Sunday, February 24, 2008

What's Happening with Micro-Yahoo!?

As you all know, Microsoft made an offer to purchase Yahoo! on February 1 and that offer was rejected. It seems that the most commonly held view on the offer and subsequent rejection is that Yahoo! realizes just how badly Microsoft needs them and that Microsoft is willing (and obviously capable) of paying much more for the company.

What's at stake is a stake in the rapidly growing online advertising industry that some project will reach $80 billion by 2010. It's apparent that Yahoo! and Microsoft both need some kind of a spark if they expect to have any chance at competing with Google over the next several years in the online advertising and search markets.

So let's assume that Microsoft will ultimately prevail in taking out the once dominant Yahoo! What is going to happen to the employees? What about the products? Locations? Culture? Etc...? Following are some thoughts on these items based on what is being said among the senior ranks at Microsoft:
* Microsoft expects that, if and win Yahoo! agrees to the transaction, it will close in the second halof of 2008.
* The number one reason for the take-out bid is stated as, "the industry needs a more compelling alternative in search and online advertising."
* Microsoft believes the R&D talent that would pick up could help them better innovate to compete with Google.
* For agencies and advertisers this would result in a more efficient management process for campaigns with a higher yield. Also, they would be pushing hard to extend the ad platform a la Google's multi-channel strategy which is something agencies and advertisers are asking Microsoft to do.
* Of course, they think this will reduce redundant expenses and increase revenue resulting in "greater shareholder value."
* On the topic of cutting duplicate positions in the merger, Microsoft mostly dodges the question pointing to the fact that MS has hired over 20,000 employees since 2005 and that there are many challenges that need to be tackled across the company. I read this to mean some people will surely get canned and that's just part of reality in any merger - especially of this magnitude.
* Microsoft would definitely retain the Yahoo! brand due to its strength in the consumer market. They will not comment on which Yahoo! and Microsoft brands would survive once the companies are combined.
* Microsoft will have a bit of a quandary with their technology integration given that Yahoo! is anti-Microsoft. I am glad to not be leading that integration process... However, Microsoft does claim that in certain cases they are good with leaving open source technologies in place and making the interoperability happen with all of their other Microsoft-based stuff. This has got to be a big concern for all of the engineering talent at Yahoo! If they migrated to MS platforms it would have a massive impact on Yahoo!'s talent pool and would likely result in a massive elimination of jobs. Even though MS s head of their own religion, I actually think it is unlikely that MS would attempt to crater all of the great technology Yahoo! has created.

The Microsoft staff has been told to continue with "business as usual" and to compete aggressively with Yahoo! on deals. They are also not to start any integration discussions until they hear otherwise.

The tone of what I am hearing out of Redmond tells me they are really serious about making this deal happen.

My bet is that Micro-Yahoo! will be a reality by the second half of 2008 and that the focus on integrating the two companies will only serve to distract them and allow Google to distance itself.

I also think emerging players should view this is a great opportunity to continue driving rapid adoption while the big three sort all of this out. For ChaCha, we believe our mobile answers capabilities are truly different than anything the search Goliaths are focusing on. I was recently asked what I thought of my partner stating that ChaCha could "blast right past" Google in mobile. My view is that the race we are running today is demonstrating that we are tapping into a massive base of demand that is not served at all by the big three. Namely, the need to simply ask a question (about anything) and get the answer on any type of phone. With ChaCha, every phone is a smart phone.

If you have yet to try it out, go ahead and text ANY QUESTION to 242242 (spells ChaCha). You will see the difference.

As for Micro-Yahoo!'s mobile plans, it looks like those are about fourth or fifth on a list that looks something like: advertising, search, video, mobile, commerce, and social media.

What do you think of this proposed merger? Will Micro-Yahoo! compete favorably against Google? Or will this all result in more distractions and less competition?

Please post a comment to let me know what you think!

1 comment:

A United States Non Provisional Applied Service said...

No, the Microhoo won't take out Google.

Google will be taking themselves out like a horse driven buggy.

We drive cars and really fast ones now and to make this short...death to 1,^$!@,!(*&@(,)(!*&),000 search results.

Google isn't just letting go and walking away but it is smart enough to diversify into other markets and app's but so far G doc's a bomb.

The liptmus test is that if your parents can't use/understand it, then its not that good as a retail service and only to the trained and paying customer.

The free B-model is a success because it has to be simple, period.

Microsoft in opinion doesn't want search but my Yahoo address to send me crap.

How much would it cost to put place ads in everyone's e-mail forever? A lot more than 4billion.

AOL was spending a 100M a year to push out the free AOL cd's...remember those:-)

Brad, all the best to you and ChaCha but where is my damn ChaCha bumper sticker?

Ever car at Clay Terrace should have one.

I am from Chicago and a little older but still can remember EVER
car in Chicago had a "Tommy Bartlet's Water Show" in Wisconsin Dells on the back....we where really cool back then!!!