Now that the news is out, and has festered on the wires a
bit, about Microsoft Corp. (Nasdaq: MSFT) and Yahoo Inc. (Nasdaq: YHOO) calling off their big, expensive wedding, it's time to speculate on the future of the Internet and whether or not
Microsoft has lost its place there.
In early March, at MIX '08, Steve Ballmer, CEO of Microsoft, essentially likening his company to The Little Internet Engine That Could, said Microsoft would catch up to Google -- even if it was his "last breath" at the company. At the time, it seemed Yahoo would be Ballmer's golden trolley ride to the top. Now, with the MooHoo deal dead, it seems Ballmer has a lot more gasping left to do at the company.
But in withdrawing its bid, does Microsoft still think it can? On its own, Microsoft's search and advertising initiatives present no threat of catching up to Google. And as we allegedly slap on our metaphorical wings for this great big flight to "The Cloud," can Microsoft secure a viable online future?
"I think
they can," says Chris Tolles, CEO of Topix and regularkibitzer on the potential merger. "I think that they need to actually take a step
back and look at their assets and figure it out. They've got the money, they've
got the talent -- currently they don't have a plan."
Tolles says that Microsoft's number one problem right now (aside from its broken engagement... tear) is that it doesn't have the content inventory to offer advertisers. Nevertheless, he says, Yahoo was the wrong way to fix this.
"I don't think they necessarily need to acquire companies as much as
inventory," says Tolles. "I think that merger would have been bad for Microsoft and bad
for Yahoo. It turns out big mergers are bad. If you're going to go off and merge
your way to success, a smaller company with inventory would be better."
While Tolles is glad for both companies that the merger fell through, to some it's only half dead. "I
think this deal -- or this saga -- is far from over," says Jason
Small, CFA and principal, assistant portfolio manager at Chartwell Investment
Partners. "We could
see some high-profile activist investors moving in on Yahoo to make this
move... I think
if I were a Yahoo shareholder I would be re-thinking what my board is doing for
me at this point to turn down a $33 offer and have the stock close today below $25."
For Microsoft, however, Small thinks the deal was a bad idea to begin with. "As
a Microsoft shareholder, I'd almost kind of wished they'd put their head in the
sand and not tried to pursue an online strategy," he says, suggesting that Microsoft would be better off turning its attention away from the tubes for a bit and, more specifically, off of Google.
"I think maybe there's better ways to focus on making the Microsoft Productivity Suite better and kind of defend that front rather than attacking Russia
in the middle of winter," says Small. "Ad revenue
sounds great. And sure, it's nice to
have revenue growth in any business -- but at what cost?"
With or without Yahoo, Microsoft still has the upper hand when it comes to online strategies. Google can't run in a vaccum and Linux is not mature enough in the enterprise or the consumer space to be able to control the Internet just yet.
And even though Apple's OS is doing just fine, Steve Jobs et. al. would you prefer to encounter the Web through their eyes. This is not to say that SaaS does not have a strong future, I think it most certainly does. But considering that more than 80% of the world's PCs run Windows accounts for something. I'm a Mac addict, but tally this fight up to Microsoft at this point.
If anything is going to shake Steve Ballmer's online strategy tree, it's going to be China. Keep your eyes on Baidu and Alibaba.
I think what's hazy is Microsoft's ability to get what it wants. The only thing Ballmer has on his mind is becoming an online search and ad giant that knocks Google down. The question is whether or not it can do that on its own and whether or not it should bother to try.
I think both of them lost! Whether they made the deal or not they were going to lose. If Yahoo agreed to sell, it would've lost not only money but also Linux users. If Microsoft bought Yahoo, it sure will add its touch to the portal; there you go, they messed things up (Like they did with their new operating system "Vista")
Microsoft is not just worried about its place & size on the web but also on desktops. You can all check the sales of Apple Computers since they switched to Intel; many now prefer to learn how to use a completly different operating system then switching from Windows XP to Vista. Once Apple Computers are as cheap as PCs (or maybe a little bit more expensive), the Microsoft Empire will fall.
Is Microsoft’s future really so hazy?I think they have plenty of irons is just about every fire with software in it.
But Yahoo, sadly, is a dead man walking.I think what Microsoft pulled back on is the prime $33 offer they made for Yahoo stock.The relative value of MSFT and YHOO shares will go only one way.
What I expect is someone else will run in to prop up the walking wounded, and then MS will buy out from them whatever they want out of Yahoo- it may be as simple as employment contracts for 5000 engineers.It might be Flikr.
Oh Yahoo management- Vanity, Vanity, all is Vanity.
What Microsoft discovered, what Google will discover is that as they get bigger they will be slower to respond to the industry. Kind of like a supertanker and a motorboat.
Eventually a new killer app will come up. A whitepaper will be lost going up the levels of beauracracy and some startup will be on top with that product. If the startup can find capital and resist being bought off or killed by the 900 lb gorilla, then another empire will be built.
Microsoft got big because IBM snoozed and Gary Kildall wanted to fly his plane and not talk to a pair of suits from IBM. Bill didn't even have an OS when they visited him.
you are right hounhosp, i meant, that this time, Microsoft failed to absorb the company who started the buisnessю But you are right, Microsoft will keep looking. Do you think that they will reenvent the strategies or just buy another company that could be succesful in time, but now just can't compete with such a giant?
Microsoft will not and should not keep its hand off searching engine industry or internet marketing. Their future depends upon their presence on the internet market and I think that it is good not to leave the future of the internet in the hand of a single mighty leader-Google. But instead of Microsoft turning back to Yahoo, they should rather re-invent their own new strategy to counter Google leadership.
As far as I remember, Microsoft didn't pay a lot of attention to the Internet development, untill I think that was THE Steve Ballmer, who was "having a tour" through Universities of the USA, and found out that most of the students were talking about Mosaic.So he pinched mr Gates and said," we really need this thingumajig browser'.So , we know what followed next.Microsoft Explorer. So, at least it is fair, that Microsoft keeps its hands off "searching engines industry:)"
Microsoft can have a bright future if and when it's corporate leadership decide they don't have to be anything and everything to computers.
The history of the company is seeing a product or vision, scoping out the competition, buying the competition (friendly), if it couldn't buy the competition release a substandard similar product and give it away, make the substandard product part of the OS so it was difficult for the average user to install the other product. Eventually the other company goes bust. (history of Netscape vs Microsoft)
We, the computer users lost innovation when there is only one software provider.
Enter into the internet age, a new economic model, companies are making money providing "free" services. Microsoft suddenly has competition on every front of it's business model. Opera, Firesfox are gaining shares of the browser market. A maturing Linux OS is showing up in the server room and on a few desktops. A 900 pound gorilla (Google) is where Microsoft wants to be.
Microsoft can maybe now listen to the end users, see what the end users want or need and maybe develop quality products and services that meets those needs and wants.
Vista won't kill Microsoft, they did survive the failure of ME. The next one has to be better and all will be forgiven.
This raises a good point. Rather than bulking up and bettering its own online initiatives, Microsoft is so intent on beating Google as fast as possible that it simply wanted to buy its way to the top of search and advertising without first analyzing what it's doing wrong at home. Your suggestion sounds like a better one than forking over billions for Yahoo.
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