RSSRoundtable part 2: Will Microsoft + Yahoo give everyone what he wants?
By Scott M. Fulton, III | Published February 4, 2008, 6:28 PM
It's a vast and complex chess game Microsoft has launched, and with Google now wedging its foot in the door, there are more interests at stake now than just theirs and Yahoo's. Our panel of experts examine what's now at stake.
Last Friday, BetaNews spoke at length with a panel of experts analyzing the Microsoft takeover bid for Yahoo. Among the topics we discussed was trying to identify the motivations behind everyone involved at this point -- not just Yahoo and Microsoft but their various allies and partners, their competitors, and all of their customers. What does everyone want to come out of this clash of the titans? Or will customers be happier if all of this just stops?
One potential prize for Microsoft, in the opinion of Burst Media CEO Jarvis Coffin -- who runs an advertisers' and publishers' service company that currently competes with DoubleClick -- is the same kind of prize Google foresees from its possible DoubleClick merger: a viable and potent online display advertising business.
"Yahoo is synonymous with the dawn of the commercial Internet, and has played a leading role -- and its leaders are still there," Coffin pointed out. "And I'm sure for many of them, it will be a very hard thing to accept this offer, particularly since I think Yahoo has stumbled in the last 18 months, but [also because] they have been going about the hard business of selling brand display advertising for longer than just about anybody. And it is branded display advertising that is expected to power the growth of the Internet to a $50 to $60 billion business over the next three to four years.
"My argument would be that they [Yahoo] are as well equipped as anyone else to succeed in that environment," he went on. "They took their lumps as a function of rapid growth to paid search, and then as a function of the fact that ad exchanges and social networking flooded the market with a lot of cheap, remnant inventory, and it hurt their display advertising business. But display advertising business, I certainly believe, will prevail long-term, and they've forgotten more about how to sell that stuff online than Google knows, and probably a good part of Microsoft knows."
What Coffin's referring to with respect to "remnant inventory" is the non-prime advertising spaces all over the Web, the tougher spots to sell but which someone has to sell at some time. Google's initial approach to this problem was to enable publishers to plug their non-prime spots with AdSense. But that solution only goes so far. Yahoo acquired an approach last year that many see as somewhat more innovative: an ad exchange called Right Media that sells non-prime slots all over the Web in batches, the way electronic stock exchanges sell shares.
"I'm sure that Microsoft, as brand-conscious and brand-protective as it is, and Yahoo for that matter, are thinking more about how they're going to create higher media value as a result of all of this transaction, rather than how they're going to harvest a bunch of remnant inventory around the Internet," said Coffin.
Microsoft will need similar innovative approaches if it intends to compete with market leader Google, which has at least two-thirds of the paid search market locked up, by Microsoft's own estimate. But as AR Communications Senior Vice President Carmi Levy believes, Microsoft actually needs something else: literally, more weight.
"Only Microsoft's and Yahoo's counter-weights to Google have the heft to even have a chance of surviving against Google's onslaught," Levy told us. "So even though Microsoft was willing at some point to leave part of this place to others, smaller innovators, rest assured, Microsoft's a company that grows by acquisition. Microsoft would've come looking for those technologies and those platforms eventually anyway. Microsoft does not develop leading-edge technology. Microsoft acquires it."
Timing is one of Microsoft's many talents in this department. And as Levy pointed out, there is a critical element of Yahoo's own corporate scheduling which made last Friday a now-or-never moment for Microsoft.
"It's almost like all the planets aligned this week, and it's the perfect time for Microsoft to pull the trigger," Levy told BetaNews.
"Yahoo doesn't have a staggered board of directors where appointments come due on a rotating basis. Their board, in fact, is elected all at the same time," noted Levy. "So they're quite vulnerable to external intervention if Microsoft manages to campaign to get its people to stand for election, and thus make the board much more sympathetic to a potential offer. Microsoft knew that going in when it made this offer, and that's why they were so bold, so up front, and so transparent in the wording of that offer."
Next: Of black, white, and "grey" knights...
I've read "I want software as a service from Microsoft". IMO that's what they want too, being Vista only a step towards that final goal. Big money at sight...
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|We have to keep the focus on a basic premise. Microsoft does not create innovation but tries to convince us all that they control its destiny. They will create yet one more platform to tells us really what it is that we think we need and how we want it. They will also make sure to lets us know, what questions need to be asked ourselves and were to find the answer which is going to be in their next generation of products. Google is learning to beat Microsoft at their own game with no intent of competing but just creating an additional universe of fake needs.
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|save us Google! save us!
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|Also, MS has plenty of money to focus on windows and also to focus on other things, I mean comon...they company is HUGE. If you think this will hinder the development of Windows you must not understand how a company of this size works.
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|If MS doesn't buy yahoo, there may be no yahoo in the future anyhow. In case you guys haven't realized...they are not doing so hot. This is what is needed in order to form a strong countersink to the Google machine. I am all for it, even though I use google services daily. In the end this is for the better, MS has the money to keep yahoo on top of things and (thought I highly doubt it) they may even add some fresh ideas to other things besides advertising which seems to be all anyone cares about these days. I guess they gotta make money somehow.
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|They're all playing a zero sum game. No one gets what they want, least of all the consumer.
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|I wish Microsoft would just focus on making the best D*** OS it can and leave advertising to the others....With Linux and Mac at their door step they sure don't need to trip and stumble while trying to aquire what I see is a fleeting moment...
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|I want software as a service from Microsoft where I pay a flat fee yearly and I get the latest and greatest. I want this all managed by MS so I don't have to think about it or hire staff to manage it.
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|Action pack? MSDN? Site licenses?
The options are there, but it's not for the average user. How many users need more than perhaps 2-3 MSFT products at any time? (OS, Office, ??)
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|I love how people may read this article and agree with Google. If you look at it, Google is not the "white" knight in this case, they are actually trying to gain the monopoly this time...not MS. What a way to twist the situation, and make it look like you are the savior, when in fact you are trying to gain a monopoly of the market.
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|Nothing wrong about gaining a monopoly, it might mean you have the best product.
Where things turn evil is when a company uses it's monopoly to force out competition in other markets.
Owning a lever is not illegal. Using it to overturn another mans apple cart is.
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|If you have notice, this site is very MS bias. Anything good with MS, they can put it negatively. A post like this probably get deleted.
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|What are you talking about?? He's talking about people agreeing with google...this site is reporting google's "spin"...not its own.
You know what I love best...is that all the Sony fanboys think this site is biased against Sony, and all the MS fanboys think it's biased against MS...and there's there's those Nintendo fanboys who think this site is biased against Nintendo.
I mean seriously...they can't be biased against everybody...
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|Oh no... I cannot believe what I read. If this site is biased, it is not against MS but towards that company. There are some editors that wrote somewhat critic-articles "against" Microsoft, but the titles that stay on the top of the site are usually those that mention the MS "work" for good.
Betanews does NOT censor user comments, if they do, my account could be banned from a long time :). I am very critic on MS business practices, software design and often reply hard to some of the many MS troll-fans present here. Don´t I boys?
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|LOL...see, this is hilarious. :)
People always find bias:)
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|I read biased articles and news too often. And they usually come from marketing "people" that reflect (dark) business practices. But that is not hilarous at all, it is sad.
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|"Betanews does NOT censor user comments..."
Oh yes they do.
I've had my comments deleted more than once because I've criticized the "journalist".
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|The problem is defining where one market does or does not crossover into another market.
With Win95, MSFT thought the browser would become integral to the OS, and damn near built the entire user interface around it.
Back then, it was seen as MSFT using its OS dominance to gain share in the browser market. Now, that would be far more arguable...many see the web browser as integral to the OS.
Still, I think that had Microsoft offered "Windows" and the "Windows Computing Suite" (for an additional $30), they'd have avoided all of those issues.
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|Also doing all this the people at MS are saying that they can function without without Bill Gates at the helm...even though he may be looking in every so often.
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|all acquisitions/mergers such as these result in workforce downsizing. so regardless of what color the knight is, there "will be" downsizing at yahoo.
unfortunately the yahooligans may not realize that irregardless of the acquisition, they are dang if they do and dang if they don't.
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