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Gates Explains Microsoft's Need for Yahoo
eldavojohn writes "Perhaps it's obvious to you and perhaps you'll be pleasantly surprised by his answer but Gates revealed to CNet why Microsoft needs Yahoo. From his response, "We have a strategy for competing in the search space that Google dominates today, that we'll pursue that we had before we made the Yahoo offer, and that we can pursue without that. It involves breakthrough engineering. We think that the combination with Yahoo would accelerate things in a very exciting way, because they do have great engineers, they have done a lot of great work. So, if you combine their work and our work, the speed at which you can innovate and get things done is just dramatically more rapid. So, it's really about the people there that want to join in and create a better search, better portal for a very broad set of customers. That's the vision that's behind saying, hey, wouldn't this be a great combination.""
You know, if its the great engineers that they want, why not just allocate $40 million or so to hiring them away from Yahoo? Getting access to Yahoo technology isn't really as big of a deal if they are talking about making something new. And great engineers are good at coming up with ideas anyways. If Microsoft couldn't think of doing things a cheaper way, then I doubt they are going to be able to drop the fat enough to fight Google. They are just throwing money at the problem when there are other ways. They could make a think tank like Xerox PARC with all the engineers they could hire for a fraction of the cost. And it would be a safer investment because what's to stop those engineers from just quiting after the buyout? $40 billion could be better spent.
Microsoft has forgotten that it doesn't take much money to get things done. A guy in a garage Bill, a guy in a garage.
Microsoft is pursuing the buyout path because they can. They have a metric shitload of money, so throwing money around is their customary solution to every problem that comes their way.
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So, if you combine their work and our work, the speed at which you can innovate and get things done is just dramatically more rapid.
This is the school of thought that thinks if you get nine women pregnant you will have a baby in one month.
Tie two birds together: although they have four wings, they cannot fly. (The blind man)
Take great engineers, put them in a crappy company and they'll not be that bright.
Most of the problems (of people sucking) are inside the companies: philosophy work environment, colleagues, etc.
how long until
Its not only about the engineer. If it were, Microsoft would (and may) go only as far as "due diligence" and get access to Yahoo proprietary information such as the important employee list.
But I think, Microsoft wants to buy users (Flickr, Delicious, Yahoo Mail, etc.). Google is making Microsoft less relevant, and there is some sort of network effect that makes smaller players nearly impossible to catch up. Anyone can duplicate an Ebay, but you can't duplicate the user base. The success of the services have less to do with the technology, and more to do with the users and where they expect to get their information.
We have a strategy for competing in the search space that Google dominates today,
"Ballmer has his panties in a bunch. He said we're going to fucking kill Google, and he gets a little attached sometimes, you know? So now we've got to figure a way to f'ing kill Google."
that we'll pursue that we had before we made the Yahoo offer,
"In case you think we're upset about Yahoo's rejection, we're not. Ballmer's still stuck on the '<expletive> kill Google' thing (do I have to keep saying it?) - he can't even see Yahoo past the bulging vein in his forehead."
<from offstage> "Yes you have got to goddammed keep saying it!" <sound of chair crashing into wall>
and that we can pursue without that.
"OK, we admit he's a little obsessed. But don't think this will divert an painful amount of capital into an a space in which we have utterly failed for years. Because, ummm, we don't want you to think that."
It involves breakthrough engineering.
"All we need is some of that breakthrough engineering stuff. We hear that stuff is all the rage with the kids these days, and we figure if we can get some of it, we'll be all set to *** kill Google."
We think that the combination with Yahoo would accelerate things in a very exciting way,
"We looked around for startups to partner with, so we could copy their technology then dump them, but apparently everyone has heard the compendium of stories that start with Stac. We figure it'll be easier to buy Yahoo. (we figure it would be easier to host a snowman making competition in hell, incidentally) Just have to figure a way past that little, 'Yahoo flipping hates us' thing."
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Microsoft is way underleveraged for a mature company. With debt as cheap as it is, especially given MSFTs debt rating, they should go into debt whether they buy YHOO or pay out additional dividents.