Is Microsoft just Screwing with Yahoo's Mind? 209
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.'"
Stock price (Score:5, Interesting)
Besides, I thought Balmer was in charge now. What's with all this talk about Bill?
secondary, not primary goal (Score:5, Interesting)
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 ... (Score:5, Interesting)
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).
Google (Score:5, Interesting)
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:Since when was business in the USA... (Score:5, Interesting)
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:Hard to tell what's going on ... (Score:3, Interesting)
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.
Re:Google (Score:2, Interesting)
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.
It's the geek who is out over his head (Score:5, Interesting)
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 [microsoft-watch.com]
My biggest fear (Score:5, Interesting)
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:Hard to tell what's going on ... (Score:5, Interesting)
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.
Not really accurate (Score:3, Interesting)
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
Who cares about Vista, the right move was
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:Treading Water (Score:1, Interesting)
At this point, the only thing Microsoft has gong for them is marketing, existing mindshare, "intellectual property", vendor lock-in, and proprietary protocols/formats. Except now that the Samba team has the documentation for Samba, it's just a matter of time before other operating systems (read: Linux/Ubuntu) start interoperating with Windows. OpenOffice.org is starting to read and write
Back to the point, while it may be standard industry practice (please note that I am not refuting that claim), Microsoft's marketers are having a more difficult time preaching to the world about the innovations of Microsoft, simply because people are older and wiser than in the '90's.
Re:Hard to tell what's going on ... (Score:5, Interesting)
Go Blizzard! They not only run on Macintosh, they run on Linux with Wine too.
Re:Treading Water (Score:2, Interesting)
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.
No, it's logical. (Score:1, Interesting)
> 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.
Your logic is flawed. Microsoft is #1 precisely *because* they make evil moves. Being ruthless in business is good for your company as long as it does not push any of your customers away. And in this case the average consumer could not care less what is going on between two giant companies, and as such Microsoft will lose nothing, while putting their opponent out of balance. So being evil is the logical move, as long as it does not generate too much bad press for themselves. Had they not done this because of "ethics", they would not have reaped the benefits of the move, and would be in a worse position.
Ethics is not mentioned in the rulebook of Capitalism chess.
Re:Treading Water (Score:2, Interesting)
Re:Hard to tell what's going on ... (Score:3, Interesting)
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 ... (Score:3, Interesting)
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:My biggest fear (Score:1, Interesting)
You see, it's not that Microsoft engineers are so stupid that they can't make a Zimbra themselves. In fact, they have made the equivalent more than once.
What happens is that internal politics kills it. As Steve would say "blah blah blah blah blah" happens. People start talking and worrying. Unfortunately Steve believes in fiefdoms and lets the little projects get taken outside and beaten senseless by the big projects. Even if they really aren't related.
So yeah, Zimbra folks I hope you all got good equity from Yahoo that vests on takeover. Take the money and run. Your hopes and dreams will stay intact.
Re:Hard to tell what's going on ... (Score:3, Interesting)
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