Microsoft to buy Yahoo: Ray Ozzie roars

OK, everyone is already talking about Microsoft buying Yahoo.

But what I find interesting is that Bill Gates is out and now Ray Ozzie is roaring. Microsoft has been so damn boring since I left in June of 2006. This shoots the boring in the head.

Why is “Microhoo” not boring?

No, not my pet service Flickr. But, damn, Gates could have bought that for $40 million. Instead Ray and Kevin had to spend billions. Wow. Nah, what makes Yahoo/Microsoft interesting is the email audience. That’s another 300 million people to add to Hotmail’s audience of close to the same. Yahoo has a ton of interesting Web properties that are far more interesting than anything Microsoft has done lately. Groups. Finance. Upcoming. Etc.

This gets Microsoft back into the Web game in a big way and puts a defense around Microsoft’s Office cash-generating-machine. I bet that some of Yahoo’s smartest engineers get moved over to the Office team to help build an online Office that’ll keep Google’s docs and spreadsheets from getting major marketshare inroads.

It’s the fear that Google’s Docs and Spreadsheets might someday take marketshare away from Office that I think was driving this deal.

Sad thing? I still own Microsoft stock, which went down today on the news. But I think that long-term this is a good deal for Microsoft’s shareholders too. With one caveat: Microsoft and Yahoo employees need to work together to create value, not destroy it. That’s going to be pretty tough since the cultures of the two companies aren’t a total fit.

Both companies also have lots of fat that can be cut, so it’ll be interesting to see whether Microsoft keeps the fat around (on both sides, as they have done so far) or if they cut back to make both companies together leaner and meaner.

Microsoft has a world-class advertising sales team and this gives that team a ton of new inventory to sell.

Anyway, this is what happens when a blogger tries to get some sleep: the entire world changes and he misses the boat. :-)

154 thoughts on “Microsoft to buy Yahoo: Ray Ozzie roars

  1. Microsoft has always been about CONTROLLING the user experience. They are not to be trusted with being good NetZines. I hope that those with deep pockets and vision will step up to the plate and partner with Yahoo. Possible white knights: SUN, NewsCorp, Noika, Apple, Cisco… hell, even Google could help them out. The name of the game is to isolate Microsoft into their own inflicted non-standard world. And let them slowly rot therein…..

  2. Microsoft has always been about CONTROLLING the user experience. They are not to be trusted with being good NetZines. I hope that those with deep pockets and vision will step up to the plate and partner with Yahoo. Possible white knights: SUN, NewsCorp, Noika, Apple, Cisco… hell, even Google could help them out. The name of the game is to isolate Microsoft into their own inflicted non-standard world. And let them slowly rot therein…..

  3. Robert, There’s no question it’s all about Search. This weekend, Tim O’Reilly made a case for e-mail driving the deal, only hours before Google played the antitrust card: citing Microsoft-Yahoo’s dominance in email marketing and portal traffic.

    Maybe Tim was scobleized by this thread. ;-)
    http://blog.searchenginewatch.com/blog/080203-103454

    @Robert – you’re right about the 300 million email users. But how would Microsoft and Yahoo create incremental revenue from the user base? Hotmail (along with other MSN properties) was Microsoft’s strategy (outlined at Searchification) for increasing share of search. So far, no dice.

    I posted on Feb 1 that paid search was driving the hostile bid. So far, no one’s made a cogent argument for another deal driver.
    http://blog.searchenginewatch.com/blog/080201-074425

    @ Danny: Not sure I understand why you’d want Microsoft to spend $2 billion to “simply rent a fair chunk of the web.” How would that knock out AdSense?

    And what kind of ROI would you expect from the $2B investment?

  4. Robert, There’s no question it’s all about Search. This weekend, Tim O’Reilly made a case for e-mail driving the deal, only hours before Google played the antitrust card: citing Microsoft-Yahoo’s dominance in email marketing and portal traffic.

    Maybe Tim was scobleized by this thread. ;-)
    http://blog.searchenginewatch.com/blog/080203-103454

    @Robert – you’re right about the 300 million email users. But how would Microsoft and Yahoo create incremental revenue from the user base? Hotmail (along with other MSN properties) was Microsoft’s strategy (outlined at Searchification) for increasing share of search. So far, no dice.

    I posted on Feb 1 that paid search was driving the hostile bid. So far, no one’s made a cogent argument for another deal driver.
    http://blog.searchenginewatch.com/blog/080201-074425

    @ Danny: Not sure I understand why you’d want Microsoft to spend $2 billion to “simply rent a fair chunk of the web.” How would that knock out AdSense?

    And what kind of ROI would you expect from the $2B investment?

  5. @77 Mark,

    You’re right. Market conditions are very different now. Back them, anyone with a good idea was buried in cash by the VCs and angels. Good luck with that now. You almost have to be already profitable before anyone will look at you. The days of free money are over.

    Google will be difficult to muscle in one, but not impossible. Methinks that people are already clamoring for change, but no one has, or can, step up to the plate. Yet. I’m not sure why. Maybe money, maybe they don’t know how to present an idea, maybe they are in fear of failing. Who knows. I’m ready for change myself. The net is beginning to stagnate already.

    No one is really offering anything that radical or different. We have email, RSS, IM, stuff like Qik, Twitter, Flickr. So what if they are all tied together. So what if you can upload videos by phone or know where everyone is at all times. This is still not radical, it’s just incremental progression.

    When they invent the holodeck, I’ll be impressed.

    When they invent avatars that I can interact with, I’ll be impressed. Avatars that derive their power from say, cell towers, much like PoE devices or wirelessly powered devices. There is nothing stopping anyone from doing these things now. I think too many people are focusing only on new/different ways to communicate rather than coming up with new paradigms. Email is boring. Twitter is boring. Web-enabled phones that do everything are boring. Give me an avatar that I can take with me, one that I can dictate messages to, one that can maintain my calendar and remind me of appointments, etc. We have the ability to do this stuff, we are just draining money into making old tech better. No fun…

  6. @77 Mark,

    You’re right. Market conditions are very different now. Back them, anyone with a good idea was buried in cash by the VCs and angels. Good luck with that now. You almost have to be already profitable before anyone will look at you. The days of free money are over.

    Google will be difficult to muscle in one, but not impossible. Methinks that people are already clamoring for change, but no one has, or can, step up to the plate. Yet. I’m not sure why. Maybe money, maybe they don’t know how to present an idea, maybe they are in fear of failing. Who knows. I’m ready for change myself. The net is beginning to stagnate already.

    No one is really offering anything that radical or different. We have email, RSS, IM, stuff like Qik, Twitter, Flickr. So what if they are all tied together. So what if you can upload videos by phone or know where everyone is at all times. This is still not radical, it’s just incremental progression.

    When they invent the holodeck, I’ll be impressed.

    When they invent avatars that I can interact with, I’ll be impressed. Avatars that derive their power from say, cell towers, much like PoE devices or wirelessly powered devices. There is nothing stopping anyone from doing these things now. I think too many people are focusing only on new/different ways to communicate rather than coming up with new paradigms. Email is boring. Twitter is boring. Web-enabled phones that do everything are boring. Give me an avatar that I can take with me, one that I can dictate messages to, one that can maintain my calendar and remind me of appointments, etc. We have the ability to do this stuff, we are just draining money into making old tech better. No fun…

  7. @76

    Kind of the point I was making. The difference is that if you allow people to have a virtual monopoly without offering any competitive alternative then the market will stagnate.

    It’s true that in the 90′s and early 00′s that there was much jockeying for position but then I’m not sure that the same market conditions apply now. It would be difficult to see a start up muscling in on Google’s territory these days for example.

  8. @76

    Kind of the point I was making. The difference is that if you allow people to have a virtual monopoly without offering any competitive alternative then the market will stagnate.

    It’s true that in the 90′s and early 00′s that there was much jockeying for position but then I’m not sure that the same market conditions apply now. It would be difficult to see a start up muscling in on Google’s territory these days for example.

  9. @75,

    Anyone who thinks Google can hold on forever is deluding themselves. All good things come to an end. The ad thing cannot go on forever. It just cannot. Sooner or later they are going to have to diversify and find other ways to make money.

    There is going to be a new, better player before long. There always is.

    Take a look at history…

    Altavista was the deal back in the 90s, then Yahoo, then Google. Someone else will step up to the plate before too long. I think that someone else has a much better chance if Microsoft buys Yahoo. If there are three or more major players, it makes it more difficult. With only one of two, it’s much easier to get a small audience, offer great products and services and grow it.

    I’m hoping the deal happens, but MS had better not tamper with the good things like Flickr. Even simply rebranding these services could have a major impact in usage.

  10. @75,

    Anyone who thinks Google can hold on forever is deluding themselves. All good things come to an end. The ad thing cannot go on forever. It just cannot. Sooner or later they are going to have to diversify and find other ways to make money.

    There is going to be a new, better player before long. There always is.

    Take a look at history…

    Altavista was the deal back in the 90s, then Yahoo, then Google. Someone else will step up to the plate before too long. I think that someone else has a much better chance if Microsoft buys Yahoo. If there are three or more major players, it makes it more difficult. With only one of two, it’s much easier to get a small audience, offer great products and services and grow it.

    I’m hoping the deal happens, but MS had better not tamper with the good things like Flickr. Even simply rebranding these services could have a major impact in usage.

  11. Yes, it’s a bad idea. Yahoo and MS should just let Google dominate the market with no opposition!

    Brilliant!

    I mean, come on people, a monopoly is bad. You should be supporting this move.

  12. Yes, it’s a bad idea. Yahoo and MS should just let Google dominate the market with no opposition!

    Brilliant!

    I mean, come on people, a monopoly is bad. You should be supporting this move.

  13. What about a 500 million-user social-network without needing active sign-up and media up-load, transfering the content to flickr,maven et al straight from what already exists on x-box/live, windows mobile and Windows o.s., and instead of needing newer technologies like Adobe Air and Google Gears, a direct connection between yahoo.com and vista PC’s?

    Kind regards,

    Shakir Razak

  14. What about a 500 million-user social-network without needing active sign-up and media up-load, transfering the content to flickr,maven et al straight from what already exists on x-box/live, windows mobile and Windows o.s., and instead of needing newer technologies like Adobe Air and Google Gears, a direct connection between yahoo.com and vista PC’s?

    Kind regards,

    Shakir Razak

  15. Poor Microsoft, King of our home computers, but not of search engines. This will automatically grant MS 2nd place.

    If I owned Microsoft, I would buy Yahoo in a New York minute.

    So, what’s next; who will eventually buy-out eBay? Is this where this is leading to?

    Join me in my logo contest for Yahoo’s new logo: http://webdesignbysteve.com/blog/?p=58

  16. Poor Microsoft, King of our home computers, but not of search engines. This will automatically grant MS 2nd place.

    If I owned Microsoft, I would buy Yahoo in a New York minute.

    So, what’s next; who will eventually buy-out eBay? Is this where this is leading to?

    Join me in my logo contest for Yahoo’s new logo: http://webdesignbysteve.com/blog/?p=58

  17. If it happens this would be a great opportunity for the new Microhoo! to leap-frog google and create an Information coscious Environment. The pieces are there but can they put them together?

  18. If it happens this would be a great opportunity for the new Microhoo! to leap-frog google and create an Information coscious Environment. The pieces are there but can they put them together?

  19. @58,

    Unlikely. Yahoo already favors IE 7. The Yahoo portal, especially Yahoo Mail barely works with Opera, my favorite browser.

    This is not Opera’s fault. It’s Yahoo’s. Opera is the most standards compliant browser available. Sites still code for their preferred browsers.

    Now that Netscape Navigator is dead, there is one less browser to worry about. Really, the only browsers they need to code for are Opera, Firefox, Mozilla Seamonkey, IE 6/7, and Safari. Maxthon uses IE’s rendering engine.

    Microsoft would be nuts to mess with Flickr and other successful Yahoo properties. They would lose all the users and ad revenue they are so worried about. What I think is so funny is that the same people that are alarmed at MS messing with Flickr are the same ones using XP and Vista already. What gives? If they feel so passiionately about not being affiliated with MS, then they should go buy a Mac or use Linux.

    I’ve not had any trouble whatsoever with Vista Premium. In fact, I’d stay it’s the most stable OS I’ve used to date. I’ve had more crashes under OS X and Linux.

  20. @58,

    Unlikely. Yahoo already favors IE 7. The Yahoo portal, especially Yahoo Mail barely works with Opera, my favorite browser.

    This is not Opera’s fault. It’s Yahoo’s. Opera is the most standards compliant browser available. Sites still code for their preferred browsers.

    Now that Netscape Navigator is dead, there is one less browser to worry about. Really, the only browsers they need to code for are Opera, Firefox, Mozilla Seamonkey, IE 6/7, and Safari. Maxthon uses IE’s rendering engine.

    Microsoft would be nuts to mess with Flickr and other successful Yahoo properties. They would lose all the users and ad revenue they are so worried about. What I think is so funny is that the same people that are alarmed at MS messing with Flickr are the same ones using XP and Vista already. What gives? If they feel so passiionately about not being affiliated with MS, then they should go buy a Mac or use Linux.

    I’ve not had any trouble whatsoever with Vista Premium. In fact, I’d stay it’s the most stable OS I’ve used to date. I’ve had more crashes under OS X and Linux.

  21. I think that this could be more of a land grab play than anything else. However it is not how much you sell it is how much you keep, and right now Google is pocketing quite a bit of cash.

    As segmented traffic becomes more coveted this looks attractive in the long run for gates and co. In the short run there is lots of room for error merging cultures that are drastically different.

  22. I think that this could be more of a land grab play than anything else. However it is not how much you sell it is how much you keep, and right now Google is pocketing quite a bit of cash.

    As segmented traffic becomes more coveted this looks attractive in the long run for gates and co. In the short run there is lots of room for error merging cultures that are drastically different.

  23. The problem here (IMHO) is that Microsoft are buying a company on the way down – Yahoo couldn’t decide whether it was a search company or a media company or a social company.

    Microsoft itself has serious issues over the perception of its’ brand – the company is seen as being as hip as Bill Gates himself these days.

    So, essentially what we have is like the marriage of an octogenarian fuddy-duddy to a schizophrenic. I can only see it it ending in tears.

  24. The problem here (IMHO) is that Microsoft are buying a company on the way down – Yahoo couldn’t decide whether it was a search company or a media company or a social company.

    Microsoft itself has serious issues over the perception of its’ brand – the company is seen as being as hip as Bill Gates himself these days.

    So, essentially what we have is like the marriage of an octogenarian fuddy-duddy to a schizophrenic. I can only see it it ending in tears.

  25. Good to see Chrissy Coulter as insightful as ever.

    Well, I’d have to stand way back in line, as everyone is sour on this deal, I hardly stand out. But glad you like the flowerly-theaterish wording. I just hope more of Hollywood/Burbank does, beyond the go-nowhere options. :)

  26. Good to see Chrissy Coulter as insightful as ever.

    Well, I’d have to stand way back in line, as everyone is sour on this deal, I hardly stand out. But glad you like the flowerly-theaterish wording. I just hope more of Hollywood/Burbank does, beyond the go-nowhere options. :)

  27. MS doesn’t need Yahoo Mail, except for the users and perhaps enhancing the UI. So, bullet in the head for Yahoo Mail. They CERTAINLY don’t need Zimbra…so…bullet in the head for Zimbra. Search gets saved. Likely Flickr too. Yahoo Finance? Dead. Small business services? Dead. Yahoo Sports could stay. Messenger? Dead.

    The statement about positioning against Google Docs? Laughable. Nobody uses it. It barely registers. I rather doubt MS is all that worried about Google Docs. If they had to it would be easy to take Office on line.

  28. MS doesn’t need Yahoo Mail, except for the users and perhaps enhancing the UI. So, bullet in the head for Yahoo Mail. They CERTAINLY don’t need Zimbra…so…bullet in the head for Zimbra. Search gets saved. Likely Flickr too. Yahoo Finance? Dead. Small business services? Dead. Yahoo Sports could stay. Messenger? Dead.

    The statement about positioning against Google Docs? Laughable. Nobody uses it. It barely registers. I rather doubt MS is all that worried about Google Docs. If they had to it would be easy to take Office on line.

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