[Updated] Three days in and the consensus is forming that the Microsoft-Yahoo takeover bid is a bad idea. Says who? Well, the suits don’t like it much, and the geeks are undecided too, given Yahoo! has an exclamation mark and Microsoft is evil.
But there’s another point of view, based on Microsoft’s own words, its own stated ambitions, what it spends its research money on, and the large gap between its ambitions and where the company is currently. Let's take the company's words at face value for a moment, look at what they've said they want to do, and where they are:
1. They want to add new tools to PCs
As Bill Gates put it a couple of years ago, “it’s about speech, it’s about vision, it’s about very advanced search, where things that you might be interested in are brought to you without your having to do a lot of work”. Microsoft Research’s Human Computer Interaction group has had billions lavished on new ways to get at information, whether visually or via speech. But what Microsoft really needs is content and services at the Web end of these PC-based tools, or stuff beneath online versions of these tools. Vista has shown how far short Microsoft is of its goal.
2. They want to ramp up search
Let’s take Bill Gates at his word when he said, “We’ll look back on this time and realise that search is pathetic. If I ask for something, I should get it, not a list of things to click on.” He’s right. Not only is search pathetic, the number of ways you can search is primitive, limited to typing keywords into a little box. This won’t be the case for much longer – search is going to be at the centre of how new classes of device draw information from the web and present it. But to do that, Microsoft needs to be a believable supplier of search, and for that, it needs size.
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Your comments (6) Click to add a new comment
nicolasmerritt
February 7th
6. A statement of simple fact? Ballmer's pitch is it's about share of, and increasing efficiency in the delivery of online ads. He doesn't even mention web services in his offer letter. Which I think is interesting.
MS can do far more than make Yahoo its online *ad* platform.
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painwithjain
February 6th
5. In that case my original point holds. To say that MS has bought Yahoo! to bolster its web services business is statement of simple fact. Where's the analysis?
Here's one view: Yahoo started on the road to a slow lingering death several years ago. At the same time MS has demonstrated relatively little evidence that it is capable of producing competitive products and services, as opposed to its undoubted skills in suppressing competition with monopolistic practices. Its core software competency is in a shocking state if you look purely at the quality of its products. Is this the company that is going to make Yahoo!'s flagging web business into a mean Google-fighting machine? I think not.
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nicolasmerritt
February 6th
4. Well, coming at it from another direction, if Microsoft wants to build a platform online and perhaps shift emphasis away from Windows, then what other better options are there than Yahoo? I can't see too many around.
Microsoft REALLY wants to find a way to make proper web-enabled applications work and I think it sees Yahoo as its best long-term shot at doing that.
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painwithjain
February 6th
3. Hmm, if Yahoo's business is so great, why did its share price slide from about $33 to $19 between around June last year and just before the MS offer was announced? Yahoo was trading at over $40 back in early 06 and is now worth a fraction of what it would be if its business had grown healthily in the intervening period.
Let's put it this way, if Yahoo was half as vigorous and creative as it should, it simply wouldnt be vulnerable to this sort of deal.
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nicolasmerritt
February 5th
2. No site that is the number one (according to Alexa) can be classed as tired, mouldy or not worth buying. And $44 billion is not particularly 'cheap' either when judged against Yahoo's profits.
And even if Microsoft does need to 'revive' it by throwing money at it, it has lots of money - and technology - to throw.
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painwithjain
February 5th
1. "So the big questions aren’t about whether Microsoft is evil or whether Hotmail and Yahoo Mail can be integrated. They are: can Microsoft pull off the risky business of making Yahoo its online tech platform and what does this say about Microsoft’s long term ambitions for Windows?"
Hmmm, blinding glimpse of the blatantly obvious, anyone?
Actually, I think the big question is whether tired, mouldy old Yahoo! and its crappy search engine and portal were worth buying, period. Yahoo was available on the cheap because it was being spanked by Google. Given that MS has forgotten how to do anything but squash competitors with monopolistic business practices, it's hard to see how it will revive Yahoo! other than simply throwing money at it.
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