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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.
I write sci-fi for metalheads
Microsoft's approach to breakthrough engineering is through acquisitions? Is it just me or do I sense an oxymoron here...
Goodbye Slashdot. You've changed.
"Look, we innovate. We innovate the hell out of stuff. Just yesterday I innovated a donut by taking one off some old guy when I pushed him down a flight of stairs. And Yahoo!, well, we're innovating them right now, and we're going to keep innovating them until they stop moving. Then we'll use their bloated corpse to innovate any Google employee that gets in our way."
Eviscerati.Org: All Hail the Eviscerati
"Without Yahoo, we are years behind, and likely to stay that way"
Am I right or am I right?
from the Cmdr-Taco-needs-a-grammar-checker dept.
Summation 2
Yahoo is acquired by Google, then Yoogle turns around and acquires Microsoft. Classic Pac Man defense.
And here I thought it was because Yahoo's pages are as fugly and user-hostile as Microsoft's. Shows how dumb I am.
mcgrew's razor: Never attribute to stupidity that which can be explained by greedy self-interest
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)
First, Take a look at http://www.eep.com/merchant/newsite/samples/ee/ee0801.htm, for "Why Most Mergers Fail".
Next, take a look at press releases involving mergers in financial and industrial companies.
Note, how there is highest emphasis on cost savings, and very little mention of ideals and NEW business strategy after the merger.
Lastly, the kind of "merger" you are suggesting is typically done as a buyout of a small company by a much larger company.
See! This is what happens if you drop out of Business School.
For just a 0.1% Fee based on the deal value, I can help provide further advice.
Good Luck!
I mean, in terms of software DEVELOPMENT you're right. I'd even say "spot on." But in terms of defining how the computer industry does BUSINESS... well, they wrote the playbook of dirty tricks, copyrighted it, and leased it to the rest of the industry. Marketers in the computer industry, no matter where they work, have a picture of Bill Gates on their wall, candles lined underneath, and genuflect to it every time they enter or leave that room.
Eviscerati.Org: All Hail the Eviscerati
You can boil his entire quote down to the above 7 words. Microsoft likes nothing more than to get their name/software/web properties in front of everyone's face. Adding Yahoo and all Yahoo's users to their portfolio is what they want. Imagine if all of a sudden everyone with a @yahoo.com email address automatically had a Passport account... all of a sudden Yahoo messenger is 100% compatible with MSN messenger.
We always knew Comcast was corrupt, here's the proof: http://tech.slashdot.org/comments.pl?sid=1909890&cid=34545432
This merger comes from the great minds who brought us Reese's Chocolate and Garlic Butter Cups.
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
billg is still chairman of the board.
Just an hour ago, I spoke to a Zimbra partner, and he informs me that in case MS does get to buy Yahoo, Zimbra would be out of it, to allay antitrust fears. That would mean Zimbra will have to be sold back by Yahoo and bought over by some other company. Is this true? Or is the popularity of Zimbra the reason why Microsoft would buy Yahoo to kill it off?
If you keep throwing chairs, one day you'll break windows....
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."
Stop-Prism.org: Opt Out of Surveillance
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.
yep, he's responsible for putting back the chairs
Kaetemi
It is not very well known, but I remember talking to an engineer at Yahoo, and I asked, "How do you make money?" He said, this was a couple years ago, that 60% of all e-commerce sites were hosted by yahoo. Think about that, credit cards, transactions, data, users, etc. M$ would live to control that.
Think of all the anti-competitive stuff they could do. Subtle problems with non-windows platforms or non IE browsers. A requirement of Microsoft Wallet. (Remember that?)
There are a ton of reasons why Yahoo owned by microsoft would be a bad thing for the world. I hope Yahoo remains independent.
Microsoft Labs has done some really great stuff. But you don't see it in their products. That's why I have a really hard time believing MS can -execute- what Bill Gates proposed.
If you look at MS's desktop products, in particular, you see a pattern of buying a good product and then as part of integrating it, making it more and more baroque and buggy and security-vulnerable.
Reminds me of the comment I read somewhere during the MS anti-trust debates: "If Microsoft is so keen on innovation, fine. The decision of the court should be that Microsoft is free to innovate using ONLY their internal resources, but is restricted from acquiring any technology from other sources. This enables the Market to work better, by allowing innovations to move freely." I had friends working on a start-up, when Microsoft announced a potential competitor piece of -vapor-ware-, their funding dried up immediately, and MS never did deliver the goods...
dave
What's purple and commutes? An Abelian grape.
Bill Gates comment is interesting in that MS' purpose in acquiring Yahoo is primarily for Yahoo's technical people, and not for any particular technologies/IP held by Yahoo. That is, MS values Yahoo only for its technical people. In a sense MS is fighting a war against Google on two fronts: 1) the search engine business, and 2) attracting the sharpest technical people. MS is losing on both fronts. Instead of MS changing its corporate environment so as to again be attractive in recruiting sharp people, MS is simply trying to buy these people from other companies. It's sad really, and reflects the real problem with MS: its employee environment. Who wants to work for MS these days? (Just read Mini-Microsoft's blog for interesting insights into how MS has evolved -- it is a pretty brutal work environment that no longer sufficiently rewards those who excel.) It'd get real interesting if a significant number of Yahoo staff come out and publicly say they will move to other companies (e.g. Google) should MS buy out Yahoo. In fact, Google could get the word out essentially rolling out the red carpet for any Yahoo employee who decides to leave Yahoo should the MS takeover come to pass. Imagine if 1000 of the top Yahoo staff said "we will not work for MS." I can't think of a better "poison pill."
If you start having sex with 9 women right now the chances of you being a father in 9 months is much greater than if you only had sex with one.
Microsoft is unlikely to be so interested in Yahoo for the search capability, though that's a nice side benefit. The real prizes are yahoo webmail and yahoo messenger. Combine those two with hotmail and MSN messenger and you have about 75% of all webmail traffic and about 2/3s of all IM traffic.
Fussing about the combined entity's search percentage is just noise--the real new killer market shares would be in webmail and IM.
Remain calm! All is well!
Yahoo is a trusted name. I have had my yahoo email account since it was Rocketmail. They have Dating, IM, Domain Hosting, Jobs, and a host of other small stuff besides. Their Search engine is NOTHING SPECIAL. Expect it is integrated with the Yahoo site as a whole. It's a question of interconnectivity. Yahoo Maps does a few things better then Google Maps, it meshes nicely with their Yellow Pages site and I use it to find subway stations and bus routes, a choice of closest businesses etc. Microsoft wants to buy a turn key operation not hire a bunch of geeks.
Sorry about the writing. Robot fingers, you know? Cliff Steele in DOOM PATROL #23
I thought the Chair-Man was Ballmer?
I'm not sure that search technology matters all that much. For the first half of 2007, Yahoo search was probably better than Google search. Yahoo had all those special cases (weather, celebrities, stocks, etc.) working before Google did. Yet Yahoo's market share barely moved.
What matters for profitability is the effectiveness of the advertising-delivery system. In that, Google is way ahead of Yahoo, MSN, and the little guys (Ask, Mahalo, Wikia, etc.) Yahoo top management knew this in 2006 but couldn't catch up.
If Microsoft has some great idea, it's probably on the ad side, not the search side. They control a browser, so they can put in something intrusive if they want.
"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."
I'm really, really surprised to hear Gates say something like this. It's been my experience that the more resources you throw at a project, the less efficient and the more bogged down it becomes. I would have expected Gates to have found this to be empirically untrue, especially given the vast number of bloated & overdue projects Microsoft has had to deal with in the past.
Unless there's some feature in Project 2008 that I'm missing.
"Look, Smithers! I'm Davy Crockett!"
Slashdot needs a "-1, Wrong" moderation option.
The Urban Hippie
Microsoft needs more programmers
DEVELOPERS!
it is, for the uninformed AC
I'm sure Microsoft is more interested in buying the customer/client base, both for Yahoo!'s web properties as well as advertising services, as well as eliminating a competitor in these areas so they can concentrate the fight on Google.
There may be some search expertise in Yahoo they can use, but really I doubt Microsoft is lacking in software talent, and I'm sure Microsoft research is more than up to the task of providing any necessary technology. The reason Microsoft is falling behind Google is surely because they are not so nimble (although I wonder how long Google can keep it up, if indeed they still are, given their crazy growth rate). Microsoft have become a giant slow moving behemoth, and apparently have horrible software management practices. The years of delay and scaled back feature set of Vista says it all. Adding masses more Yahoo! software engineers and managers to the mix is not the solution. Microsoft need to totally rethink the way they manage software projects - cut the burocracy and layers of management and inter-team back biting and get back to start-up type get-it-done environment.
IMO, the spin that this is about aquiring great technology is presumably because that sounds better than saying they're trying to remove a competitor and remove user choice - FORCINC people to become Microsoft customers.
For those who don't want to RTFA, here is the gist: The richest man on the Earth said: I want more money!
Don't forget GigaShit,which was also the internal name for Vista,and the reason they are looking to buy Yahoo now. :)
ACs don't waste your time replying, your posts are never seen by me.
If you're competition focussed, and not customer focussed, then don't expect your business to grow. MS has a lot of momentum, so it won't die overnight.
They've puled the Vista SP1 and that's not getting much of Ballmer's energy. Nope he's off buying Danger and trying for Yahoo to try make a fight with Google.
Google must be pissing themselves. Both Yahoo and MS are sinking in service space and there is no reason to think that they will be more productive together than as they currently are, while Google is growing.
Engineering is the art of compromise.