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Our Blogs The BeerFiles Microsoft culture to stymie Yahoo merger
Our Blogs The BeerFiles Microsoft culture to stymie Yahoo merger | Microsoft culture to stymie Yahoo merger |
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| by Stan Beer | |
| Sunday, 06 May 2007 | |
      
Despite crushing promising startup Netscape as a result of Gates' memo, Microsoft after 12 years of playing in the Internet space, still hasn't made a penny from its online businesses. In the lucrative search advertising business Microsoft is a minnow compared to front runner Google and is a distant third to second placed Yahoo. However, there are some areas where a combined Yahoo and Microsoft could excel in the Internet space. For content, the two most trafficked sites on the web are yahoo.com and msn.com. For communications, the two companies have already collaborated to create the world's largest instant messaging network. Similarly, the combined customer base for web-based email would be formidable. In addition, the two companies have enough combined market share to at least give Google some competition in the search space. The problem is that Microsoft is a software company and the Internet represents a growing threat to its legacy desktop businesses. Like all businesses with legacy baggage - telecom carriers and newspapers are classic examples - any efforts within Microsoft to introduce new web-based technologies that threaten to undercut existing desktop money spinners will almost certainly be stifled. Thus, Microsoft has been hampered from day one in its efforts to build a dominant Internet business because nothing will be done to jeopardize the desktop software money spinners within the company. While companies like Google, Salesforce and Yahoo develop web-based applications to compete with Microsoft desktop applications and, in the process, free users from the confines of any particular operating system, Microsoft can do nothing because it is contrary to everything its business stands for. It is this knowledge that the Yahoo board would take to the table and the company's shareholders when considering any take-over offer from Microsoft. Belonging to such a desktop centric behemoth would be anathema to both staff and management at Yahoo and it is likely that sooner rather than later there would be a mass exodus of much of the company's best talent. Microsoft has the cash and resources to launch a hostile take-over bid for Yahoo if it so desired. However, it is questionable whether the company it ended up buying would be worth the money, if most of its best people were gone. Commentators can talk about a culture clash between Microsoft and Yahoo. However, the essence of the problem is that Microsoft cannot be a dominant Internet company unless it changes its desktop centric business model. When a company is bringing vast sums of cash from desktop software, as Microsoft has been since before the birth of the Internet, it would take very brave leader to justify spending $50 billion or more to buy a business than in many areas runs counter to its existing business model. If it does happen, it will take some effort to convince an already sceptical market that such an acquisition will work.{moscomment}
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