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Yahoo’s Search Share Due For Another Fall

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Yahoo’s market share has dipped slightly over the last year, according to comScore, in the face of stiff competition from Google (NSDQ: GOOG) — but it may fall farther still. A Dow Jones (NYSE: NWS) report suggests that Yahoo’s share could drop another three percentage points over the next 12 to 18 months, with the loss of several distribution deals with big PC makers. It appears to be the first time that the impact of those deals — which made Yahoo (NSDQ: YHOO) the default search engine on new Hewlett-Packard and Acer PCs — has been quantified. Yahoo told the news service that while it might lose some share, it would not be as high as three percent, “mainly because consumers will continue to use Yahoo search even if they buy a new computer pre-loaded with a rival’s toolbar.”

Still, the number is noteworthy not only because it would add to Yahoo’s woes, but also because it gives a rough sense of how much Microsoft (NSDQ: MSFT) could potentially benefit from several major distribution deals it has struck recently for its Live Search. Microsoft replaced Yahoo as the default search engine on new HPs earlier this year and it also announced a similar deal with Dell, which went into effect in February. Together, those two firms account for 56 percent of new PC shipments in the United States, according to Gartner. By contrast, Yahoo’s partners, HP and Acer, accounted for 42.7 percent of shipments. So, if the search share Yahoo is set to lose is proportional to the market share of its old partners, it looks as though Microsoft could eventually get a very significant four-percentage-point boost.

Yahoo’s search share fell to 20.6 percent in February, down from 21.6 percent a year ago, according to comScore (NSDQ: SCOR). Microsoft’s share dropped to 8.2 percent, from 9.6 percent a year ago.

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