Upon arriving to work this morning, sitting in my Inbox was the following email from a one Dennis R. Mortensen, COO at IndexTools:

Hi there,

I hope this email finds you well.

It gives me great pleasure to inform you that IndexTools has positively agreed to be acquired by Yahoo! today. We firmly believe that our technology platform combined with Yahoo!’s extensive offering of on-line marketing services will provide our partners and clients with an unsurpassed marketing tool set.

So how does this affect you?

We would ask you to give us the opportunity to present this in more detail on Tuesday 15th April 2008. In the meantime, it is very much business as usual! Please be assured that, for the time being, our services will continue as normal and there will be no disruptions to your account.

We appreciate that you’ll have many questions and we look forward to providing you with answers to these early next week.

Until then, have a good week and look forward to speaking to you soon.

Kind regards

Dennis R. Mortensen, COO at IndexTools

At first this was a pretty big shock. We’ve been using Indextools for about 4 years now for our website analytics. In my opinion they are the most powerful solution available, for the cost. There E-Business edition of analytics runs only $49.95 a month and provides a plethora of analytical tools and reporting options. They also offer a more robust solution for $249.00 a month. Compare editions here. Naturally, I’m wondering how this will affect me directly.

However, I started thinking about the bigger picture. It’s no secret that Microsoft has been salivating to challenge Google in not only search, but analytics, advertising, and so on. This has come to the forefront recently when it was announced that Microsoft offered to acquire Yahoo! for $44.6 billion dollars. An offer that was surprisingly, and resoundingly rejected by Yahoo stating, “After careful evaluation, the board believes that Microsoft’s proposal substantially undervalues Yahoo including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as our substantial unconsolidated investments.” The key here is “substantially undervalues Yahoo”.

Yahoo’s statement is a calculated one. The acquisition is probably inevitable and they want to milk Microsoft for everything they can get and are taking the steps necessary to prove that they indeed are worth more than Microsoft is currently offering. Acquiring Indextools I believe is a huge step in that direction. Analysts have stated that Microsoft could pay as much as $35 a share for Yahoo, with the current offer at $31 a share. Yahoo just gave Microsoft one more reason to offer the $35 a share. Adding Indextools to the cauldron of services available to Microsoft after acquisition, poises Microsoft to have the _ability_ to compete with Google. Of course, this is all assuming that Microsoft acquires Yahoo and can pull together the little talent they have up in Redmond and really offer a service that’s going to benefit the community. You might be asking if it’s even possible for Microsoft to make a “right” decision that benefits “us”. We’ll leave that question to be answered in the comments. Furthermore, it depends on how Yahoo decides to handle their acquisition of Indextools.

As Eric T. Peterson of WebAnalyticsDemystified explains, Yahoo has a few options:

  • Yahoo! can simply slap a big “Y!” on the IndexTools products and continue to sell them
  • Yahoo! can brand IndexTools and give away the E-Business edition while continuing to sell the Enterprise version
  • Yahoo! can slap the logo on and say “Come and get it, people!” giving away the whole hog to all comers

Eric T. Peterson also believes that the Microsoft/Yahoo acquisition could take years to play out, giving Google time to react, thus improving Urchin (Google Analytics) and staving off any competition that might result from any of these acquisitions. Me, I’m not so sure. Microsoft and Yahoo both know the urgency of the situation. Google continues to expand it’s empire and isn’t waiting for anyone. If Microsoft and Yahoo want to survive this game, they must react now.

It will be very interesting to see how this plays out. I can only dream of a free Indextools/Yahoo!/Microsoft E-Business edition. The current E-Business edition runs circles around Google Analytics and would be a very serious contender at the price of $free.