Is Microsoft just Screwing with Yahoo's Mind?

The Narrative Fallacy writes "This week Cringely offers up a speculative piece asserting that Microsoft might not really care if its bid to buy Yahoo succeeds or not — Bill Gates just wants to disrupt Yahoo and poach the company's employees. 'Microsoft's offer for Yahoo has thrown that company and several others into a tizzy. Yahoo can't be getting much work done, that's for sure ... Redmond's real goal may be simply to poach people from Yahoo, and this deal could help them do just that.' Cringley says there is plenty of precedent for Microsoft's behavior — Microsoft's bids for Borland and for Intuit back in the 1990s sent both companies into a tailspin. 'A failed Microsoft bid, even one involving a termination fee, could lead to horrific results for the company. Remember that Yahoo is staggering here while Intuit was at the top of its market and its game.'"

Comments

Hard to tell what's going on ...

[ScrewMaster]

but is Microsoft capable of this? I'd say that's a given.

Re:Hard to tell what's going on ...

[blowdart]

See it's weird; I thought that the google proposed partnership was a spoiler and a non-serious offer just made to burn up more of Microsoft's warchest by giving Yahoo a plausible reason to drive the price up. And the goggle thing dissolved away very quickly, whereas the Microsoft offer is still on the table.

Re:Hard to tell what's going on ...

[rucs_hack]

but is Microsoft capable of this? I'd say that's a given.

Maybe, maybe not. However I'm sick and tired of the Microsoft conspiracy nutbars who trot out evil reasons for everything Microsoft do.

Ok, perhaps it is true, but if Microsoft were investing so much time and energy being evil in every move they make, don't you think they wouldn't be the #1 company in the field? (profits wise). I'd have thought they'd have slipped a while back.

And no, they haven't slipped. Point out the failure of the Xbox to turn a buck if you will, or other small change projects. Those are strategic exercises that may well turn south, but they will not 'bring down Microsoft'. Right now no-one comes close to them in terms of overall power and money.

And that Netscape thing? Even the Netscape CEO admitted that Microsoft were only doing what other companies did at the time. Incidentally, he ended up a billionaire, and most Netscape employees became millionaires. I have trouble equating that with a poor downtrodden company being hounded out of business, seems to me they did ok.

I get annoyed by a lot of what Microsoft do, but that's because I'm not into their philosophy, not because I think their running around in the shadows constantly. I'm more likely to get annoyed about their implementation of C++ then their latest business dealings.

And you know what? IBM used to be right evil buggers, and it cost them their lead in a big way, too much time spent hurting the competition, not enough time minding the shop. Now everyone loves them, 'ooh, but they love open source' is trotted out in defence against any slight. They were real gits back a few decades ago. /rant

Re:Hard to tell what's going on ...

[osu-neko]

Ok, perhaps it is true, but if Microsoft were investing so much time and energy being evil in every move they make, don't you think they wouldn't be the #1 company in the field? (profits wise). I'd have thought they'd have slipped a while back.

Err, no. All of the the above would make sense if it were true that being evil is bad for business. Alas, the reason companies usually behave in an evil manner is because it helps them financially. You can't point to financial success as evidence they're not evil. It doesn't necessarily prove they are, either, despite popular perception. Classically, though, the temptation to do evil is almost always because you do better materially when you do, so your contention above flies in the face of classical reasoning on the subject.

IBM used to be right evil buggers, and it cost them their lead in a big way

IBM's evil is was sustained it as long as it did. It was IBM's arrogance that brought them down.

Re:Hard to tell what's going on ...

[kripkenstein]

See it's weird; I thought that the google proposed partnership was a spoiler and a non-serious offer just made to burn up more of Microsoft's warchest by giving Yahoo a plausible reason to drive the price up. And the goggle thing dissolved away very quickly, whereas the Microsoft offer is still on the table. The Google offer dissolved because it wasn't very realistic. But that doesn't prove the Microsoft offer is real.

Personally I suspected Microsoft's offer might be fake pretty early on. I mean, it can't be 100% fake, because if Yahoo! were to immediately agree, then Microsoft would have to go through with it, or lose face (and a lot of it). So there is some degree of truth in the offer. But Ballmer might think that the deal has a 95% chance of not succeeding (due to Yahoo! dismissing it, regulatory issues, etc.), and that in that 95% case he manages to screw Yahoo! up big time.

As for why Microsoft would want to screw with Yahoo!, my reasoning as I explained it to someone the other day is this. First, Microsoft would screw with Google if it could, but it can't use this trick there. So Yahoo! is the target, as follows (numbers are made up here, just to make a point): Say Google has 50% market share, Yahoo! has 30% and Microsoft has 10%. If Yahoo is screwed with, it might lose 10% to drop to 20%. In theory 5% might go to Google, 5% to Microsoft, giving us Google 55%, Yahoo! 20%, Microsoft 15%. Note that this helps Google at the same time as it helps Microsoft, but in simple terms, Microsoft has gained 50% market share (10% to 15%). From there Microsoft is at a better vantage point to challenge Google. Or, in other terms: First Microsoft fought with 80% of the market; now it fights with 75% of the market.

Another way to see it is that Microsoft wants to be #2 instead of #3. Any playing fairly always takes more time.

Re:Hard to tell what's going on ...

[SL Baur]

Point out the failure of the Xbox to turn a buck if you will, Maybe it didn't, but you are right - it was huge strategic victory. More than ever, console games and Microsoft Windows are linked. The last time I went to a GameStop I asked for games playable on Macintosh. The salesman immediately said there weren't any. I pointed behind him at the display case with World of Warcraft and told him he was wrong and he said he didn't know it could be played on Macintosh.

Go Blizzard! They not only run on Macintosh, they run on Linux with Wine too.

Re:Hard to tell what's going on ...

[microbee]

In theory 5% might go to Google, 5% to Microsoft, giving us Google 55%, Yahoo! 20%, Microsoft 15%.

I am sorry but this "theory" is pretty silly. Why wouldn't it be that Google grabs most of it, at least at the 50:10 ratio?

Re:Hard to tell what's going on ...

[_Sprocket_]

And you know what? IBM used to be right evil buggers, and it cost them their lead in a big way, too much time spent hurting the competition, not enough time minding the shop. Now everyone loves them, 'ooh, but they love open source' is trotted out in defence against any slight. They were real gits back a few decades ago. IBM lost control of the market because they over-valued their mainframe business, lost their R&D focus, and fumbled the microcomputer market. Their evil ways? It was all about keeping their dominance with mainframes. Meanwhile the microcomputer sprang from hobbiest device to must-have decentralized business tool. IBM lost control of their attempt to capture this surprise market (one that they had largely ignored) and, ultimately, set the stage for their own downfall; the rise of inexpensive, commodity computers. Having a bag of "evil" tricks in business is very much like carrying a loaded gun. It doesn't matter that you possess it. You still have to point at and hit the right targets.

So what about IBM and OSS fanboyism? Fair enough point. People should remember that there's no guarantee the IBM of today will be the IBM of tomorrow. We should remember that it isn't too long since the IBM of the past. But there's an important point that critics who bring up this "IBM used to be evil" meme don't mention or don't understand. IBM's contributions to OSS right now is under OSS licensing. They can't take it back. Even if the IBM of old rears its ugly head once more.

Re:Hard to tell what's going on ...

[Fulcrum of Evil]

No, a 44B offer is absolutely a poker bet. Just because the numbers are big doesn't mean that the rules change. Poker is about psychology, and that doesn't vary with the stakes.

Re:Hard to tell what's going on ...

[dhavleak]

No, a 44B offer is absolutely a poker bet. Just because the numbers are big doesn't mean that the rules change. Poker is about psychology, and that doesn't vary with the stakes. That's more of a universal statement, than something that applies to this topic. When you look at it that way anything/everything/nothing (whatever you prefer) can be looked at as a poker game.

But I seriously doubt that the acquisition offer began with Ballmer and the other top dogs saying "let's screw with yahoo's mind, because we can, and by our machinations we could actually get yahoo to disintegrate and we'll snap up 5% of the online ad revenue market in the process".

In any case, going along with your poker anology, keep in mind that poker is not just psychology. It's also got a bit of cold hard math. The online ad revenue martket is projected to reach $80bn/year soon. Yahoo has 20% of this market. Assuming they maintain parity after the merger, that's 16B/year -- a 44B investment is recovered in 3 years.

Yahoo's been losing market share so maintaining parity isn't a given. Yahoo's brand is stronger than MSN/Windows Live, but nowhere close to Google. And Yahoo has been on the decline. But the synergies can actually be made to work in this case. And I don't mean that in a management-jargon-bs kind of way. If you consider the online properties MS and Yahoo have, you'll notice in terms of just actual presence and features, they are at parity (search, ads, mail, auction, photos, blogging, the list goes on..). Now that's where the synergy comes in -- there are common problems that yahoo and MS have been solving idependantly to offer these services: Cost of storage, fault tolerance, log compression, analytics, indexing, search algorithms, etc. etc. There's bound to be at least an 80% overlap in their technologies for dealing with these issues. The other 20% is where both sides get rapid gains.

Some of the synergies come even more easily. Maybe they discover that MS's ad-platform is better than yahoo's (or vice-versa). It can be plugged into yahoo's pages without it's users ever noticing a thing. Just the back-end provider changed, but the relevancy (and hence monetization) shot up overnight. Same is possible with search too.

Some cost-cutting will probably come easily as well. By yahoo's own admission at 16,000 people, the company is quite bloated (and they had layoffs recently to prove it). Some job cuts are almost guaranteed.

Now the acquisition offer has been rejected by yahoo, so for now this is a moot point. But even if it had been accepted it would be foolish to suggest that the advangates are easy to achieve, or without risk -- no, it would be a hard grind for both parties. Handling Yahoo's brand correctly and delicately is the part MS is most likely to fuck up. But they themselves must surely be aware that they are woefully bad in this department, and yahoo is light-years ahead of them, so it makes sense that they would defer to Yahoo and let them lead the way in this area (otherwise what's the point of this acquisition).

Bottom line: to suggest that the offer was nothing but a poker bluff intended to mentally disintegrate yahoo and magically pick up 5% when this happens is just nuts! It's a gross oversimplification, and puts too much stock in the "ms always has malicious intent" line of thought.

Disclaimer: I think most of my numbers are close to the truth in this post, but I didn't really bother to look them up :P

Treading Water

[wombatmobile]

Yahoo is treading water. Microsoft is treading water. Neither company has innovated to grow new business for the last 5+ years. Meanwhile, Google has created growth. It has built and grown a large, growing advertising business. Now Microsoft has a paw on Yahoo, treading water next to it.

Re:Treading Water

[Anonymous Coward]

"Microsoft is treading water."

That is the trouble right there with discussing Microsoft. You really can't have a serious discussion of the company because there a million Microsoft fans who will flip out and point out that a company that Microsoft has/makes 'billions' and that is 'like an infinite amount of money'.

Re:Treading Water

[erroneus]

That's a fact and I'd add more to this by saying that Microsoft is "leadership" and "vision" poor. They are not likely to be short on talented or skilled people. The reality is the decisions and priorities that Microsoft is following are what's leading to its hardships at the moment. They had defined "computing" as we had known it for around 10 straight years but that position has slipped quite a bit and pretty much everyone is doubting Microsoft's vision and wisdom in the industry -- even the end users -- and it would seem Microsoft has yet to realize that they no longer truly wield the power over people's minds that they once had. (Or perhaps they are realizing it and are attempting to compensate in other [failing] ways?)

Once upon a time, Microsoft made cool stuff and people bought it... a lot of it. Then, for some reason, marketers took control of the company instead of the creative people and now people are wondering why Microsoft is failing.

It's LEADERSHIP and lack of vision that is dooming this once incredibly influential company. Attempting to poach employees from Yahoo, an equally if not more stagnant company, isn't going to anything but rearrange the deck chairs on their Titanic.

Re:Treading Water

[abigor]

Microsoft's year over year growth for the fourth quarter of 2007 was 26%. Their quarterly revenues were nearly equal to Google's entire financial year. Such growth can hardly be termed as "treading water", despite their lack of innovation.

Re:Treading Water

[webmaster404]

Once upon a time, Microsoft made cool stuff and people bought it... a lot of it. Then, for some reason, marketers took control of the company instead of the creative people and now people are wondering why Microsoft is failing.

No, once MS, Bought cool stuff from other companies, rebranded it and made deals with OEMs so people would use it. Just about EVERY thing MS has done has been bought by other companies. If it wasn't for getting lucky with DOS (which they bought from someone else) and IBM they would not be existing right now. All MS survived on is luck and buying companies that do innovate. Now that they managed to monopolize all the OS industry, they have just left the community projects like Linux that can't be bought and Apple which would be highly unwilling to be bought. Everything MS has done was by money, even though they have good coders, all MS has done is buy and buy and now they have scared all the competition from even trying, they have nothing left to buy and are now stagnant. Yahoo innovated slightly but I still think it represents the early '90s on the Web whereas Google represents the present age.

Re:Treading Water

[imsabbel]

Well, if it really hurts you that much that people point out the truth to groupthinkers, than its sad.

otherwise, just to give you a hint "record quarter".

(Sorry, this kind of fud just doesnt work against microsoft. you really have to actually _do_ something if you want to change the status quo)

Re:Treading Water

[abigor]

Actually, it's flat because MS is transitioning from being a pure growth stock to a blue chip stock, complete with dividend payouts, which are still too small. Successful blue chips generate huge profits and sustain predictable growth year over year, but their stock prices aren't particularly volatile. MS is not paying large enough dividends, causing the stock to flatline (this may have changed recently, as I'm not up to date with their latest actions).

MS is no longer like a Google-style volatile growth stock. It's more like investing in Johnson and Johnson or something. They need to increase their dividend payouts, if they haven't already.

Re:Treading Water

[rucs_hack]

Purchasing smaller companies that produce products you want to incorporate into your business is standard industry practice...

Re:Treading Water

[Anonymous Coward]

Go back to playing WoW and stop trying to be an amateur economist. A stock price moves primarily when expectations of future earnings change. That Microsoft's stock has been flat for so long is indicative of the fact that this rate of continual growth was priced into the stock long ago. They've been executing consistently for a long long time.

You are right in suggesting that new products have not caused that growth rate to accelerate beyond expectations (until recently). But when your earnings grow by a Google every year, it's pretty damn hard to turn the corner yet again.

Re:Treading Water

[Anonymous Coward]

Google represents the current age? What exactly has google done that is innovative aside from adsense? Search was already done, it was just an incremental improvement. And then they did what you say Microsoft did, they purchased. They bought maps, blogging sites, on-line office suites. Googles products are driven by acquisition and not innovation.

Re:Treading Water

[bigpicture]

I believe you have framed the actual situation very accurately here. The MS leadership didn't actually have a lot of vision, they just bought up cool stuff companies who seemed to be succeeding in the marketplace.

Re:Treading Water

[abigor]

What? MS posted 26% growth, as I said. That is impressive. You are conflating revenue growth with stock price, which is wrong. Their stock price is related, instead, to their rates of dividend payouts, which increase as profit increases. The stock becomes more attractive as dividend payouts increase, thus more people buy it, thus the price goes up. That's why MS needs to increase dividend payouts. This is known as "value investing". Since you don't seem to understand what I'm talking about, I'll let you Google it.

I'm not the one who needs to grow up here, kid. You obviously hold some kind of a misguided grudge against an entire corporation - "stupid human nature" indeed.

Re:Treading Water

[tiffany98121]

$265 Billion is "pretty close" to $165 Billion? What?

Re:Treading Water

[stuboogie]

"but the XBOX really was nothing new."

Really. So the PS2 had a built in hard drive? An online gaming platform for multi-player action?

Didn't think so. The hard drive was a big decision maker for me. I liked the idea of being able to save my games without having to buy memory cards on top of the console. The drive also allowed you to copy your own music onto the console for use as custom soundtracks in games. I don't recall that option on PS2.

Online multi-player for a console? There was nothing remotely close to this prior to XBox Live.

Personally, I liked the controller for the XBox better than the PS2, but that's just my opinion.

But you're right. It's MS, so nothing new there.

Re:Treading Water

[westlake]

Wasn't that a port of an already existing public domain BASIC?

In 1974, Paul Allen and Bill Gates wrote the first microcomputer Basic interpreter on a PDP-8 minicomputer for an Intel 8080 microprocessor emulator.
MITS licensed MBASIC for the Altair in late 1975, and Micro-Soft was born. By the end of 1976, over ten thousand Altair computers were sold with either the original 4K or a newly expanded 8K MBASIC. Micro-Soft's work on the 8K version was spurred by a new player, Commodore Business Machines, and its Personal Electronic Transactor (PET), which debuted in mid-1976 with a licensed version of what was now called MBASIC 2.0. Early in 1978, Tandy Corporation licensed MBASIC 2.0 for its TRS-80 Model 1 Level II and called it Level II BASIC. At the same time, Tandy cross-licensed Level II BASIC to Apple, so the same MBASIC was running on virtually every microcomputer of any significance. ComputerSource

Re:Treading Water

[TomV]

didn't buy Visual Basic

While that's strictly accurate, they did buy a tool for building task-specific customised Windows shells by dragging controls from a palette and dropping them onto a form, called at various stages, Tripod then Ruby, from Alan Cooper. they then glued a modified version of QuickBasic into it to create version 1 of VB. Cooper's original Tripod/Ruby could have multiple languages plugged into it, and he anticipated C as the main one. So while they didn't buy the VB language, they did buy the concept and the first version of the IDE.

Here's how Cooper tells the story

Since when was business in the USA...

[zappepcs]

anything like fair?
Sure, all MS has to do is either make their products better than anyone else's or scare everyone from investing in a competitor's business and products. Either one will result in Microsoft's favor.

Business-wise, since Google isn't going to suddenly lose market-share it is necessary to gain market share, either by purchasing it, or causing your own product to gain market share.

Some very large corporations in North America have been found guilty of this same type of practice. With all the MS bashing on /. this should come as no surprise AT ALL.

Whether they actually buy Yahoo or not, MS wins in the business side.

Sure, to the average joe it is hard to see the win, but if Yahoo loses revenues MS will begin to take them (what Google doesn't get anyway). In the business of becoming the largest in your field of endeavor having better products/services than your competition is only marginally more important (if at all) than your competitor being worse than you at the game of business. We all know that MS is very successful at business, not so much so at creating innovative products and services.

Re:Since when was business in the USA...

[webmaster404]

Sure, to the average joe it is hard to see the win, but if Yahoo loses revenues MS will begin to take them (what Google doesn't get anyway). In the business of becoming the largest in your field of endeavor having better products/services than your competition is only marginally more important (if at all) than your competitor being worse than you at the game of business.

I know a lot of people who use Google as their primary search engine, I know lots of people who use Yahoo for searching and mail, I even know people who prefer to use Ask. Even still there are some who use some hijacked browser page to search. However I have not met one person who really uses Live/MSN to search. I don't think for most people Yahoo is going away soon, most have mail accounts there and of course will use it to check their mail, and unless MS's search engine has new and different features then Yahoo and Google I doubt they will gain marketshare. For most people, they choose search engines from convience not features and Google and Yahoo are rooted in their minds and browser's homepage more then MSN/Live.

Re:Since when was business in the USA...

[Hucko]

Australians. If they aren't using Google, they seem to use Msn via ninemsn. Nine is one of our Big4 free to air channels who did some dodgy deal with Microsoft way back. As far as I know we only have five national f.t.a.

Stock price

[Tom9729]

Didn't Yahoo's stock price go up from this, while the price of MSFT stock went down? Isn't Microsoft doing more harm to themselves?

Besides, I thought Balmer was in charge now. What's with all this talk about Bill?

Re:Stock price

[jbengt]

Try the 3-month trend.
http://finance.yahoo.com/q/bc?s=YHOO&t=3m/
Yahoo had a sharp spike up at the takeover announcement and Microsoft went down

Re:Who

[Anonymous Coward]

Who are Intuit?

A small tribe near the Arctic Circle.

Re:Who

[Anonymous Coward]

The QuickBooks guys. But ten seconds of Google could have told you that.

secondary, not primary goal

[globaljustin]

TFA is being hyperbolic to claim that the purchase bid "alone has some value for Microsoft." Not quite. We're definitely in "a little bit of both" territory here

MS was serious about its announcement about buying yahoo. If yahoo had been openly amenable to the idea, then the deal would be moving forward right now.

The secondary effect (since yahoo was NOT amenable) was to destabilize yahoo, who is a competitor.

So, MS did a cost/benefit actuarial analysis and found that if they bought yahoo for a certain price, then they would benefit. Yahoo doesn't want to sell, but MS still gains b/c of the uncertainty that the bid caused. It was a win/win situation for them. This is how big business works.

Why its not a repeat of Intuit or Borland ...

[tomhudson]

Remember that Yahoo is staggering here while Intuit was at the top of its market and its game.'

Being at the "top of its market" is a liability - it forces you to look beyond your core business in hopes of continuing to expand. This is what happened to Borland - at one point, Borland owned the programming languagess market, with a 66% market share - more than Microsoft and everyone else combined. Then they went nuts. "Desktop / Professional / Enterprise" versions of compilers were one fo the first signs that rot was setting in. So was the buying and selling of WordPerfect and dBase. The dBase acquisition made sense - it let them compete directly with CA-Clipper. Dumping it later on didn't.

Apple didn't get smart until it had it' near-death experience.

So if Yahoo! isn't at the "top of their game" they can afford to concentrate on what they're doing. Microsoft, on the other hand, has nowhere to go bud down - their #1 competitor is themselves (see Vista vs. XP as a good example).

Re:Why its not a repeat of Intuit or Borland ...

[FlyingGuy]

. This is what happened to Borland - at one point, Borland owned the programming languagess market, with a 66% market share - more than Microsoft and everyone else combined. Then they went nuts. "Desktop / Professional / Enterprise" versions of compilers were one fo the first signs that rot was setting in. So was the buying and selling of WordPerfect and dBase. The dBase acquisition made sense - it let them compete directly with CA-Clipper. Dumping it later on didn't.

Borland's demise began on two very distinct and different fronts. The cause of one of them rests squarely on their shoulders, the second was pure MS evil.

1. Borland deciding to get into the applications market was the most supremely stupid move it ever made. Paradox with its obscure and somewhat strange "Answer Table" model broke down on large data sets and was generally to strange for a lot of people to deal with. Other then that it was a pretty good database. It's main competition at the time were two dBase from Ashton-Tate and DataEase. dBase had a great language but had a pretty low end database engine. Indexes were not dynamic, and if you packed a datafile, you were in re-index hell. DataEase had a built in screen builder, a sreaming fast databse engine, a very SQL like language, a report writer that was pretty damn nice, easy to use and would crank out reports like mad. Unfortunately they bet everything on OS/2 and Presentation Manager because at the time that was where the MS/IBM strategy was heading, then MS pulled the plug and well the rest as they say is history.

Quatro was an insanely wonderful spreadsheet product that was eating both Lotus's and Excel's lunch. It had a native GUI mode, perfect WYSIWYG and was lighting fast. It could handle multiple large spreadsheets, linking, all the fun stuff we enjoy today, and then Jim Manzy, that fuckwad from Lotus Development decided that the only way he could stave off the Quatro juggernaut was to go to court. The infamous look and feel lawsuit that came within a breath of putting Borland out of business. The filed suit in Boston and it looked like Borland was done for, then in the end Borland prevailed, but not until it had spent almost everything defending the suit. To this day I still want to find Jim Manzy in a dark alley and have a chat with him,

2. So anyone remember OWL??? The Object Windows Library? Pretty much up until then if you wanted to write windows programs you had to deal with the bare Windows API. If you had ever used it you knew it was a miserable experience. Many of the calls were very difficult to deal with, at best, and you had to re-invent a lot of things just to make your software work, Borland realized this and did something that changed windows development forever. They took the windows API and wrapped up in a very neat, clean, object based interface. Suddenly writing windows programs became some that was no longer am arcane bith of magic, and pure dumb luck. Microsoft, instead of going WOW, this company is driving TONS of programmers to windows they decided to counter with MFC and of course they really shit the bed. The first versions of MFC were simply awful, bordering on unusable, hell no one at SM would even use them. Meanwhile Borland kept refining OWL, they even had a CUI counterpart called turbo-vision, now called FreeVision as it was open sourced. OWL was being adopted by everyone and their grandmother. Borlands Language products were being used to drive windows development. The integrated IDE, all that stuff you take for granted today was ALL Borland. Up until this time Borland had licensed all the right bits from MS to handle things like integrated debugging, software profiling, really cool stuff within windows and they were flying high. Turbo C, Turbo C++, Turbo Pascal for windows were just climbing the charts. The reviews were rave and Borland was making money hand over fist and developers, for probably the first time ever, had really GREAT integrated tools to create grea

Re:Why its not a repeat of Intuit or Borland ...

[FlyingGuy]

'That so? Read on please... OWL

Google

[Zayin]

"Redmond's real goal may be simply to poach people from Yahoo, and this deal could help them do just that.'"

I think not. It's more likely that Google would do so, I expect that their recruiters are quite busy calling Yahoo employees at the moment. If this is Microsoft's goal they've just aimed a double-barreled shotgun at their feet and pulled the trigger. They just gave their no. 1 competitor a huge opportunity. Where would you, as a brilliant Yahoo employee, work next? Google or Microsoft?

Re:Google

[bonkeroo buzzeye]

Microsoft - for many employees who decide they'd be a very small extraneous fish in a very large pond at Google or the cavalry to the rescue at Microsoft. At Google, everyone higher up would be better than them; nowhere to go. At Microsoft, obviously no one knows anything about search or the web - nowhere to go but up.

There are a million arguments against this viewpoint and I'm not sure I'd want to hire anyone who adopted it but some people would see it that way and they'd apparently be Microsoft's kind of people.

Basically, MS has no mindshare or momentum at all, as far as I can see. Making a few key acquisitions (individual people or entire companies), rolling out any marginally successful product, *getting talked about in the media*, doing *anything* towards getting to at least #2 first, will make becoming #1 easier than just being stuck in the mire.

But I will grant that it had earlier occurred to me that some of the best Yahoo people, faced with a disrupted Yahoo or working at MS, would jump to Google, as you say. I just don't think it's quite the slamdunk it might seem.

Re:I wish MSFT would screw with me, like that.

[mritunjai]

Please keep in mind that stock price inflation is due to "premium" put up MS and speculators have driven up the price which *would* fall down if the deal doesn't go through.

I'd expect a lot of speculators to actually short the stock.

All in all, for a serious business, it's *not* a good thing to be in this situation. Even in best case it'd rock the boat and cause heart-burns and unrest whether the deal goes through or not.

Micro$oft Exploder - Tenacious Gates

[bobmarleypeople]

(Sing to the tune of Master Exploder by Tenacious D)

Ahhhhh, ahhhhhh, ahhhhhhh, ahhhhhh, ahh ahhh ahhh ahhh
ahh ahh ahh ahhhh AAAAAARRRRRGGGGHHHHH YEAH!!

I do not need, (he does not need)
The Yahoo Bid (the yahoo bid)
Our Company is freakin, (freakin)
POWERFUL!
Aaaaaah yeah!

Arghhhaaaaaaaaaaaaaaaa!
[Yahoo explodes]
Sorry
I did not mean, (he did not mean)
To screw your mind (to screw your mind)
But that stuff happens to us,
All the time!

Now take a look (take a look)
In to heaven? (In to heaven)
It's coming soon, WINDOWS SEVEEEEEENNNNNNNN!

AAAH! ArghhhAAAAAAAAAAAAAAAAAAA!

Lyrics copyright to bobmarleypeople. w00t!

Re:Fixes

[tomhudson]

If only Microsoft found so much energy and effort to fix it's own products first!

You mean Fear, Uncertainty and Doubt aren't Microsofts' 3 main products?

With SCO possibly going private, welcome to FUD 3.11.

Cringley's an idiot

[kabdib]

Cringley's an idiot. There are far cheaper ways to do this. BillG could stand on the sidewalk in front of Yahoo and hand out hire-on-bonus checks if all that MS wanted was employees, and MS would have been far, far ahead, stock-price-wise.

Re:Cringley's an idiot

[Anonymous Coward]

And Frodo could have hopped on the back of a freakin' Eagle, flown the 2 hour trip in to Mount Doom, and dunked the ring and been home in time for dinner.

But where's the adventure in that?

Re:Cringley's an idiot

[martin_henry]

And Frodo could have hopped on the back of a freakin' Eagle, flown the 2 hour trip in to Mount Doom, and dunked the ring and been home in time for dinner.

But where's the adventure in that?
No homoerotic overtones?

..it might be ......

[gadget junkie]

... that Microsoft's business acumen in providing a better product over the years has overflowed into their Corporate Finance department.....

Jokes apart, there is a possible explanation which implies no wickedness on the part of MS: MS investments in his search engine + ad seller has been less effective than Yahoo's. MS would never be allowed to bid for Google, so it must settle for second best, which is not a bad place to be if you are much lower in the totem pole.

Given the cash pile burning a hole in MS pocket the cash pile burning a hole in MS pocket, the pressure to put the money to work somewhere, or return it to shareholders, is enormous, and they cannot or would not invest it in making a better product overall.

That's just about the single stupidest idea...

[Etherwalk]

I've ever heard. And I've played catch with rock hammers.

MS did it because they wanted to consolidate a larger advertising and search engine position, and a major internet portal. It was probably still a bad decision, but who can really say what the results would have been ten years down the line?

Look at what MS Stock did. It had broken out of a major rut--a rut not justified by its earnings--for the first time in years following an earnings report last year. Now it's down 24% off its high. Twenty-Four percent. Balmer has lost $3.6 Billion, Gates has lost twice that, and even employees who've only lost twenty or fifty or seventy thousand aren't happy about it--because that is a big chunk of their savings. Now that price change isn't all yahoo, by any stretch of the imagination. But a big chunk of is it from the Yahoo offer.

You don't take that hit for an offer you aren't interested in following through on.

Nonsense

[sjbe]

Nobody makes a $40B+ offer just to screw with another company. That's WAY too much money. While business disruption might be a desirable side effect, especially if the merger doesn't go through, it isn't why MS made the offer. When MS tried to buy Intuit, it was because they wanted to dominate personal finance software, not because they wanted to screw with Intuit. If memory serves they were blocked from the merger by the government due to the effective monopoly the merger would cause.

If I was a shareholder (I'm not) and it ever came out that MS was doing that with their cash hoard instead of finding market beating investment opportunities, I'd have my lawyer on the phone faster than you could say "class action lawsuit".

It's the geek who is out over his head

[westlake]

Microsoft is treading water.

Perhaps you can't forgive the pun. But...

There seems to be nothing that can pull the Geek out of denial.

Microsoft posted breathtaking results in its first and second quarters. 15-20% growth in Windows. In Office. In servers. In home entertainment.

That kind of growth isn't fueled by massive "upgrades" to Win XP.

67 cents of every new retail dollar spent on PC software goes to Microsoft Office.

Microsoft gambled on "the ribbon" and won.

For the quarter, Microsoft sales increased 30 percent in emerging markets, 20 percent in established markets like Europe and 15 percent in the United States. Microsoft has become very well insulated from a recession in the states.

Online services are still posting a loss, but ad revenues are up damn near 40% from fiscal 2007 to $623 million.

There are 427 million Windows Live IDs.

Which suggests that estimates of one billion Windows users world-wide are on the money.

Microsoft has been paying dividends, buying back stock. It holds $20 billion in liquid reserves and doesn't owe a dime to anyone.

Microsoft Q2 2008 By The Numbers

My biggest fear

[pavera]

If MS buys Yahoo, what happens to Zimbra? Yahoo just bought them, and I'm 100% sure MS will kill that project the day they take over, they don't want any competition for exchange, and certainly not open source competition.

Zimbra might not be the greatest software, but it is in my opinion the best open source collaboration/email software out there. It is the only serious competitor to exchange in the open source world. And it will be gone if MS completes this takeover.

Re:My biggest fear

[robizzle]

I don't know anything about Zimbra but if it is really open source, then there is nothing Microsoft would be able to do. The license allows other groups to take the code and continue development. Assuming Yahoo is paying employees to develop Zimbra (I have no idea, are they?) the worst Microsoft could do is lay off those employees or make them start working on a different project. However, the open source is still out there with its license in tact and if it really is a good project, someone will start up a sourceforge project in no time.

Not really accurate

[Anonymous Coward]

MS and YAHOO and complete different services than google.

Google is a fiscal service for advertisers with free user services to get viewers to the add content.

MS and Yahoo are user services that use advertising since they already have the users there. The motivation is cleary and entirely different between these companies. Google is all ads, MS wants you on their platform and subscriptions with some ads on the side. Yahoo must have a mountain of email accounts that perhaps MS wants to eat up in order to integrate them with the new MS email/office combination.

I must say, google and the rest of the world are slacking on getting onlnie apps out. At this rate MS is going to eat them alive and google is going to have some shitty plain Ajax wordprocessor to pretend to be competative against Word online.

MS having ported to .NET is positioning themselves to go all out, all online, even all crossplatform if they have to. They've basically aligned the entire Win32 development army to produce the most portable rapid developemnt environment around.

Who cares about Vista, the right move was .NET. It's taken awhile and too many version and code changes, but they will have the most awesome integrated framework for making any apps. I think you'll see that more and more with online apps and web pages. The fact is, the non MS development community has dropped the ball on a full featured devlopment suite such as .Net and the power and support it has and they are going to pay in yet another decade of MS rule.

It's funny because of all the platforms, MS needs development tools the least, because they have the most, yet they know where their strength is and have expanded their lead their.

The difference is that Yahoo and MS are sustainable, and Google is reliant on ad revene. Though, you could say Yahoo isn't all that susnstainable in the long run, but google is BY FAR not sustainable.

As soon as ad spending goes down, so does Google's revenue with it.
Google's is a more opportunistic model and the only reason it's good is because it's realiable. Yahoo and MS have unclear reasons for doing things while Google's reasoning is pretty much always fiscal based. You can bet on Google to piling up services to draw more revenue and you can count on them to stick with that same basic strategy.

Google is being more and more exploited everyday and in time it's highly unlikely it can keep it's good reputation and without a doubt it's search results aren't as good as they used to be.

Google's business model is unsustainable because it relies on completely immoral ad revenue. No matter how good the serice, in time, the force of profitablity will erode google because the HEART of google is generating money through ads. That's just a very shaky place to draw the majority of your revenue. Look what happened to TV, the news. These services started out with a much more individualistic and unbaised position and over time as profitability proved more powerful than morality these servies lost integrity.

Google, at it's current rate, will do the same and the plethora of rip off artists using it are a sign of this.

You're probably not going to be able to rely on one search engine in the long term any more than you can rely on one news source to provide you the truth.

Perhaps MS just want to buy Yahoo's user base, statistics, logs and such from them.

MS might also be suspecting the fall of Yahoo and trying to buy the equity of the company at a relative loss to yahoo and gain to MS.
I certainly don't see that it's worth 45 billion though, since yahoo is the new lycos.

Yahoo will die on their own because like so many web services, they forgot to make money. Perhaps yahoo has patents on online apps that MS wants also since they will be going full force with office online soon.

I think whoever buys yahoo is bound to take a loss on the investment, so with that in mind News Corp can have them. Yahoo had the edge, lost it, and failed to innovate. Yahoo answers is about the only new buzz they have going on.

Re:Who

[Warll]

Odd, according to Google it only took 0.12 seconds.

Results 1 - 10 of about 12,000,000 for Intuit [definition]. (0.12 seconds)

Re:Fixes

[hairyfeet]

Actually I think that if MSFT can't get Windows 7 out the door quick enough,or if it does and it carries the Vista stink of failure(yes,I know some folks like it.But enough folks have been burned that the WinMEII label won't be going away) I really wouldn't be surprised if they took one out of Apples playbook and bought a Linux or BSD to use as their next OS.It really wouldn't be hard for them to bolt a proprietary GUI on top of a Linux or BSD kernel and simply add a parallels style "compatibility layer" using the .dlls from WinXP and Win98.

I am just glad that the Asus EEE has taken off,since it would make buying Xandros more expensive than some of the other Linux Distros out there(I like my Xandros just the way it is,thank you very much).If I had to bet,it would be Novell or one of the older Linux or BSDs.I also think that moves like trying to buy Yahoo shows that they have no direction at the top,which is going to make it that much harder to make a decent OS,as design by committee is never good.

I think the era of a company pounding out an entire OS from scratch is coming to an end. It is just too risky and too costly an operation for even someone like MSFT,and the rise of the low end markets where they simply can't compete(and where they are shooting themselves in the foot by not keeping WinXP) is simply going to make it harder for them as time marches on.You really have to give Steve Jobs credit for seeing the writing on the wall and building OSX out of BSD.It minimizes his costs while giving him a rock solid base to work from.Anyway my .02c on the subject,YMMV.

Who on earth would mark you Insightful?

[LibertineR]

What product makes Microsoft their greatest profit? Answer = MS Office.

Which department decided to bundle Microsoft's desktop apps into what is known as MS Office? Answer = Microsoft's Marketing Dept.

You must be very young to believe Microsoft simply BOUGHT all of their products, or that everything successful is simply the result of their money.(Did I mention MS Office?)

Love them or hate them, but you would be foolish to think Microsoft never built anything on their own towards their success. They didn't buy Excel, they didn't buy Exchange Server, which spawned Active Directory, so give them their due.

Nobody told the folks at Lotus or Netscape that they got beat by money, rather than products that kicked theirs in the teeth. Who did they buy Visual Studio or the .NET Framework from? Something tells me, Microsoft will be just fine for the long term.

Re:Who on earth would mark you Insightful?

[falconwolf]

You must be very young to believe Microsoft simply BOUGHT all of their products, or that everything successful is simply the result of their money.(Did I mention MS Office?)

This could be turned around on you, you must be very young to believe MS Office was innovative or the first office suite. All MS did was bundle different apps together. And even then though my memory is rusty I believe WordPerfect bundled an office suite before MS did... Yeap, whereas MS Office was first created in 1989, for the Mac, WordPerfect Library/Office was created in 1986.

Love them or hate them, but you would be foolish to think Microsoft never built anything on their own towards their success. They didn't buy Excel, they didn't buy Exchange Server, which spawned Active Directory, so give them their due.

MS did nothing innovative, as far as software is concerned or hardware either, though.

Falcon

On the other hand, the ARE similar.

[Futurepower(R)]

"Yahoo doesn't really seem like a good match for Microsoft."

Yes, but they are a bit similar: Microsoft has proven, over many years, that it does not know how to run a search engine. Yahoo has proven, over many years, that...

Luck favors the prepared

[westlake]

If it wasn't for getting lucky with DOS (which they bought from someone else) and IBM they would not be existing right now.

It amazes me that the geek still fantasies about MS-DOS.

Microsoft was incorporated in 1975 and by 1980 was dominant in languages for the microcomputer. Microsoft was moving up and moving fast.

There would be an MBASIC for the IBM PC and much, much more to come.

Gates promised to deliver a cheap, serviceable, OS in time for the projected launch of the IBM PC, an OS that would sell for about 1/6 the price of CP/M 86.

That was all IBM needed to know, that was all IBM wanted to know.

But it was Bill Gates who had the imagination to see the enormous potential for growth and profit in the MS-DOS PC that was almost - but not in its beginning - an IBM PC-clone.

Re:Anders' common reply to posts like yours....

[FlyingGuy]

Anders is the Darth Vader of the software industry.

Ever wonder why so much of .Net looks just like stuff that Borland came out with, except that it sucks? Seduced by the dark side he was.

Anders is brilliant, he could have created his own software company and did something like .Net that actually was light weight, fast and X-Platform, but instead, .net is .Garbage because it is done the "Microsoft Way".