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Microsoft Going After Yahoo! Again
Corrupt writes "Microsoft on Monday released a letter that supports investor activist Carl Icahn's efforts to unseat Yahoo's board, as well as confirming its interest to explore a bid to buy the entire company, or just its search assets, with a new board."
I thought about buying stock in Microsoft, but this behavior appears to be out of spite rather than a sound business decision.
Microsoft buying Yahoo would only have made sense if they never had MSN in the first place. It is buying a competitor to compete with its own products and if they intend to only shut it down or merge it with MSN, its only going to bleed massive amounts of money from MSFT in the process.
The smartest decision would be to let Yahoo die on its own and focus on more "fresh" markets or ones that is truly their bread and butter like Xbox, Office, and Windows. There is no need for it to dominate a market that is firmly entrenched in Google by aquring Yahoo. If nothing else it only helps Google and people who are short selling MSFT.
"I am the king of the Romans, and am superior to rules of grammar!"
-Sigismund, Holy Roman Emperor (1368-1437)
Sure, it's great for the shareholders. Unfortunately, it's a disaster for the internet and its users. Flickr with Silverlight? No thanks. Yahoo Mail -> Live conversion? No thanks. Replacing YUI with .NET AJAX? No thanks.
Fortun'e take on this is interesting (http://money.cnn.com/2008/07/03/technology/kirkpatrick_search.fortune/index.htm?postversion=2008070405). They're arguing that Microsoft's pursuit of Yahoo has little to do with competing with Google on technology...because Google's innovation is not in technology. They're competing with Google's business model. This strikes me as very similar to some of the criticisms I hear on Microsoft: they don't innovate in technology - they innovate in business model (e.g. realizing that Windows/OS's was a good business). It's intersting to see the mainsteam media starting to catch onto Google as business innnovator but not a technology innovator. I mostly agree with two big exceptions. One is that Google clearly has some decent search algorithms. Nothing that can't be equaled or beaten but they do provide decent search results. Two, while invisible to us, they must have some pretty amazing software to manage their datacenters. The irony there is that this innovation is more similar to enterprise software...the old boring on-premise stuff that Google likes to trash.
A company with Microsoft's resources should be able to come up with a better business plan than a buy-in. I think they're impatient, for some reason not yet disclosed.
It's all about Google.
If I were an MS strategist, Google's search business wouldn't scare me. If you lost sleep every time somebody made money doing something technological you'd go mad.
I'd be a little more concerned with Google's foray into online office suites, but I'd be fairly confident that wasn't a serious problem in the short to mid term.
The thing I'd be freaked about is Google's casual way of generating APIs for its popular services. That hits Microsoft where it lives.
This is a relatively low cost, low risk game for Google. Nobody expects them to provide soup-to-nuts service for all your IT needs; they're just throwing API shit against the wall. If it sticks, good for Google, bad for MS; if t doesn't, MS feels no pain, but neither does Google. It's just another interesting idea from Google.
This is like assymetrical warfare: MS is the conventional force, and Google is the guerilla force. Google chooses when and where to stike, and if it fails it doesn't cost them much. Tactical failures can even be strategic victories if they provoke a costly response. From MS's standpoint, it is necessary to limit Google's ability to strike when and where it will, and get away without much loss no matter the outcome. One thing you can do is start to poach on Google's engineering talent; taking people out of a team is disruptive. Another thing you can do is try to hurt them in places where they live, so you want them so focused at keeping their ad revenue flowing that they can't do anything else.
Google's strategic weakness is that it doesn't provide full solutions. It is an interesting technology company, not a product company. That's good for MS because once Google (or anybody else) provides a complete replacement for Office, Exchange and Sharepoint, bad things are going to happen to MS.
Gaining control of Yahoo makes sense for several reasons. First, it keeps them from cooperating with Google, which is the opposite of what MS wants. MS wants Google to have to work harder to get ad revenue, not less. Second, Yahoo is a product company, like MS; it could be the first to offer the complete, MS free product stack. Equally bad, Yahoo could goad Google into upgrading its products so they look more like a viable replacement for MS to enterprise customers.
The picture MS would prefer is Google struggling to maintain ad revenues, and facing a steep uphill battle in product adoption and API mindshare when it looks at MS dominated product areas.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
Are you really saying there's no risk to Google's innovation?
I'm not sure how you get there from what I said. The driving strategic factor behind acquiring Yahoo is constraining Google.
MS looks at Google, and sees its younger self. MS was built around the desktop OS cash cow. Having a cash cow means having room to fail. MS often failed, but used its money to keep strategic projects alive until they could kill the competition. Google might not have the swaggering, mercilessly brutal image that MS in the bad old days did, but make no mistake, they're an aggressive competitor. Worse yet from MS's standpoint, Google has its own cash cow, and MS knows exactly how a cash cow can be used to enter new markets.
Why oh why is Google mucking around with office suites? Because with a cash cow, it's play money to them. As long as the money rolls in, nobody is going to complain. If online office suites turns into a big business well, jolly good, but they can afford to chalk it up as brainstorming. On the darker side, Office suites are a very serious business to Microsoft; it's one of Microsoft's cash cows and one of the pillars of its strategic power. It must be maddening to have a dominant player in the search market mess around in their core business.
Over the years, many MS competitors lost their ability to innovate because they were obsessed with MS, and now Google is doing the same to them. Is it intentional? You decide.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
A US corporation does NOT have to put shareholder interest #1 by law. A US corporation is free to act against shareholder interest as established in the corporate charter. Plenty of "green" corporations have clauses about environmental responsibility in their charter that are detrimental to the profit interests of thre shareholders, yet this is not illegal.
Futhermore, it is not illegal to act against the interests of the shareholders. It can result in a civil liability to be decided in a tort case, but it is not against the law.
What do you think a partner is? It's an owner. It's obvious to me that you have *NO* idea wat you're talking about.
:)). Serving the shareholder (owner) means serving the customers and employees, within reason. Note that sharholder == owner.
As for customers, employees, etc being second or third fiddle to owners, most ownership knows that investing the right amount into customer and employee relationships literally pays dividends (for dividend-paying stocks
There are lots of problems with how joint-stock corporations operate, and I agree that things would be much nicer if they changed... but when owners demand crap, their companies produce crap. The problem is not really with the corporations' structure, the problem is with the owners (shareholders) of the corporations.
Rant as you will against corporations, it's people who make the decisions, the same as with any business.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai