February 1, 2008: Microsoft Bids on Yahoo.
So I finally get around to looking at Techmeme this morning around 10:30 AM. And the page is almost completely dominated by the news of MS’s surprise bid for Yahoo. MS seem to be playing hardball on this one. You can see what it did to their stocks (good for Yahoo, bad for MS).
There’s a lot of commentary out there. Some of it is pure business analysis; some of it is pure emotion, much of it is somewhere in between. I guess I’ll jump in with an opinion (like the web needs another one!), but I want to preface it with this: I’m not an enterprise architect. I’m just a simple sysadmin.
What does MS get out of buying Yahoo (and using up all of their cash hoard in the doing)? Long Zheng took a look - and it turns out that MS basically already has all the Yahoo-alike services. So MS gets … the Yahoo brand and eyeballs? Wouldn’t $42B buy enough advertising that MS could have the eyeballs without the brand?
One strong thread running through all the comments is Google’s threat to Microsoft. And this is something I have never understood: why exactly should anyone (least of all MS) consider Google a credible threat to the MS business? Google have an advertising powerhouse, driven mainly by the eyeballs their search engine delivers. Microsoft are primarily a software house. We can talk about Google Apps (Gdocs and such), but they are still a tiny fraction of Google’s overall impact. And they are a loooong way from seriously challenging MS in its own domain (OS and applications), just as MS’s attempts at advertising driven by search are a loooong way from seriously challenging Google’s domination of search-driven advertising.
So why do so many people think that a single company should be able to excel at both OS/apps and web advertising? What evidence do we have that being good at search makes you any good at app development, or vice versa? Are people simply thinking MS is big, and Google is big, therefore they must be mortal enemies?
Suppose we simply remove that assumption, and say MS are not persuing Google’s advertising business. (MS’s own press release makes this a hard concept to swallow, so I am out in left field here.) What else could be in the deal for MS? Could it be that they simply need something like Yahoo as a host for, and a better way to push their own Live Services initiatives?
In the long term, Live Services is really about providing an online component to the local OS. Storage in the cloud, data in the cloud, partial applications in the cloud. There are advantages to this - your data is accessible whether or not your computer is.
I don’t know what it all means - I really don’t. I suspect that if the bid is successful, there will be another shoe to drop - some synergy that most of today’s commenters are not seeing. I really, really hope this is not just MS buying into the Google is big, we are big - therefore we must beat them mentality.
(Oh, and what would happen to Zimbra, which Yahoo owns?)