Orkut or Yahoo360:Social Network fails!

In social networks, Google and Yahoo have tried and largely failed. To be sure, Google has Orkut, which is popular in Brazil and India, but not the United States. For its part, Yahoo has largely pulled the plug on Yahoo 360. But it is clear that MySpace and Facebook (and Bebo in the United Kingdom) remain firmly on top of the social network heap.

“We are not trying to be another social network,” said Yahoo president Susan Decker on Tuesday, during the company’s earnings conference call. “Rather, by linking users’ favorite destinations and content, with their friends’ families and communities, we can deliver better relevance on a scale that no one else has achieved.” Two days later, the company’s new chief technology officer, Ari Balogh, speaking at the Web 2.0 Expo in San Francisco, elaborated a bit on the idea. “We don’t think of social as a destination,” Mr. Balogh said. “We think of social as a dimension.”

Google has long hinted that it would take a similar approach. Earlier this week, it suggested that users of iGoogle, a personalized home page service, might be able to share activities with friends. And the company has allowed users of Reader, its blog viewing service, to share items with friends.

One challenge both companies face, however, is how to turn the voluminous amounts of data about relationships that they have in their e-mail, calendar and other services, into “social graph,” a set of relationships establishing who is friends with whom. They will have to tread carefully.

Google Bites Microhoo Yet Again

Nielsen Online data confirms both Yahoo!’s and Microsoft’s gradual path to irrelevance in search, making it seem less likely that the two will be able to take on Big G in the long run.

According to the report, Google’s market share in the domestic search engine market continues to grow, at the expense of the fading silver and bronze medalists.

	Jan.	Feb.
Google	56.9%	58.7%
Yahoo!	19%	17.6%
MSN/Live	12.1%	11.2%
AOL Search	4.7%	5.2%
Ask.com	2.4%	2.5%

In other words, in the span of one month, Google’s market share has grown from 56.9% to 58.7%, while Microhoo’s combined stake has shrunk from 31.1% to 28.8%. It would have needed to acquire IAC’s (Nasdaq: IACI) Ask.com to stop the organic bleeding, or make a pricier purchase of Time Warner’s (NYSE: TWX) AOL, to keep pace with Google.

If a Yahoo!-Microsoft combo was good enough to reach Google’s armpit a month ago, it’s now closer to its belly button. Any lower, and we’ll have to move this analogy over to an adult website.

This is clearly a race that Microsoft won’t win, especially if it’s hitching its horse to the only other search engine within the top five to join it on the downslide. This is even before we turn to the global playing field, where Microsoft actually trails China’s Baidu.com (Nasdaq: BIDU) by a fair margin for the bronze.

Numbers fluctuate monthly, but this clearly does not bode well for either company, especially heading into next month’s quarterly report from Yahoo!, where the potential carnage could wind up being a dealbreaker.

One may also speculate that sour impressions of Yahoo! and Microsoft combining forces — a deal that was announced at the end of January — may be weighing on actual usage.

Search engine stats are important because this is where the fat online advertising margins come to party. Most of the other page views in cyberspace are tough nuts to monetize, explaining why Microsoft and Yahoo! generate far less in ad revenue than Google.

So, go figure: That fat Google kid keeps stealing Microhoo’s lunch money. What a bully!