RSSRoundtable: Four experts dissect the Microsoft bid for Yahoo
By Scott M. Fulton, III | Published February 1, 2008, 7:01 PM
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Making the two cultures mesh
From some investors' perspective, technology geeks look alike, and Bill Gates and Jerry Yang may as well co-own a jazz club in San Francisco together. But from a veteran technologist's standpoint, no two companies could have more disparate cultures than Microsoft and Yahoo. To them, the difference is a massive gulf, black and white, Star Wars versus Star Trek.
"Look, when Yahoo took on Overture, look how long it took to integrate those two companies. Look how long it took to really move that thing forward," JupiterResearch's Michael Gartenberg pointed out. "This is monstrous. These are two very different corporate cultures that would have to find ways to mesh. And we're still very light on details. Who are the executives that are going to be involved? Who at Yahoo is going to stay and who is going to be shown the door? Lots of questions here going forward, and this is not, by definition, going to be a panacea and solve all of Yahoo's issues and all of Microsoft's issues by coming together.
"The real challenge starts the day after the ink dries on the contract," he went on. "The real question is how they [Microsoft] are going to monetize their whole inventory, and if they were able to do that, we wouldn't necessarily be seeing a deal like this."
"What do we know about Microsoft?" asked Jarvis Coffin rhetorically. "They are an intensely competitive organization. And in my experience, they are more used to being the dominant player, and clearly they have not been, online. And I don't think that sits well with their culture. So I think they tried to build it, and now they're going to buy it."
"This is really an acknowledgement that their [Microsoft's] first-party online services strategy was not working," Directions on Microsoft's Matt Rosoff remarked, "[and] was never going to get the kind of market share or the gains that would turn it into a big profit center or a $10 - 20 billion business along the lines of Windows and Office, which is what they want out of Internet advertising."
For Web advertisers to go with a service such as Google's or Yahoo's, they have to adopt software tools to track the efficiency of their campaigns. Each service uses a different set of tools, so it almost doesn't matter that the service with 60% of the market might have tools that aren't as innovative as the one with 20%, Rosoff pointed out. When there's a three-way split, the number three player typically loses out...and guess which one's the number three.
"I think in search, Microsoft is worried that Google's building a near-monopoly in search advertising," Rosoff said. "Because when you have a market that's split 60/20/10, advertisers might be prone to say, 'Eh, it's really not worth going for three tools to reach 20 and 10, we'll just go with enough for one."'
The two-way split isn't as bad, however, and Rosoff gave us some historical precedent for that. Years ago, Microsoft actually outsourced its search services online to Yahoo, which at the time, Rosoff said, wasn't really as bad a deal as Microsoft thought it was. "As soon as the market split into three, it actually had the perverse effect of increasing Google's market share at the expense of Yahoo," he pointed out.
"There are a lot of very hard decisions in the future over which of the services that overlap between Yahoo and Microsoft will survive, which ones will be killed, which ones will evolve into an eventual consolidated offering," mentioned Carmi Levy. "And it's significantly premature to even speculate on what those decisions will be, but it's clear that it makes absolutely no sense from a synergistic perspective for Microsoft to keep many of the parallel services going between both companies."
Will it ever end?
Of course, all this assumes that the entire matter doesn't get bogged down forever in regulatory matters. Microsoft said this morning it expects the entire deal to be completed during the second half of this year. It's not yet clear which planet that part of the statement was transmitted from.
"Let's not forget that between the [US] Dept. of Justice, the European Commission, these are all government and quasi-government entities that have previously gone head-to-head with Microsoft over antitrust, anti-competitive issues," Levy reminded us...painfully. "So this deal certainly opens the door to more action of this type in the future, and Microsoft's going to face some very hard questions, certainly much harder than those that have been levied at Google in recent years over issues such as privacy, confidentiality, and user information.
"If the eyeballs are there, the advertisers have to reach them. If they start cutting things willy-nilly, and making everything MSN, and revamping the Yahoo Mail interface, that's when you lose customers." Matt Rosoff, Directions on Microsoft |
But suppose this actually doesn't go through at all. Will Microsoft still have won something, just in the trying?
"Absolutely, because then they will have positioned Yahoo as a weaker player than we believed even a week ago," Levy responded. "They have not painted Yahoo in the light of Weak Company Vulnerable to Being Acquired. That previously was not the case.
"What Microsoft has done, even though for the past couple of years it's taken some pretty serious knocks from the media about being a dinosaur and having its lunch eaten by Google, Microsoft's on a roll now," he went on. "Whatever happens with this deal, Microsoft wants to be seen as a player that is swinging for the fences, that is willing to take that chance, that is willing to strike out a few times along the way, before it manages to hit it out of the park."
"I think regulatory approval will be the big hurdle," remarked Matt Rosoff. "Integration could take years. Are the acquisitions of Great Plains and Navision really done? Yea, they've been consolidated under the 'Dynamics' brand, but there's still different lines of ERP software, and they don't necessarily operate the same way, and they don't have the same code base, and Microsoft is still trying to come up with this unified, single ERP platform. And those acquisitions were six and seven years ago.
"Will it ever be concluded? Heck, look at Visio," Rosoff reminded us. "Visio is still not sold as part of the Office suite, and there's still things that Visio does differently from other Office applications, and that acquisition was what? Ten, twelve years ago now? So will they ever be completely integrated? I don't think so."
So Rosoff advises that Microsoft, if it does acquire Yahoo, let it retain some measure of autonomy. "That's how they're going to keep Yahoo's traffic, and that's how they're going to keep advertisers happy," he said. "Now, they might want to move it to a single back-end ad platform, and maybe advertisers will appreciate that, maybe they won't. But if the eyeballs are there, the advertisers have to reach them. If they start cutting things willy-nilly, and making everything MSN, and revamping the Yahoo Mail interface, that's when you lose customers."
One of our experts, however, predicted that the culmination of this deal could produce for both Microsoft and the market at large...absolutely nothing.
"Two or three years from now, I think they [Microsoft] are going to ask, 'What in fact did we buy? We didn't buy world domination,"' remarked Burst Media's Jarvis Coffin.
"Yahoo is a phenomenal property, and indeed, it will make [Microsoft] bigger and it will make them richer, but no, I don't think it's going to make them more powerful. It will only assuage their cultural requirements that they play a dominant role in all of their businesses, and in this case, it will give them better alignment with the size and critical mass of Google, and they can feel better about themselves," he said. "But it isn't going to change, I think, this fabric of the marketplace or really what it is ultimately good at, from a media standpoint, and that happens to be very granular, because that's how people use it, and that's what people treasure about it. This transaction will do nothing to further the user experience online generally."
We always talk about "Microsoft", but where is the border with "Macrohard"?
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|IS THIS EVERYWHERE THE FORUM'S DISCUSSION WENT? THE BASH-ANSWER PROTOCOL? NOTHING TO SAY?
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|IS THIS EVERYWHERE THE FORUM'S DISCUSSION WENT? THE BASH-ANSWER PROTOCOL? NOTHING TO SAY?
Not really, other than:
CAPS LOCK IS CRUISE CONTROL FOR COOL!!
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|AOL YAHOO MSN Compuserve, All are relics of the past anyhow. the only one that has the deep pockets to progress to a true corporate dictatorship is Microsoft. The downside is that now all yahoo accounts are going to be flooded to the nth degree with the endless Spam that resides in the MS network. My hotmail account has more spam then a spam factory. Why? cause MS is notorious for selling their username lists to advertisers, and the insecurity in their network also leads to loss of personal data.
So now that MS may get their grubby hands on Yahoo customer list expect more of the same for them. And of course the inevitable IE7 required, thus Vista Required, and of course MSN live required to have access to your Yahoo account from now on.
hooray another Monopoly.
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|"My hotmail account has more spam then a spam factory. Why?"
Funny...my MSN account is the only account I have that is spam free. Why? Because I never used it to sign up for ANYTHING.
"cause MS is notorious for selling their username lists to advertisers"
Proof? Didn't think so.
"and the insecurity in their network also leads to loss of personal data. "
Proof? Didn't think so.
"And of course the inevitable IE7 required"
weird, I don't need to use IE7 to access my msn account.
"thus Vista Required"
Even more weird...I have IE7 installed and I'm not using Vista...I must be doing something wrong?
"hooray another Monopoly"
What monopoly? Google has 60% of the search engine market...MS and Yahoo combined have about 30%...yea, they're a monopoly. Oh, no my eyes aren't rolling because you have no clue what you're talking about, they just do that sometimes...
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|and the insecurity in their network also leads to loss of personal data.
Not 2 seconds after a password reminder for some random account is sent to a HOTMAIL address its easily stolen with packet sniffers...
Sure its against the law, but it does not change that its done. Its happened to me twice. That was enough for me to say Hotmail was worthless as anything but a spam box.
And IE7 is soon to be required for all live services, and once XP is officially retired all IE7 and Live services will be Vista only... thats only next year...
Point is MS just keeps taking over crap all the time and too soon it will be nothing but MS. And when that happens we have no choice anymore when they amke their bad consumer decisions yet again to be good for them and very bad for anyone that is their customer. IE Windows 10 $800 Mandatory installation or no internet access allowed (EVEN WITH COMPETITOR BROWSERS)... Oh freaking boy how lucky are we?
Try looking ahead at what these MS people try to pull over your eyes every year, and get called on all teh time by people that review their actions for both teh public and the government. And they have to put the breaks on with MS all the time. Trust me if they didn't we would all ahve Zero choice but to paying MS extortion subscription fees for using Windows Vista and IE7 even after paying around $400 for it. The ultimate goal of MS is to make the internet, email, and Windows, and Office similar to a MMOs business model. Not only paying for the apps, but the right to continue to use them on your machine. And even after the fact if you want to open something and your subscription is lapsed you would not be able to open any documents unless your extortion payments (subscription) are paid up.
Oh and trust me If Google gets it it would not be any better cause Googles days are numbered, and MS will get a two fer with that one...
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|"Not 2 seconds after a password reminder for some random account is sent to a HOTMAIL address its easily stolen with packet sniffers... "
Passwords to hotmail are sent with ssl encryption, same as just about all webmail accounts...any passwords sent to any site can be picked up with a sniffer,, you're acting like this is a hotmail problem only...do you even know how packet sniffers work?? LOL It's not like I can sit here and "packet sniff" your hotmail account...I really wish people that posted here would have at least a little technical knowledge.;/
"Its happened to me twice."
I seriuosly doubt that. Are you running a wide open, unencryped wireless AP at your house?
"And IE7 is soon to be required for all live services, and once XP is officially retired all IE7 and Live services will be Vista only... thats only next year... "
Sources? Didn't think so.
"Point is MS just keeps taking over crap all the time and too soon it will be nothing but MS. And when that happens we have no choice anymore when they amke their bad consumer decisions yet again to be good for them and very bad for anyone that is their customer. IE Windows 10 $800 Mandatory installation or no internet access allowed (EVEN WITH COMPETITOR BROWSERS)... Oh freaking boy how lucky are we?"
That entire paragraph is about the dumbest thing I ever read in my life...I think I actually lost braincells reading that.
"Try looking ahead at what these MS people try to pull over your eyes every year, and get called on all teh time by people that review their actions for both teh public and the government. And they have to put the breaks on with MS all the time. Trust me if they didn't we would all ahve Zero choice but to paying MS extortion subscription fees for using Windows Vista and IE7 even after paying around $400 for it. The ultimate goal of MS is to make the internet, email, and Windows, and Office similar to a MMOs business model. Not only paying for the apps, but the right to continue to use them on your machine. And even after the fact if you want to open something and your subscription is lapsed you would not be able to open any documents unless your extortion payments (subscription) are paid up."
I take my last statement back...THIS is by far the dumbest thing I ever read.
"Oh and trust me If Google gets it it would not be any better cause Googles days are numbered, and MS will get a two fer with that one... "
Uh...what?
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|stop you delirious anti-ms stupidity show please!
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|I have to agree with you Niro, this guy must be on something or bi-polar. lol
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|Take your meds dude. I use XP and I use Firefox to check my hotmail all the time. I get tons of spam on one of my hotmail accounts because I use it to sign up for s***, but I have another hotmail account that gets zero spam.
Let me guess you have a mac or you use Linux? Good for you. The top 3 reasons MS windows is the #1 used OS is because
1. MS ha the most programs and games. Mac OS is good for graphics and video work, but not great for most businesses. Mac OS server doesn't do everything that MS server can do.
2. Most people who use Windows don't want to have to go out and buy a ton more programs that will work on another OS, or learn the free alternatives which aren't YET grown up enough for the average person.
3. People are use to Windows, they know how it works. Companies and people at home don't want to take the time and learn a new OS. Even though you may say Mac OS is simple, for the average person that already learned Windows, its not. When I first played around with Mac OS there are many things I didn't know what to do and if me a tech savvy person couldn't figure out things right away without asking, then the average person will have a harder time and training cost, so its easier to just go with what you know.
The next chance another OS will have to lead will be when something totally dynamic and new comes out in an OS. Like when the first 100% voice activated OS comes out where you can just open folders and files and such by voice command. Or when a 3D OS comes out where you can manipulate the OS with your hands instead of keyboard and mouse. These OS' are years away, so we have some time for Windows to be #1 and who knows maybe they'll be the first to make one of these OS' then we'll have many years more of nagging and complaining.
Last I heard Apple is doing very well for itself and so are some Linux distros, and in a monopoly this would not happen. So I guess their goes your theory.
I for one don't think MS is evil. I like Mac OS and Linux too. I don't think MS is evil, if you want to see evil then go to Walmart.
"AOL YAHOO MSN Compuserve, All are relics of the past anyhow. the only one that has the deep pockets to progress to a true corporate dictatorship is Microsoft."
Oh and the last I heard MSN was part of Microsoft so this comment does show how much you really do need meds.
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|Even though we rarely agree, you are usually, at least, lucid.
Get hit on the head with an 18-wheeler this morning?
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|1. i agree, main reason I don't use linux(at home)
2. Only point to make is that sometimes open source apps are better, though many will work for windows anyway
3. I like the fact that I know my os to a good degree that allows me to do things a normal user wouldn't know how. You have eventually pick one side to up your skills. Being a master of all takes too much time.
As for future os, i think a keyboard is hard to replace, if you use unix a lot you can see why. It would take something like direct link (e.g. matrix, ghost in the shell) to top it I think. Maybe a highly intuative 3d voice command system.
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|Yahoo is worthless is that what you think, well then you are wrong. From what I see it is still the most visited site on the planet. So yes it is worth a lot.
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|I never said Yahoo was worthless. I was saying MS should use the Yahoo name and grow on it. Most regular people (people who don't read up on here, people who don't read up on tech much period because it gives them a headache) know either Google or Yahoo. MS has some good ideas with their MS live, so incorporate them with the Yahoo name, maybe Yahoo live. This has been coming for a while if you think about it. Now you can talk to MSN people on yahoo messenger and vica versa, so MSN has been thinking of this idea for a while. Their are people who love MSN messenger and others who love Yahoo so keep them separate too and just let people from both messengers talk to each other.
Here is a good idea Google should buy AOL and fix or get rid of all their failing projects.
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|I think if MS is smart this could work for them but they'd have to keep the companies separate.
If they change the yahoo name to MSN people might move away from using the site. If they keep the Yahoo and add on to it then people who use Yahoo may give it a chance. Like when Ford merged with Jaguar, Mazda and Volvo they kept the company names, I think MS has to do the same.
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|Four experts
wouldn't that be a square table?
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|I think it was a slight reference to Microsoft's pathetic excuse for a 360 degree video conferencing product called Roundtable.
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|If you can't beat them, buy them......
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|Uh...Yahoo hasn't beaten MS in anything....Actually Yahoo is huge sinking ship.
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|I agree, but I don't see this as something that would make yahoo more desirable. It would however make yahoo more likely to get updated, upgraded, and integrated. It's core (and user base) could easily become part of MSN.
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|Yes, and then yahoo mail will become a nightmare, and yahoo search may start censoring linux searches and later yahoo messanger will require 8gb RAM and at least a 16 core processor to show you some ads in front of your contact list.
Now, seriously, I think this actually may help Google to gain even more market share.
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|I agree with you, I think this would help get google more shares
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|Yes...because, that just makes sense, right?
I mean...it's not like MS knows what they're doing, it's run by a bunch of HS kids, right?
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|i think the reason why Google is such a popular brand as well as Apple is just the way it is, Microsoft, Lycos, Yahoo... there all trying to be something there not, take there home pages for example... googles, clean crisp easy to find what your looking for, with microsoft yahoo etc.. they have just to much there home pages are to busy and people get put off by the
Simplicty is the key, Apple & Google now its done, Microsoft & Yahoo dont.
Microsoft & Yahoo are both sinking ships!
give it 5 years and windows & microsoft will be long gone, mac's are the way forward.
( slighty off topic but you catch my drift. )
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|"Microsoft & Yahoo are both sinking ships!"
Uhm...MS made record revenues last year, beating expectations...maybe you want to redefine what a sinking ship is??
"give it 5 years and windows & microsoft will be long gone"
I'll sell 5 years...how much are you willing to put on that statement? I'll even give you odds. 100 to 1 odds in your favor, $500k that MS and Windows will be far from "long gone" in 5 years. That's a bet you can't refuse, right?
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|By a sinking ship i mean, they try to design and make something and Apple come along and do a damn good better job at it.
Apple iPod & Zune ... which one is better iPod.
Itunes vs Windows Media Player? ... itunes is better.
Apple have the ideas just like Podcasts, microsoft just dont have the ideas anymore. the only ideas they do have is like DRM & Activation. nobodys intrested in that.
Apple will always do one better, System Restore Vs Time Machine ....
one thing microsoft wins on is its Generic can be installed on any computer. but im sure apple will be in there little labs designing software that will run on basicly any computer built.
I enjoy using both OS's, Microsoft OS is more globally recognised, but anyone i talk to now has heard of Mac OS, plus Mac is much much cheaper £89 for lepoard and 300+ for vista ultimate??
Sorry mate, in 5 years time youll be using one of Apple's Computers to write on the wall of Betanews ill put money on it.
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|"Apple iPod & Zune ... which one is better iPod."
Opinions are like a**holes...everybody has one.
"Itunes vs Windows Media Player? ... itunes is better."
I hate to repeat myself, but "Opinions are like a**holes...everybody has one."
"Apple have the ideas just like Podcasts"
What does that statement even mean? Apple didn't even come up with the "podcasts" idea...
"ideas they do have is like DRM & Activation."
DRM? That's not MS's idea...you ever heard of the RIAA or MPAA? Yea...if apple wants in on the hi-def world, DRM is something they will have to implement.
"im sure apple will be in there little labs designing software that will run on basicly any computer built."
Uhm...apple SPECIFICALLY DESIGNED their software NOT to run on just any machine. You can install their OS on any machine with a hack, but then guess what, you're breaking the law. They're not in their "little labs" trying to make their software more compatible...they're in "there little labs" trying to make their software only work on their platform and preventing you from using it on just any machine. Talk about restrictions.
"Sorry mate, in 5 years time youll be using one of Apple's Computers to write on the wall of Betanews ill put money on it. "
Ok...lets put money on it, like I said, I'll even give you odds.
I'll tell you what, in 5 years, when you graduate HS and start working in the real world, come back and talk about something you might have a slight better understanding of....and don't forget about my cash.
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|"I'll tell you what, in 5 years, when you graduate HS and start working in the real world, come back and talk about something you might have a slight better understanding of....and don't forget about my cash."
Man Niro, you have in all your posts demonstrated your lag of knowledge, so I seriously hope that the above post was irony... And how in the world did you guys end up b****ing ipod vs zune - This topic is about MS buying Yahoo ...
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|Actually I believe Niro's points were quite good.... you HS kids have a lot to learn.
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|*laughs*
Wow. Beat who? Yahoo?
Where have you been the last 10 years?
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|Apple? Am I missing something?
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|