Overture NewsFlash!
Overture buys AltaVista, then FAST. Why?
by Detlev Johnson
This is pretty big news for the SEO industry. Does it make sense? Remember that Overture began life as GoTo. I was skeptical of it, like a lot of folks, that users would not be so enthralled with the idea that their search listings were paid for, especially in an auction style. I was concerned when Yahoo! began charging for expedited directory listings too.
My thinking was that searchers would end up far more proud of their findings when discovered through bona fide high-technology search sites than browsing commercial listings. Those searchers of advanced experience feel like wizards of the Web sometimes, and paid-for results unfortunately spoil that notion.
Hence the Google phenomenon never surprised me terribly.
It was always obvious that GoTo was going to make a lot of money, it was just not a very good "spiritual" transformation for Web Search. Now it seems like Overture runs around like LA ZZ Top attorneys with fat wallets. Talking to industry colleague, Kevin Lee from Did-It, we surmised that the FAST acquisition made sense, but in light of it, the AltaVista deal seems suspect. Why buy AltaVista when they announced FAST only days later? Did they tell AltaVista about these plans?
We wondered...
Kevin knows Overture and the PPC space really well, probably better than anyone. Looking for something redeeming at AltaVista, (which was my original favorite,) I asked Kevin about Prisma expanding the keyword match driver at Overture and he answered that Prisma is nice but not worth $140 million! Right.
The street so far hates the deal, knocking 20% off Overture's value in a matter of days.
The technical problem AltaVista faced all along, was it originally launched for the purpose of showing off the technology of Digital, and the supposed "super-computing" power of its Alpha processors. But AltaVista's infrastructure was never designed to scale to the Web the way Inktomi or FAST was. With the acquisition of FAST, Overture has the scalability and European market share (they've been jealously keeping an eye on eSpotting.)
So why AltaVista?
Kevin had this insight: Overture is likely to use the AltaVista global network as its primary commercial portal; taking over operations. Not many bona fide searches are conducted at Overture proper. This leaves FAST to its own devices indexing the Web and generating revenue with the PFI and trusted feed models. Only time will tell how well this all shakes out.
Overture's move is a pretty strong statement.
What do you think?
*cheers*
-detlev