Pundits are pointing to various factors behind the Microsoft bid for Yahoo. This week alone provided two events that helped pave the road: On Tuesday, Yahoo co-founder Jerry Yang acknowledged that the company was in trouble by announcing plans to lay off 1,000 employees. Yesterday, Google stock emerged with a 20-per-cent decline in January, and this morning alone, Google stock fell a further 6.7 per cent.
Sure, these are factors. But in the longer view, it seems that an alliance between Yahoo and Microsoft could pose a serious threat to Google, which has been spooking Microsoft’s market domination for several years. And with Google suffering a rare stock setback, the time was ripe. And Microsoft’s move, though it had talked takeover with Yahoo in 2006 and 2007, was timely and impressively swift.
Perhaps it had the offer already drawn up and was just waiting for the appropriate moment.
Yahoo’s great strength has been its search engine, one of the first on the Web and now a golden brand. It also has an enormous number of e-mail subscribers, and its portal was lucrative. But its recent strategies — among them Project Panama, announced in April, 2006, in which ad placements would be based on price and relevancy — has been disappointing. A year ago, Yahoo promised a major reformulation of its business plan, but whatever it did was not impressive enough to raise shareholder’s faith.
Microsoft, on the other hand, was failing in most of the areas where the two companies overlapped, especially in the area of ad-supported search. Live Search, despite an enormous push from Microsoft, has failed to ignite any excitement, and the company’s clever attempt to bring in users via the Ms Dewey platform has nevertheless been a major disappointment.
And Microsoft’s pride has been stung in one area not in common with Yahoo — disappointing sales of its Windows Vista package, a kind of thing that, if not countered, could damage the company’s stock.
Microsoft has expended more money on its Live Search and it entire Live platform, in fact, that subsuming Yahoo’s expertise in advertising-based search would not only eclipse Vista’s marketing problems, but solve a bunch of Live.com issues as well.
As Microsoft’s critics have often said, the company doesn’t have much imagination — it buys what it can’t create.
And there is one other area that appeals to Microsoft: Yahoo has a huge number of e-mail subscribers, as does Microsoft, through its MSN and Live.com services. Combining them would result in an awesome subscription list.
Okay, so let’s assume Google must be quaking in its boots. But would there be any other fallout?
Apple comes to mind. The company has little in common with either Microsoft or Yahoo, but a combined Microsoft-Yahoo venture would push Apple even further down the list of major tech players.
On a lighter note, Engadget is asking readers to vote on a name for the new company. Its slate includes Microsoft!, unGoogle, Microhoo, Yacrosoft ... or just Microsoft (“this ain't no merger of equals”) or unchanged (“the Feds won’t approve it”).
