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February 01, 2008 | Comments: (0)
MicroYahoo: A marriage made in heck
We interrupt our regularly scheduled Geek News roundup to bring you this bulletin filled with conjecture and unsubstantiated opinions.
In what has to be both the biggest tech news story of the last year and the least surprising, Microsoft has made a direct offer to put Yahoo investors out of their misery by swallowing up the company -- lock, stock, and two chokin' barrels.
Timing is everything. Yahoo's share price is swirling down the toilet, even though it posted numbers ($205 million profit in Q4) that many companies would kill for. Even at $44.6 billion ($31 a share), Microsoft's "generous" offer isn't outrageous. Look at it this way: They're buying 500 million Yahooligans for around $90 apiece. That is dirt cheap. And they're leapfrogging into a solid No. 2 in search behind Google instead of a pathetic third, just by signing a few dozen documents.
Which is why I predict that Microsoft will not be the only suitor, and some major media company (CBS, News Corp.) or broadband provider (AT&T, Comcast) will dive in with a competitive offer. You know Larry Ellison is kicking himself for not doing it first, because he can't stand to be one-upped by You Know Who.
And after that, well, who knows?
If Microsoft wins the bidding (and I think they will, because they need it more than anybody else), I predict an unholy mess for a good long while, along the lines of the Time Warner/AOL mishegas -- only with even bigger egos to manage.
Yahoo employees will leave in droves, and Google will happily snatch up the good ones. Redmond will slough off the redundancies between it and Yahoo, and it will mostly make the wrong choices -- choosing to keep the stuff it's developed in-house (like Hotmail) instead of the superior products (Yahoo Mail). The revenue bump from online ads will be nice, but merging the two brands will be like a python trying to digest the engine block of an Oldsmobile Cutlass Supreme.
And while Microsoft execs cut a groove in the ozone commuting between Sunnyvale and Redmond, trying to manage two bureaucratic morasses at the same time, the Google machine will chug merrily along, introducing new mobile platforms to carry its ads and kicking Microsoft where it hurts most: in the operating system.
Maybe 2008 will turn out to be a good year after all. Or at least an interesting one.
Is Microsoftization of Yahoo a brilliant strategy or a final desperate ploy from a company that has never truly gotten its head around the Internet? Share your thoughts below or e-mail me here. Prognosticators are standing by...
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Posted by Robert X. Cringely on February 1, 2008 08:59 AM
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Zimbra isn't such a hot property, and the code is Free anyway, so if Microsoft decided to screw with it, we'd have a new fork and Microsoft would be left with nothing but a trademark.
Posted by: Ryan at February 1, 2008 06:29 PMIt is definitely a good deal for cash rich Microsoft, while investors of Yahoo are much likely to cash in for that. For Yahoo development in long term and the rest of the internet users, it may not a good sign, both have lost focus in the online market in recent years and combining the two won't give any challenge to Google still.
Google is going to benefit the most out of this, taking two down without spending a single cent.
Posted by: dotservant.com website hosting at February 2, 2008 07:35 PMCount me as one yahooligan who will jump ship if the merger goes through. The $90 investment for my eyeballs will be wasted as far as M$ is concerned.
Sigh. I never saw any great superiority of Google's services over Yahoo's, so I never saw any big reason to switch from what I was comfortable with. I am pretty sure Cringe is right that e-mail @yahoo.com will become e-mail @hotmail.com and so forth. If so, I might as well switch to gmail, google search, etc. Better to support a company who tries to "first, do no harm" than one who thinks crushing competition with dirty tricks is good business.
Posted by: Paul Norman at February 4, 2008 06:05 AMI think the name really should be
MicroHoo (pronounded Micro Who)
Posted by: AndyW at February 4, 2008 10:54 AMOne thing that no one has talked about much is the fact that Microsoft's web properties are built on, well, Microsoft software. Yahoo's web properties are built on Linux. Cringe, you have it right -- Yahoo mail will take a giant leap backward towards Hotmail and a lot of very good Yahoo engineers will leave the company. I wonder what the web hosting customers will do -- They might have some re-coding to do because of the Linux to Microsoft switch. Or will Microsoft keep the Linux base? I don't think so.
One last point: On the radio, this morning, they mentioned that Google has approached Yahoo with some kind of deal. I wonder what that could be? Guesses? Anyone?
Posted by: SteveC at February 4, 2008 11:46 AMNo fair! I call "first" on Microhoo and Yasoft!
posted last nite ;)
http://lairigmarketing.blogspot.com
This will be the final straw in all those Yahoo users switching to Google for free email, searching, and all the other Gthingy's.
Do you Ya..eh, I mean Google?
Posted by: Dave at February 4, 2008 11:56 AMSuggestions for mishegas:
1. mishaps 2. misshapes
3. meshugah 4. mashers
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7. misgauges 8. meshuggah
9. Micheas 10. migrates
11. matchless 12. machetes
13. Macias 14. matchers
15. micaceous 16. -enchymas
17. Magsaysay 18. mixtures
19. Magnesia 20. machinates
Anyone worth his salt in Unix-land isn't going to take kindly to a forced migration to Windows town. I don't know any Unix people that don't absolutely loathe Microsoft and everything it stands for.
If Microsoft follows through with this, I don't think there's going to be a Yahoo! left to take over. Ballmer surely would have a heart attack before supporting Linux, right?
I think either Google will take over all the talented engineers or some smart guy will found Oohay, Inc and grab all Yahoo's customers.
I think Ballmer's nuts to try that, but then again, I guess he's nuts anyway ...
D
Posted by: David H Dennis at February 4, 2008 12:32 PMI'll go with any search engine that brings back the old AltaVista "near" keyword used in boolean searches.
Posted by: annon at February 4, 2008 12:48 PMThis will be an interesting footnote in history - once we all figure out that smaller and local is vastly more efficient than consolidated, remote and disinterested.
Posted by: Richie Rich at February 4, 2008 01:02 PMGiven the likely regulatory challenges, I don't see any MS-Yahoo merger taking its final shape in under two years. Plenty of time to decide on what to do about staying or switching. And plenty of time for Google to eat Micro-Hoo's lunch! For now, don't get your shorts in a knot, Yahooligans! It's not the End of our World -- not yet.
Posted by: rc primak at February 4, 2008 03:18 PMThis is like throwing an anchor to a drowning person. Yahoo is in trouble, MSN is in trouble and the pair together will be in even bigger trouble as Google googles ahead.
Google is doing a head-fake toward Yahoo, making it look like it might be a bad thing for Google ("Please, sir, don't throw me in the tar pit!"). It isn't.
Posted by: MS Watcher at February 4, 2008 04:29 PMSorry but Hotmail was not developed in-house. MS bought it. And even though MS has screwed it up a few times since then, it's stil way, WAY better than Yahoo mail. Even at its worst times it was better than Yahoo. That's why I'm still using it.
Posted by: Sergey at February 5, 2008 07:44 AMHotmail is better now... especially with a cool new "live.com" address... I always cringed at the hotmail.com domain.
I'll be happy with both and I'm sure the Yahoo services will stay.
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