With the majority of their revenue coming from two partners who have destination sites and therefore can beat Overture down on revenue split (or ‘cost of traffic’ as Overture call it in SEC filings), Overture needs a destination site, but Google is way ahead of Altavista in terms of users.
This consolidation is bad news for FAST, Microsoft could possibly buy them for MSN, but if inclined to buy at all they may look at AskJeeves.
So what does the search space look like now:
Google
Syndicated and destination site search, paid listings (adwords) and relevance ranked search.
Yahoo
Syndicated (Inktomi) and destination site search, paid listings (they are probably thinking of building their own) and relevance ranked search.
MSN
Destination site search
Overture
Syndicated and destination site search (Altavista),
paid listings and relevance ranked search.
Possible acquisition targets:
AskJeeves (Microsoft); FAST (Microsoft); Espotting (Overture or Google)