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Yahoo Bid shows Microsoft on the Ropes
Ponca City, We Love You writes "One day after the announcement of Microsoft's plan to buy Yahoo, there is an interesting piece from the NY Times analyzing the reasons behind Microsoft's bid and proposing that the bid is a tacit, and difficult, admission that Microsoft did not get its online business right and that online losses continue to mount while Google makes billions in profit. Microsoft "finds itself in a battle where improving its search algorithms and online ad software is not going to be enough," writes the Times. With the Yahoo bid Microsoft is trying to buy a big enough share of the market to be a credible alternative to Google with online advertisers. "This shows just how worried Microsoft is by Google," says David B. Yoffie. "Microsoft has faced competitive threats before, but none with the size, strength, profitability and momentum of Google.""
Look at for example GEC/Marconi. It can happen.
People aren't buying Windows Vista and Office 2007 because they have Windows XP and Office 2003 that does the job just fine, and possibly better, and it costs nothing to continue using it. None of their other attempts to diversify - Zune, X Box, Windows Live etc have been very succesful, so there are problems ahead.
They aren't bankrupt yet, but they are taking action to try and avoid it while they still can.
I made a comment over on another site about hoping that the buyout doesn't happen, specifically because of what Microsoft would do to the useful software/services that Yahoo! has built up and acquired (Y! mail, flickr, del.icio.us). Someone else responded with a "Quit being so childish. Look at all the money they'd make!" comment that quickly got modded up. The sad truth, however, is that one of the major assets that MS is buying is the customers, and if the buyout goes through, quite a few customers will leave. After all, many of us went to Yahoo! after being dissatisfied with the services that Microsoft offered.
Microsoft has been overconfident in its approach to the internet from day one. First by believing they could deploy an alternative, then ignoring the Netscape threat early on instead of buying them outright (back when they were still up for sale for a few hundred million). They repeated the same mistake with the search engine market, with a myriad of failed search engine initiatives from within rather than buying outright an external player.
About a decade ago, Microsoft balked at paying $8M for one of the key players, about three years ago, they were wincing at spending $20M in a decent search engine effort. "You'll end up paying billions for a search engine company if you don't spend this money now", was my advice. They didn't listen and here we are $46 billion dollars later after the FAST and Yahoo! acquisition.
That sounds like a full-fledged hostile takeover threat to me... "we can do this the easy way, or the hard way."
I think we can all agree that what Microsoft needs most is a complete change of corporate culture, not Yahoo. This would require a complete replacement of at least 80% of the Microsoft brass, however, so it's not likely to happen until the company is near-dead.
However, if Microsoft realizes that they need to change their corporate culture to attract a bigger audience/customer base, but doesn't want to go through the hassle of actually doing it, then theres one VERY EASY way to impart this realization onto the purchase of Yahoo: for the love of fucking god, DONT FUCK WITH YAHOO!! That means: no changing their servers from FOSS to Windows, no firing all of their managers, and no adulterating Yahoo's way of doing things with Microsoft's shittastic attitude (among other things).
Looking at the market's response to this announcement, it seems that the merged YHOO+MSFT are worth at least $6.5 billion less than they were as separate entities. Yesterday MSFT lost $19.3 billion in market cap, but YHOO only gained $12.8. (If you factor in NASDAQ's overall rise, then these numbers are even worse -- suggesting perhaps a $9 billion loss of value from the merger.)
Two wrongs don't make a right, but three lefts do.
Actually, I was helping my neighbour with their new computer the other day, and when I pointed out that you didn't need to pay $150 for Office 2007 Home&Student to write letters, they were very open to the idea of trying out OOo. I think they'll be very happy with it, mostly because they saved $150.
Anecdotal, mostly. Office 2007 isn't that bad...but my company (like many others) is having a hard time justifying an upgrade to 2007 when they can see the costs associated with user retraining. I personally own 2007, though, and I have a hard time trying to go back to 2003 or earlier versions.
My Sysadmin Blog
Now, now. Before all you naysayers and Slashdot cynics read too much into this, consider that there may be some real madness to their methods. Consider this report, on the front page of my newspaper, retrieved by my time-traveling teletype machine.
Reprinted from the Bizarro World Times
April 1, 2010
Headline:
BALLMER PLAYS FIDDLE AS MICROSOFT BURNS
Reported by Peter Perplexed and Wally Whathehelljusthappened
Federal investigators with the SEC and FBI, along with Interpol authorities, today released preliminary information about the sudden and dramatic collapse of Microsoft. Investors, employees and customers, still largely in the dark about the sudden seeming evaporation of the company, were none to happy to hear this news, but at least there was a sense of relief that some answers are starting to come through.
Employees at all Microsoft campuses worldwide showed up to work today to find their buildings padlocked, the workforce locked out. Customer support at all levels, the phones at all of the corporate offices, and the MS website and MSN are all completely offline. Shareholders seem to have lost their entire investment in Microsoft as the NASDAQ has eliminated the company form the exchange. What happened? How could it happen so suddenly and so thoroughly? Where are the company principals (not to mention their principles)?
And even more peculiar, we are starting to receive worldwide reports of their latest operating system, Windows Smokescreen (aka Windows 7) suddenly quitting - wiping hard drives on systems that it is installed on, or otherwise refusing to boot a computer. Here at the Times, we first noted problems when many users started getting the following message: "You do not seem to have the properly signed and verified digital rights to the email and txt files you just created - you are hereby prohibited from using Windows again."
Based on the public reporting by the above agencies, plus investigations from multiple news agencies and tech and financial reporters, we believe that the following is an accurate, albeit sketchy recreation of events at the world's largest software vendor, beginning about 2 years ago, leading up to today's dramatic events:
January 2008 - Numerous events indicate that MS is aware of the fiasco that is Vista, its latest release of Windows. Regardless that the new OS has a variety of merits, it simply has too many demerits, and it has garnered no loyalty nor market share among home and business users - especially among businesses - meaning a serious interruption of revenue and credibility for the company and its flagship product. MS announces an accelerated schedule for creating and releasing its next proposed Windows OS - version 7. Many are skeptical.
February, 2008 - MS announces a hostile takeover bid for Yahoo! No one can understand a legitimate or business-responsible rationale for this move. General opinions take the dim cynical view that this is an expensive but lame attempt to compete with Google, by eliminating the third major player in the online search and advertising market. The offer is made at nearly TWICE the outstanding market capitalization of Yahoo!
March, 2008 - Until now, Yahoo! has made no official reply. The unofficial discussion from Yahoo! execs is that the bid is a disgrace, that they will never capitulate to the rapacious so-and-so's at the Evil Empire, that market consolidation is a losing proposition for the public, that the deal will NEVER go through. Nevertheless, market speculation on Yahoo! and MS stock drives up share prices.
April, 2008 - Over the past month, the MS bid for Yahoo! has risen another 30%, to a net of nearly $58 B (billion), keeping ahead of the speculative price rises and nominal Yahoo! value. All of the fuzzy warm sentiments about corporate independence, freedom, mom, baseball, and apple pie go by the wayside, as money talks. At a hurried and hastily organized Yahoo! shareholders meeting, the merger-buyout is accepted.
May, 2008 - F
The Ascension of Ballboy to the Throne of Microsoft is the clearest sign that Microsoft has weak senior management and is embarrassingly impoverished in vision.
Ballboy's unwillingness to speak the name of the "fucking guys" he was supposed to "kill" years ago shows how charmless and obsessive he can be. He is like a less personable Joseph Stalin with no big fur hat. His reign of terror will come to an end when Microsoft's shareholders start worrying about ~their~ value.
Microsoft has muscle, big teeth and claws and a walnut-sized brain. People like a company with cool ideas and vision. Google hits many notes perfectly. Apple hits some notes extremely well. Sun can sing but its ears are plugged. IBM gave up singing and now likes to set up the microphones. And Microsoft is the Michael Bolton of software.
Rich And Stupid is not so bad as Working For Rich And Stupid.
This has always been Microsoft's way. They bought "Word" and (depending on how you interpret it) they bought "Dos".
Exactly what I thought, this is what Microsoft knows how to do best. They bought DOS (CP/M QDOS), they bought SQL Server, they bought powerpoint (forethought), Fox, Sourcesafe, Visio, etc... among LOTS of other companies.
Microsoft does is not a "software" company per-se, it is a technology company which objective is to buy out the competition. They are just doing what they know to do best!
Ubuntu is an African word meaning 'I can't configure Debian'
Just about everything you said is incorrect. You said:
You said: People aren't buying Windows Vista and Office 2007 because they have Windows XP and Office 2003 that does the job just fine, and possibly better, and it costs nothing to continue using it.
But the facts are: "Better-than-expected worldwide PC shipments, tougher anti-piracy measures and growing numbers of businesses switching to long-term volume software licenses helped boost revenue for the two Microsoft divisions responsible for Windows and Office to a total of $9.14 billion, 50 percent more than a year ago."
Microsoft has never depended on people going out and buying Windows and Office as shrinkwrapped software. People buy them when they buy computers because it is the easiest thing to do.
You said: . None of their other attempts to diversify - Zune, X Box, Windows Live etc have been very succesful, so there are problems ahead.
But the facts are: "The division responsible for the Xbox 360 video game system swung to a profit on rising sales of games and accessories, which deliver better margins than the console itself. Microsoft said the division is still on track to be profitable in fiscal 2008."
You said: They aren't bankrupt yet, but they are taking action to try and avoid it while they still can.
But the facts say: "Microsoft blew by Wall Street's expectations for a second consecutive quarter." (announced just a couple of weeks ago) Quantitatively speaking they are not only "not bankrupt yet" but not even heading in that direction.
My reference: http://www.kval.com/news/business/14266747.html
Do I think that all is well in Microsoft land? No way: but no massively profitable company with a gargantuan bank account can be said to be "on the ropes". There is a big difference with "perhaps pointed in the wrong direction" and "on the ropes". It would be more accurate to say: "There are indications in the early rounds of fighting that the current champ will have to adjust strategy to win against a promising upstart competitor."
I'm no Microsoft fanboy: I think that they need to fire Ballmer and reform the culture. But that's actually an easier thing to do than the sorts of things that their competitors need to do to become as entrenched and powerful as Microsoft is. Or to put it another way: Microsoft will lose if they don't adjust strategy, but the fight is still theirs to lose. i.e. they are a bit bloodied, not "on the ropes".