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Is AOL The Key to Microsoft 'Killing' Google?
VK writes "When Steve Ballmer yelled at a departing Microsoft employee that he would "kill Google" we had no idea just how direct a method he had in mind. Buying all or part of AOL may be the first part of the master plan, as Google relies heavily on the advertising pages that come from AOL, since it now syndicates its search to Google." Update: 09/23 19:20 GMT by J : As our readers pointed out, the original and Reg reprint both typoed "Yahoo" for AOL. Fixed.
Still true today!
The cases they send CDs in are sometimes clever being made of wood or metal and sometimes even having magnets in them to keep them closed. I naturally discard the paper ones unopened but the metal ones are great for sending DVDs you make to friends and family. Just make sure it's clearly marked as NOT FROM AOL. I also carry live linux dvds in case I need a quick boot. You can't be sure that a system will support booting from a USB fob, but DVD is universal and cheap.
As a company I still have no use for AOL, but they can send me their clever little boxes all day long.
Sorry about the writing. Robot fingers, you know? Cliff Steele in DOOM PATROL #23
Isn't there some kind of Monopoly law that prevents these things?
That's why the FTC can review large mergers like this and reject them. Although with the recent mergers of Sprint/Nextel and AT&T Wireless/Cingular and the Oracle/Little Fish you have to wonder what the hell is going on in their minds. Oh yeah, and Kmart/Sears.
Is there some reason why large companies can't resist the temptation to acquire AOL? First Time Warner's notoriously ill-fated merger, right as broadband was emerging... Now Microsoft? I realize AOL has a large number of subscribers, still the most of any ISP, but according to Business Week, they lost 900,000 subscribers just in the second quarter! As broadband becomes cheaper and cheaper, why would anyone stay with AOL? Are they even getting any new subscribers? That article also mentions AOL's goal to become a web portal, with AIM, AOL Music and MapQuest drawing users in. AIM I imagine is growing, as new preteens start using it all the time, but does this really make them any money? There's advertising on the client, I've never heard of anyone actually clicking it, or even really noticing it. MapQuest is okay, but I imagine people will gradually switch to Google Maps. I've never even heard of AOL Music, but it doesn't look like anything spectacular. And who would ever use AOL for search or free email? I think anyone under 35 wouldn't even think to look there. Perhaps that's what these companies don't understand: AOL, and really MSN as well, make most of their money off of customers' cluelessness. As customers get clued in by friends and relatives, they'll move to better services. The customers you have left will use one hour of Internet time a month and will probably eat up any profit AOL could make with their tech support calls alone.
I really have to disagree with you. You're looking at what Google is now and what AOL is now. I'm sure the marketing teams at Microsoft have a plan for turning AOL into what they want it to be. That having been said, I think it would take a lot of time to completely change the image of an existing company, but it has been done in the past and could be done again. FYI, Black and Decker did this with their DeWalt brand. Construction guys wouldn't use Black and Decker products at all because they had this cheesy "at home" use to them and it was purely an image thing. So Black and Decker spun off the DeWalt brand and gave it more of a jobsite feel. Next thing you know, construction workers were using DeWalt power tools and loving them, even though they were Black and Decker products with a new name and painted yellow. Admittedly, every case is different, but Microsoft could surely change the image of AOL with the right marketing and new approaches to AOL's business.
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Now guess what:
Vinton Cerf works for Google now. Google wants to become a provider and they buy their own communication cables for an alternate internet. Ergo, Google will allow Vint to create a new Inernet protocol, which will have a number of features, which will make AOL/Microsoft cannot provide.
Of course, AOL/Microsoft can buy the market share, but if Google's protocols and Internet is the next generation, then Google will get its market share. And there is nothing that AOL/Microsoft can do about that.
Windows Inc. would be afraid that Google threatens it's dominance of the world's computing platform, but would not be able to use MSN Inc. to battle Google. Windows Inc would be forced to make Windows better.
Office Inc. would want their software running on all computers everywhere, it would make Office for Linux, maybe even Office for the internet -- Office Inc would have no interest in ensuring Windows was the dominant computing platform.
Internet Explorer Inc. would embrace technologies like Java and Flash ensuring seemless compatibility with their browser. They would ship a top notch version of IE for all platforms including Mac and Linux. They would not worry about these technologies threatening Windows' dominance of the world's computing platform.
And, MSN Inc. would have to compete fairly with its competition from Yahoo and Google, and would not have the resources to perform its *illegal* predatory business tactics.
Sam
While I don't particularly fear for Google, we should all be concerned about the fact that Microsoft, which has twice been convicted of anti-competitive practices, and barely flinched at it's 'punishment', is now gleefully declaring that it's going to destroy another competitor.
This latest goal of Balmer's shows that the company still isn't interested in competing through innovation, as they keep claiming, but through destroying any company that gets in their way.
Somehow, this smells like monopolistic behavior to me, though somehow, I doubt we'll see our government do anything about it.
-All that is gold does not glitter - Tolkien
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Hahaha how true how true.
Microsoft is going to slowly but surely eat away at Google. Expect GOOG to fall to ~200 in next few months. $300 is a little high for a company that DOESN'T PAY DIVIDENDS and instead of giving financials tells reports about their chef. Google is great, but it is still a bubble.
Yes, Google makes money. Sure, money is good, and everyone want more. But for crying out loud, just because someone else has success in an area of business doesn't mean you have to squash them. Microsoft should focus on making Windows better. The reason Google is good is because they spend their effort trying to be the best search engine, not the only search engine.
I'm not saying companies shouldn't aggressively pursue their competitors, but this just reeks of jealousy. I know that Google has a lot of new services (and likely more on the way) which compete with Microsoft (GMail vs. Hotmail, Google Search vs. MSN Search, GTalk vs. Messenger, Google Earth vs. Terraserver) but still...
It would be different if I thought MS was going to build a product which would "kill" Google by simply being better, but I suspect the plan is more to cripple Google as much as possible, and bring everyone down to a "well, it could be better but this is good enough" level.
The main reason this can't work, is that Google already owns the mindshare of the internet. You can't buy what Google has going for it, IMHO. Consider the mindshare that AOL has...
Mindshare doesn't pay the bills, cold, hard cash does. MS is going after AOL's business (either through purchasing all or part of it, or giving them a sweet deal for switching their search engine to MS) mainly because it'll hurt Google's bottom line. I've seen numbers that indicate that 10% of Google's revenue comes from AOL. While losing it won't be fatal, it will hurt like hell.
I had mentioned this in a previous MS/Google thread. A lot of the posturing by both companies has more to do with "How do I disrupt my competitor's cashflow" than "how do I make more business for myself."
Basically this is not true. AOL accounts for something like 2%-3% of Google's operating profit. See article at Forbes. Google will be fine with or without AOL. In fact, it may be better off in a world where Microsoft has to deal with all the problems that AOL has faced over the past few years.
Art Makers Just an excuse to show photos of naked women !!
This isn't Linux, where an open source project can't be killed. Google is a busniness, subject to business pressures. I don't rule out the possibility that Microsoft may actually find a way to buy Google one day. At the very least, Google will end up like Lotus, Apple, Wordperfect; profitable, with a dedicated fanbase, but small and irrelavent compared to the MS juggernaut. Worse, they could end up like Netscape. There was a lot of brainpower in that company too. It didn't save them.
Life is hard, and the world is cruel
Microsoft has proved an absolute zero at thinking up anything to do with computers.
Innovation is definitely not their bag. They have bought or stolen everything in their OS, beginning with QDOS and ending with Vista (which is strange considering the number of people on their payroll.)
Microsoft has proved unbeatable at reacting. They don't think of anything but but that. They have their antennas out feeling/looking for any financially successful product out there and seeing how they can take it away.
Its very depressing to witness such stullifying behavior.
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are you kidding? 10% might not sound like much if it's in the form of a coupon for 10% off a gallon of milk. but 10% of your revenue from one customer? that's substantial, and not something a company just shrugs off if it happens to dry up. no, losing aol ca$h money wouldn't kill google in one fell swoop, but it wouldn't be trivial, either.
Not really a valid comparison as both of those had to play inside of Microsoft's monopoly. Google does not.
Why not?
What's to stop MS from having IE add an invisible <BASE HREF="search.msn.com"> into the page every time you go to google? (And if you say "antitrust law", you've already lost your argument. Remember what happened last time MS was found guilty of violating anti-trust law?)
I worked construction jobs from 1995 to 2000 and the three most popular brands were Makita, Makita, and Makita. Black and Decker, disguised or not, was never seen. Not everybody who wears a hard hat is stupid, some of us are merely slow-witted engineers. Which "Seven Steps of Highly Effective Managers" did you get this story from?
Heck, I'm saving up eight different colors of AOL CDs to use as a mobile, myself. Break them in half, melt them to strings, tie the strings to dowels, and you have a hanging porch ornament that catches the sun in flashing half-arc rainbows. I tried the coaster bit, but the hole in the middle lets the moisture leak through.
Both of these would be invisible to the user, very difficult for Google to spot, but visible to advertisers and sponsors, which would potentially cripple Google's revenue stream. (This is why advertising is a lousy business model - anything that exists only on a logical level is totally mutable, making it easy for people to steal.)
It's a small world and it smells funny; I'd buy another if it wasn't for the money; Take back what I paid (SoM)
innovating a new business model is hardly what real geeks would consider important innovation, right?
I think that most geeks give Netflix full credit for their original business model.
I'd like to think that geeks are a little better at ignoring the marketdroid and a little more likely to be interested in what's going on behind the curtain. Most "new business practices" don't stand up to that kind of scrutiny very well, but those that do seem to get the respect they deserve...
In my experience anyway.
Regards,
Ross
"Is assimilating AOL the quantum link to 'p3ning' Google?"
Actually, no.
While I have not read any major news on this I think this may be M$ killing AOL (by accident).
My wife still wants her AOL e-mail address. Why? I have no clue. What I do know is that for the past three days the web authentecation server has been down, thus preventing a user from checking their spam without using the AOL application. When I finally got tired of being blamed for her inability to get her spam I called the AOL HellDesk. The person on the other end admitted that they have some critical server issues (when I poked for a better answer than "use the AOL app"). I made the comment that based on M$ 20% share of AOL I predict that 20% of their servers are down. (apperantly it is most of their internet gateway), this was confirmed by the tech.
So my take:
M$ buys controlling interest in AOL, shoves W2003 server etc. down their throat, doesn't do a proper impact study and blindly forges ahead. Result? nothing. Why? cause the AOL users don't know any better. Ultimately they'll work it out and such, but in the meantime their incompetance is shining through.
-nB
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Corportations have lifecycles, and dividends are the only method a corporation has of producing net benefits. From public company to the eventual bankruptcy, all other transactions enrich one side while impoverishing the other. Purchasing a non-dividend paying company is a statement of faith that the company is investing its capital in a manner that will produce larger dividends in the future. One of the main failings of investors in capital markets has been grossly overestimating the eventual value of those future cash flows.
The best example of this is from an old paper by Dr. Fama(which I will simplify) imagine two investments a forest and a mine. The mine will be exhausted in 7 years but produces $2,000 per year. The forest will take 5 years to mature and will produce $500 per year after it reaches maturity. It would take a very low discount rate for the forest to be worth more than the mine. Google Arness curves if you want the full story.
However, if you replace internet search company (or biotech or software company or radio company or any of a number of then new industries) for forest and building or shipping company for the mine people have generally paid far more for the forest than the mine.
Not to long ago someone did a study that found Altria [Phillip Morris] was the best performing stock in the Dow or S&P 500 over the last 30 or 40 years, even though it has struggled greatly with government regulation, massive lawsuits, and was never considered a "sexy growth" company during any of those time periods. While most companies had considerably better months, years, and even decades than Altria they were unable to string together consistant performance. All too often in the corporate world the forest never reaches the harvest stage due to unforeseen circumstances, which only improves the performance of the mines of the investment world. This isn't intended to be a reccomendation of any company or sector, just an example of why dividend payments are important.
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
AOL's future can be predicted very easily by examining two simple curves. The first is AOL's incremental revenue per customer; note how it has been trending downward for several years now. The second is AOL's marginal cost to aquire each new customer; note how it has been steadily increasing ever since AOL started. Now note have the two curves cross in 2005. That's right, AOL now spends more to aquire each new customer than it gets in revenue from each new customer (on average). Any questions?
I've abandoned my search for truth; now I'm just looking for some useful delusions.
Brilliant! But I bet most Slashdotters don't realize that Quantum Link was the precursor to AOL as we know it today..
More like "Is AOL the key to Google killing Microsoft?"
Microsoft could not buy AOL without parting with AIM due to antitrust considerations. There's already the public record about Microsoft considering AIM a monopoly back before the AOL Time Warner merger and that would be thrown back in their face. Furthermore, if AOL Music's *partnership* with the iTunes Music Store was cancelled following a Microsoft acquisition, Steve Jobs would bring up the issue to the Feds.
Google could use AOL to chip away at Microsoft bit-by-bit. Just imagine them bundling OpenOffice with all AOL discs and having the AOL multitude use it instead of Microsoft Word. Google would also have the stomach to switch the default AOL browser from IE to FireFox, which would also hurt Microsoft.
Google could choose to continue development on WinAmp or directly open source it. Microsoft would kill it completely.
Google could leverage AOL to promote its Wifi plans. Unlimited access to wifi if you are a paying AOL member.
And that's just the stuff off the top of my head.
"Right now, somewhere in this world, Scott Baio is plowing a woman he doesn't love," - Peter Griffin, *Family Guy*
Personally I don't care if Microsoft or Googles dies/wins/{insert melodramatic verb here}. But this could be very interesting. Google has been able to take an unusual business tactic of promoting lots of disparate innovations and then trying to find ways to monetize them. To be honest, it hasn't really worked all that well -- yet. Their lack of monetary success on these fronts has been easily hidden by their massive success in their "old" business: search related advertising. That old business brings in billions that fund all the new businesses, that don't bring in much money (yet.) So what happens if Google has a down quarter where their revenues slipped significantly. Their revenues have generally gone up every quarter since their IPO, so that would be a huge change. It would be interesting to see if they would try to cut costs if their revenues were slipping. They might mean less Google Labs projects. Or maybe they would stick with their same business model, even though that might mean a huge drop in their stock price. Either way, it would be interesting to see how they "grow up" in the face of real adversity.