative 88 percent of the search-generated ad revenue from its own sites for the first five years of the deal, much higher than is standard in the industry.

After the takeover bid failed, the companies renewed talks about a partnership last summer. The talks included discussion of a large upfront payment from Microsoft.

But when Ms. Bartz joined Yahoo at the start of this year, the interest on the Yahoo side shifted. Ms. Bartz was more interested in steady revenue to ensure the longer-term financial health of Yahoo instead of a big payment, she said in a conference call Wednesday.

Shares of Yahoo fell 12 percent, to $15.14, after the deal was announced, apparently reflecting investors’ disappointment in the lack of a payment. Shares of Microsoft rose slightly.

“It feels kind of like a stab in the chest,” said Darren Chervitz, the co-manager of the Jacob Internet Fund, which owns about 100,000 shares of Yahoo. “It certainly feels like Yahoo is giving away their strong and hard-fought share of the search market for really a modest price.”

Now, Yahoo’s financial fate will be inextricably linked with Microsoft for years. “My sense is that Yahoo will regret making this move,” Mr. Chervitz said.

If the deal is completed next year as planned, and after the partnership is fully in place in three years, Yahoo estimates that its operating income will increase by $500 million a year, based on the anticipated higher search traffic and ad revenue, and a substantial drop in its investment in technology development.

Steven A. Ballmer, Microsoft’s chief executive, said in an interview that Ms. Bartz had driven a hard bargain. “Look,” he said, “she got 88 percent of the revenue and none of the cost.”

Still, Mr. Ballmer added that he won something he badly wanted as well: “I got an opportunity to swing for the fences in search.”

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Hands-on: Sungale ID800WT digital picture frame

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Hands-on: Sungale ID800WT digital picture frame

Digital picture frames fit into an awkward part of the technological landscape. On one hand, they’re certainly the next evolution of the standard wooden frame — why only display one picture when you have thousands waiting to be seen on your computer?.

On the other, they’re almost backwards thinking — in a worlds where every decide you have does many things, they’re like a really small computer monitor, except less useful, because they only display pictures.

Sungale has released the ID800WT in hopes of mitigating this discrepancy by loading the frame with a Wi-Fi card and touch screen, meaning the device can access current weather and forecasts, your stock information, internet radio and YouTube if you hook it up to external speakers, and even your Gmail, all on top of displaying a rotating slideshow of your pictures.

Most of the widgets worked as promised; the news reader loaded the stories from Google News or Yahoo! News, and while the font was the most legible, this was really nifty. Unfortunately though, I found the YouTube widget frequently froze the device when I tried to load a video.

The transitions available were standard, and maybe it’s just the fact that I enjoy the clean Mac aesthetic, but I feel like they were a bit dated. The “card stacking” and “bloom” transitions ceased to be cool with Powerpoint 97. Personally, I think it’s time for more grown up transitions.

One of the really cool features is the ability of the device to link to your online Picasa albums. If you have them set to sync from your computer to Picasa, then the device can then sync them to its onboard memory, obviating the need for cords.

That being said, if old school is more your style, the device showed up on my Mac as an external flash drive without any fuss, and all I had to do was drag and drop the photos I wanted. You can even keep them organized by folder, and the frame intelligently displays photos from within the folders, making it easy to swap “albums” in and out. The half-gig of on board memory is actually rather roomy, especially if you crop your photos down to the 800 x 600 resolution of the screen, which is simple in a free editor like Picasa.

The frame itself is matte black plastic, and while it’s won’t exactly win any award in the design department, it’s certainly good enough to fit a standard décor, and isn’t ugly by any stretch of the imagination. The screen is bright and clear, minus all the fingerprints from being a touch screen.

However, the inclusion of a soft screen wipe is definitely thoughtful. Obviously it’s hard to photograph a bright screen correctly in a photo like this, so you should just take my word for it. The screen itself has an 800 x 600 resolution, which is very high for a screen this size — think back to the 90’s when your 13.1” CRT monitor had the same resolution. The touch-screen was nowhere near as responsive as, say, an iPhone — typing in my email password was particularly frustrating. I tried to use the on-board file explorer to arrange the photos, but I decided that it was easier just to plug it in and do so from Finder.

The fact that your device can do all of these things certainly gives it a leg up over your standard digital picture frame, assuming you have a solid Wi-Fi connection — and this is where the frame failed me. The Wi-Fi connection was extremely flaky, to the point where I couldn’t sit on my couch fifteen feet away from my router. The only time I got a semi-decent connection was when I put the frame directly on top of the router, but even then it gave out, and I frequently had to remind the device to connect to my network.

The solution turned out to be to turn off my router’s security. While this may work on occasion, I’m clearly not going to be broadcasting an unencrypted network all the time in my crowded neighborhood, which means the device loses a lot of it’s “always on” potential if I have to change my router settings every time I want to use the weather, traffic, or email widgets. Another minor quibble is that I think the power cord actually isn’t long enough. If you wanted to hang it on a wall, you’d likely be limited to hanging it directly above an outlet, or running a rather unsightly extension cord.

I can’t help but feel like all the pieces are in place for the ID800WT to be an amazing device — it  just falters on the execution. As a digital picture frame, the device performs near flawlessly, as it should. The widgets however are just too clunkily implemented to be truly useful. The makers should look toward a device like the Chumby, which has a small touch screen and cycles through photos and widgets much the same way, but with a much more svelte implementation. Of course the Chumby is itself rather chucky by nature — you won’t be hanging one of them on a wall anytime soon. What we all truly need is a love child of the two.

Overall, the Sungale ID800WT is stellar at being a digital picture frame, and while the onboard widgets may not replace hopping onto your iGoogle homepage in the morning, it wouldn’t really be a poor choice if you were in the market for a digital picture frame.

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