Microsoft and Yahoo (best analysis) or Finally a Microo’ish Result
Ok so the big deal was finally announced yesterday. Microsoft is now number two in the search game or at least will be shortly. Over the last couple of days (and really for a year), I have been reading all the different analysis from the raving to the ranting. I have felt most didn’t get it and see the value for Microsoft and for Yahoo!.
Microsoft needs scale and Yahoo! needs help has been my thought all alone. Yahoo! is screwed up, I have an account for mail because I have ATT’s U-Verse. So occasionally I use that email account and some Yahoo! services, outside of the Financials I find Yahoo! horrible…. Though I should be nice, I use Live Mail (refuse to call it hotmail) for my email….
Though Microsoft is behind in some aspects and Google is leading in most, I have been pretty happy with several of the Live services (Mesh, Bing, My.Live.com) and pretty impressed with the direction Microsoft has taken for the web (Azure, .NET, SilverLight). I think they have a lot of catching up to do, but at least there is no contextual ads on my personal email (why I left Google).
Now this morning, I was running through Techmeme and came across “Yahoo committed seppuku today” by Jason Calacanis . I opened it expecting the typical “Micr$oft is evil” garbage, but I found one of the best assessments of the deal yet. There are a few key parts and I highly suggest you read his entire post. It is well worth it….
First, I have to really agree with this.
To be clear, Yahoo didn’t need to do this deal, Microsoft did. Ultimately Yahoo will look back at this moment as the second–and perhaps fatal–mistake in their epic history.
Second, Jason points out that Microsoft is not the big sloth and dumb company that many think. They get it and they will be here 30 years from now. Just like everybody thought IBM would die, but didn’t.
Today, with their Microsoft deal, Yahoo again undervalues their search asset. Again, they will be “Powered by…” and again they will destroy their brand and its value.
All that being said, Microsoft’s obsession with taking Yahoo’s second place position and adding it to their 3rd place position is not an indication that it’s time to sell. Far from it. When Microsoft is interested in a space it is a clear sign that you should be investing in it–not selling it.
Microsoft’s deep dive into a graphical user interface on an operating system, Windows, was a clear sign to Steve Jobs that his bet was correct. Steve doubled and tripled down and that is why Apple is Apple. Microsoft’s deep dive into word processors and spreadsheets was the clear sign to WordPerfect and Lotus 1-2-3 that this was a space worth fighting for.
Microsoft’s massive investment into video games, mobile operating systems and search are clear indications that Sony’s Playstation, Google’s Andriod, the iPhone, Google and Yahoo are very important companies.
Nintendo didn’t give up when Microsoft came into the video game space–they innovated. Now the Wii outsells the mighty XBOX 50 million to 30 million. That is how you fight Microsoft: you innovate. Steve Jobs knows this, Nintendo knows this, and Oracle knows this. Yahoo, apparently, did not get the 40-year-old memo.
Aggression and innovation wins. Period. (my emphasis)
To say it clearly: Microsoft does not enter a market unless it’s important, huge and on the way to becoming even bigger. Microsoft is the buy sign, not the sell sign. The people at Microsoft are brilliant and not to be underestimated–history has shown this to be true.
Third, this is a less for all… Innovate or die.
The lesson for all startups–and BDC’s (big dumb companies)–is that innovation is all you have. Once you stop innovating you lose your talent and you lose the race. Never. Stop. Innovating. Never. Never. Never.
Again read the whole article, it is well worth it.
A final thought… and my imaginary letter to Jerry Yang (technically it is not imaginary anymore).
To: Jerry Yang,
You ruined Yahoo!. You toasted the best name on the web, left what made Yahoo! great and the “player” on the internet. You screwed your investors by just simply hating Microsoft, instead of taking the acquisition deal last year. The deal will be made eventually and Microsoft will own Yahoo!… You could have negotiated your place in Yahoo! and helped actually drive the services side. I actually think that would have worked out well… But now… Microsoft will eat up Yahoo’s users, search and advertising business over the next few years… You killed Yahoo! Jerry, because of your pride.
Stu
Related posts:
- Jerry Yang Resigns as Yahoo! CEO
- Gone with the Wind (or anti-trust objection)
- Microsoft CES Announcements
- Windows Live Wave 3 Review
- Microsoft Zune HD – Goes Global (Finally)