Microsoft Circles Back to Yahoo With New Offer 143
Ian Lamont writes "Microsoft has come back to Yahoo with a new offer that would involve it buying part of Yahoo. No details have been released, but sources told the Wall Street Journal that part of the arrangement would involve Microsoft selling display ads next to Yahoo search results. No word yet on how this will impact Carl Icahn's proxy war with Yahoo's board."
Web advertising (Score:5, Interesting)
Media companies have grown huge on advertising, but they have also spent huge sums to produce and purchase programming that attracted viewers. Online content is nowhere nearly as expensive to produce, and the target web audience is much smaller than TV audiences. I just don't see how online advertising can carry a company much farther than they've already come.
I just don't get it. It seems like anyone trying to sell online advertising space is trying to squeeze pennies out of sheep. For all the effort going in to providing these online advertising spaces, I just can't imagine the payoff being that great.
Freedom a la Microsoft (Score:5, Interesting)
Other times when their nice asking was refused, Microsoft just created an approximately equivalent service or product and swallowed the losses until the original company was destroyed. I think Palm was probably the best example of that, though it's quite a stretch to call Windows Mobile even vaguely similar. (Actually, in that case they did most of the damage by using advertising to drive Palm away from their original objectives.)
I love freedom and democracy, and therefore I conclude I must hate Microsoft. Freedom is about informed choices among real options, not limited to choosing today's flavor of Microsoft's poisonous cruft. They should cut Microsoft into four or five pieces and force them to compete against each other and against Linux and Apple. That would give us real choices and lead to much faster development of much better software. It would also prevent any part of Microsoft from getting so fat as to go around destroying other companies and other markets, Yahoo and online advertising merely being the latest targets.
Optimal strategy for Microsoft now (Score:5, Interesting)
This makes more sense than buying the whole company, which is way overpriced and overstaffed for its revenue. All Microsoft really needs, after all, is the brand, so they can drive traffic to MSN.
Re:Web advertising (Score:3, Interesting)
Re:How's this going to work?? (Score:4, Interesting)
I still expect a full acquisition to occur. Whether its $32, $33, or $34 or something else, we'll see...
I was just wondering... Yahoo's stock fell after Microsoft withdrew their original offer. Did it slide all the way back to pre-acquisition-attempt value or did it remain above that?
I knew immediately that Microsoft withdrew only to reduce Yahoo!'s value, but if Yahoo! decide to hold out again, the tactics may prove to be disadvantageous to Microsoft.
All in all, Microsoft is playing catch-up instead of innovating. Somehow, I think they will dominate the search market a year after Linux starts dominating the desktop market.
Re:Why? (Score:2, Interesting)
I agree.
My pet theory is that they are actually out to destroy competing application platforms, in this case LAMP(php) + YUI.
Re:Web advertising (Score:3, Interesting)
your 1/2 right in your post anybody informed (not sure that's the right word, but meh) enough to read slashdot will have friends that are smart enough not to go, ooooh shiny, clicky, clicky, but I think something has to be said for the fact that marketing folks tell the higher ups their important and sell THAT message really well.
Re:Why? (Score:2, Interesting)
Who's going to lend MS $20bn to buy a Web company?
Who's going to lend them $20bn to buy an advertising company in a recession?
Re:Freedom a la Microsoft (Score:1, Interesting)
And by Dow Jones and all their little averages,
Dont you forget it! Right, boys?"
With apologies to the creators of Li'l Abner
Mod me flamebait or troll if you like, but imo, corporations and central banking are more conducive to fascism then a free democracy. Corporations are a reaction to high taxation, particularly for inheritance taxes in many cases, as well as restrictive monetary control. So in some ways they can be a counterbalance to government, but mind you they will seek to control it as much as they can within the scope of the power they can obtain. Mergers are little more then an expansion of power.
Corporations used to set up their own little towns for their employees to live, get their homes from the corporation, their light, their heat and they got food, clothing etc from the company store. Americans ended up having to take up arms to get out of that trap. Have to wonder though if the corporations have just learned to spread the debt.
Of course, at least now, we can still chose to stay out of a large part of that game if not all. Let's make sure we don't end up singing along with Tennesee Ernie Ford: "another day older and deeper in debt,,,,,,I owe my soul to the company store". Entrepreneurship needs to make a comeback, however the plans for a new business can become patentedly absurd.
Re:Web advertising (Score:5, Interesting)
Re:Web advertising (Score:1, Interesting)
Needs of people will be created by the people themselves and capitalists can revert to owning labor to produce stuff that is really wanted.(I'm not saying that that necessarily isn't Britney Spears, though)
Why click on an ad for someone who paid for it, when the community, with its free software tools, will give you more accurate information?
Or maybe not. I don't know.
Re:Ichan Will Force Yahoo's Hand (Score:3, Interesting)
Icahn did absolute wonders for TWA when he bought them, and many other companies
/sarcasm
If Icahn gets control and Microsoft doesn't buy it all, expect Yahoo to be broken up into little pieces and sold off bit by bit if that's determined to be the most profitable thing for him. We may be seeing that happen now. Icahn gets a Board in there friendly to him, Yahoo only sells search to Microsoft, then starts selling off what's left to other companies.
I'd suspect if Microsoft buys all of it, I bet they absorb search and sell off the rest as well.
Yahoo! Is! Dead! and doesn't know it yet.
Re:Web advertising (Score:1, Interesting)
Another point of note is the geographic areas they seem to target. I live in Ireland and find absolutely nothing of interest on msn.ie and yahoo.co.uk, it's all incredibly americanized something Irish people arn't interested in (apart from US tv shows)
Ballmer is crazy (Score:2, Interesting)
The proposed deal didn't make sense before, and it makes even less sense now. If Microsoft takes just search from yahoo, then the rest of Yahoo will be irrelevant within a year. Yahoo would be stupid to give up search.
The only way this can end well is if Microsoft just backs away and pretends that none of this ever happened.
There is just no getting around the fact that Yahoo is itself struggling to survive against google, and Microsoft has already pretty much admitted they can't compete with Google in search... I mean, didn't anyone ever tell Ballmer that two wrongs don't make a right?
Reason: The core of Microsoft's interest (Score:3, Interesting)
This deal IS and always WAS about search. But not so much today's search. Tomorrow's search. Microsoft is playing for a market that exist... yet.
Online service are going to get a new focus, which is based on mobile computing and GPS. Your GPS coordinates will become a very valuable piece of data in numerous new online services, and will add flavor to existing services.
This will open the door to what I call the "local Internet" or the "location-based Internet". If the Internet to date has brought people access to the nation or the world, the local Internet will bring people greater information/access in their own communities.
Google is so far ahead of everyone else in this field, it is laughable. They've been playing the game well in advance of everyone else. Microsoft has almost nothing. Yahoo appears to be the second place player (and I'd argue a distant second).
Microsoft needs to play catch-up in the field that they, once again, recognized too late. Acquisition.
So, the deal may have the blanket of "search", but the desire behind it is more specific than that. They are looking to get their foot in the door of the NEXT generation of Internet services, specifically, Local Internet search.
Re:Web advertising (Score:5, Interesting)
What is really the motivation for this transaction is that Microsoft got caught with its pants down in an emerging field. Again.
A new Internet is developing. (No, really. Hear this one out.) An Internet that is centered around your location (your GPS coordinates) and where you currently are, and what is around you. If the Internet, to date, brought you access to the world, then the next generation of Internet services will bring you access to your community (or will bring your community access to YOU!)
Think of all your data, all your requests, everything, but tagged with GPS coordinates. What fun services can you provide? GPS + Flickr = location and time based picture sharing. Went to a concert? Easily get photos from other people who attended the same event. See? Internet + GPS = fun.
Guess what also can be location based? Yup. Advertising. I won't get into the whole host of ideas here (online coupons, business search with advertising, favored search results, etc etc) but there is a great opportunity here. If people are currently using the Internet to market to the nation/world, then perhaps a different group of people will want to use the Internet to advertise to people in their own community.
For example, a mom-and-pop sandwich shop. Trying to find a good sub shop to go to for lunch? The mom-and-pop business can pay for favored search results. Perhaps dangle a digital coupon to entice your business. A completely different advertising customer and advertising model than we have today.
Microsoft totally has its pants down on the local Internet that is developing behind the scenes. Microsoft will be handing out the money all over the place to build the empire that they neglected to develop themselves. One that Google is totally dominating.... and it isn't even out there to the public... yet.
Re:Why? (Score:1, Interesting)
1) Microsoft think that growth in the advertising market and the possible capture of market share from Google will be enough to provide a good return on the investment
2) Microsoft want to reduce the rents Google can collect from its dominant position in web search, thereby making Google less able to invest in products that challenge Microsoft's dominant positions in operating systems and applications
Technology firms that are successful in one market often seem to do things that look like 2) above. E.g. Novell had a very dominant position in network operating systems, and when Microsoft positioned NT Server for that market, Novell reacted by trying to offer a competitor to Microsoft Office, in order to reduce Microsoft's rents from its dominant position in the office suite market (thereby reducing its ability to invest in development of NT Server). Sun tried to do the same thing when threatened by Intel and AMD hardware running Windows, by buying StarOffice, and also tried to attack Windows in the OS market by pushing the 'Java platform' as an alternative.
Novell and Sun both failed abysmally to dent Microsoft's position in applications (and operating systems), and probably did more harm to themselves by wasting resources attacking Office (and Windows) instead of defending their positions (specifically, Novell took too long to realise it had to move from IPX to TCP/IP). The same thing could happen with a Microsoft attempt to use Yahoo to challenge Google, but in general I'd say Microsoft's management are a lot cleverer than Novell's or Sun's, and Microsoft have massively more resources. The thing is, Google's management are pretty clever too (Eric Schmidt may have failed at Novell, but it was more a case of not being able to stop the Titanic sinking after his predecessors had already run into the iceberg), and Google have a lot of resources as well.
In the best case, a ramping up of Microsoft's challenge to Google, and Google's to Microsoft, will lead to increased competitive pressure in both markets (which will reduce both firms' profits, but increase consumer surplus more than enough to compensate), but without a negative impact on the ability of either firm to invest in R&D.