February 1st, 2008
Microsoft's Yahoo play: Some love it; some hate it
Former Softie Robert Scoble thinks Microsoft’s bid to buy Yahoo is the first “interesting” thing Microsoft has done in over a year. A poster on the Mini-Microsoft blog called the Microsoft play “assinine,” and equated it to “John Edwards merging with Rudy (Guiliani).”
I have to say that I — and, apparently, many Microsoft shareholders (given the hit Microsoft’s stock took today) — am more in the “hate it” than “love it” camp. It’s not just vast amount of technology overlap, user base overlap, the cultural incompatibilities between the pair and the staggering price tag that has folks, including yours truly, up in arms.
Until today, I felt like Microsoft had done an admirable job keeping focused on its core Windows/Office/enterprise software business, in spite of pressure by many Wall Streeters, market researchers and venture capitalists to chase Google. Sure, Microsoft needs to diversify and keep abreast of changing technologies in the Web space. But online services is just one piece of Redmond’s business. Wasn’t that the whole premise of Software+Services — that services wasn’t the be-all/end-all?
Microsoft execs are emphasizing that they want Yahoo first and foremost to gain more online-advertising horsepower — not for Flickr, Yahoo Mail, Zimbra, etc. As Microsoft President Kevin Johnson made plain during the summer of 2007 at Microsoft’s Financial Analyst Meeting, Microsoft sees online advertising as its biggest potential money maker, going forward. Johnson, who is president of both platforms and services, has become increasingly focused on the services — specifically, online advertising — piece of the business in the past year.
As one poster on the Mini-Microsoft site said:
“The strange, incessant fixation Microsoft has on Google is just plain bizarre. I understand that Google is very similar to Microsoft in terms of its DNA or that at least some see it that way. Its a new, serious and smart competitor that apparently reminds some MSFT execs of themselves. Ok. Got that. Understood. HOWEVER, back in the real world, Google is in a completely different sphere than Microsoft. Instead of MSFT focusing on its core business (windows, applications and to some extent enterprise) and organically going to the web THROUGH superior execution in its core, MSFT has been throwing around money on XBOX (which it strangely uses to undercut its own Windows gaming/DirectX efforts), and has similarly followed a seperate, wild-eyed strategy of becoming an ‘internet company’, whatever the costs. It is chasing to clone the Google business with all its might instead of using the internet to complement its existing products and services in a smart way for customers. Basically, it either forgot its strengths, doesn’t care about them or has the arrogance and the hubris to think that it can build a core businesses ‘ad hoc’.”
Another Mini poster seconds that take:
“I don’t get it. And you’ve hit the nail right on the head. I look at even 1% of the cost of this acquisition in some of the areas that I’ve struggled to beg for money and that 1% could have yielded so much more in the enterprise in ROI. And yet we keep throwing money down this rat hole.”
What’s your two cents? Do you think Microsoft would benefit from buying Yahoo? Or do you think the Softies would end up better served if the acquisition attempt gets tabled by Yahoo and/or antitrust regulators?
Mary Jo has covered the tech industry for more than 20 years. Don't miss a single post. Subscribe via Email or
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