Parsing Bill Gates: Is he saying Microsoft wants to be left alone?

By Scott M. Fulton, III, BetaNews

May 7, 2008, 11:17 AM

While touring Asian countries this week, Gates gave reporters a bone to chew on: a suggestion that Microsoft will now pursue an "independent" strategy in the wake of the Yahoo deal's failure. But independent of what, exactly?

There may not be many opportunities left in history to draw extrapolated conclusions on something Microsoft Chairman Bill Gates says about the future of his company, or of anything else related to technology. So a single phrase containing a key word uttered by Gates during a press conference in Tokyo yesterday has once again drawn the wolves into a feeding frenzy.

At issue is whether Gates meant to say that he intends, or would prefer, that Microsoft develop its own online strategy now in-house and independently of anyone else, now that the pairing of his company with Yahoo is off the table, or whether he meant that Microsoft would pursue a course independent of Yahoo. It's always nicer when reporters ask follow-up questions during the press conferences themselves; but if they did that -- and in so doing, actually answer some of these questions -- then we might have less to write about.

Multiple versions of the same Associated Press story, with the same byline, have Gates saying things slightly differently. However, outlets which typically carry AP stories unaltered quote Gates as first having led up to his point by saying both his company and Yahoo had put significant effort into making a deal, but then saying Microsoft and Yahoo have both now chosen to pursue "independent paths," and later adding specifically about Microsoft, "Now at this point Microsoft is focused on its independent strategy."

As to that last citation, many are interpreting that comment to mean that Microsoft will refrain from making any consolation deals, which would probably include with AOL -- a name that has been bandied about as a possible takeover target from Time Warner, ever since Yahoo let it be speculated that it might enter into a pact with AOL to avoid one with Microsoft.

But in the same context as the first Gates citation, quite possibly, he may also have meant "independently of Yahoo." And what reporters may have failed to notice that earlier, during Gates' tour of Asian countries, he stopped over in South Korea, where on Monday he was cited by the Associated Press as having not ruled out near-term deals with others, though leaving it up to CEO Steve Ballmer to make that decision.

"Well, the key decisions on that will be made by Microsoft CEO Steven Ballmer," the Monday report cites Gates as saying (although it's curious that we never typically hear Gates refer to his long-time friend and partner as "Microsoft CEO Steven Ballmer"), "who took a look at Yahoo and decided that on our own he likes the stuff that we're doing...We need to show the innovation and it's a very competitive space...I wouldn't rule out some partnerships but we don't have anything imminent there."

In an interview with BetaNews on Monday, Directions on Microsoft lead analyst Matt Rosoff suggested Microsoft take a hard look at the possibility of spending some of that $45 billion plus it had allocated for Yahoo, on acquisitions that would bring it closer to its goals.

"The options for Microsoft are, 'Yes, we want to be a big online publisher,' in which case, they probably do need to make another acquisition or figure out a way to grow their audience on MSN and Windows Live; or 'No, we don't want to be an online publisher,' in which case, they focus on the aQuantive business," said Rosoff, referring to Microsoft's May 2007 purchase of the Australia-based ad platform provider. Rosoff later suggested that Microsoft consider AOL -- not necessarily as a whole, but perhaps its most critical part instead: "Maybe eyeing something like Platform-A, Advertising.com, that's an option as well."

In another interview that same day, Jarvis Coffin, CEO of Burst Media -- which competes in the same space as aQuantive and Platform-A -- disagreed, saying he feels now is Microsoft's best chance to take its existing wealth of assets and come up with its own solution.

"I think Microsoft has other ad-serving assets, ad network assets, and they ought to be thinking about what they can do that is more relevant to what's taking place in the market today, where the race is still on," Coffin told BetaNews, "and in the whole area of vertical networks, trying to figure out how to build a Microsoft online ad network that is global and competes with the other ad networks that are out there."