OK, Microsoft withdrew the offer for Yahoo! yesterday. Perhaps we will move on and quickly drive to the next big thing... but first a couple of thoughts.
Mary Jo Foley noted in her post Microsoft takes its ball and leaves Yahoo on the Web 2.0 playground that the move away from the Yahoo! deal "restores my faith in the future of the company."
"All along, many Microsoft watchers, including yours truly, have noted that there was an awful lot of overlap between Microsoft and Yahoo. Yahoo’s open-source-based platforms and strategies would no doubt be tough to combine with Microsoft’s Windows-centric ones. And it wasn’t just Yang and some Yahoos who didn’t want the deal; many Softies didn’t either. Yes, Microsoft would have gotten Yahoo’s ad inventory to combine with its own, making a combined Microsoft-Yahoo ad network more appealing to publishers and advertisers. But was that really worth $44 billion?"
I like MJF. From my customer's perspective and happy user of Flickr, I can imagine that the integration would have been tough, given the tremendous overlap of properties. But the access to eyeballs on Yahoo! properties, IMO, is attractive. But you can do a lot of shopping for complementary companies with $44.6 billion available on your debit card.
Larry Dignan notes five reasons why it’s a good move, including integrating the back-office infrastructure...
"Microsoft and Yahoo come from two different worlds. MSN is about Microsoft infrastructure on the front and backend. Yahoo is about Hadoop, open source and creating a network of properties that’s open to developers. How exactly do you bridge that gap? Do you have to? The integration was a migraine waiting to happen."
And in his post Microsoft walks away from Yahoo: Assessing winners, losers and Plan Bs, Dignan said that the following are...
- Google. I think that the move to me shows that Microsoft is willing to significantly continue investing in the space (both in capital and the impact that integration has on a business and its employees, customers and partners).
- Rupert Murdoch. But is MySpace relevant anymore? Oh, yes. I think that many corporations don't realize how much of a window this is into the budding consumer soul (tweens, high schoolers and Generation Now).
- And our friends at Time Warner, especially as they now are getting smart about what to do with the cable arm. It's amazing to me how many people I still see with AOL email addresses, ones that could just as easily get transferred to Gmail or Live mail for the back end.
- Microsoft. Dignan says that it was smart for Ballmer and Microsoft to walk away from the deal. To say the least, "the Yahoo deal would have been toxic for the company and a distraction to say the least." And interesting that he brings up alternative ways of leveraging current and future products.
[One more <comment>, added 050408] Henry Blodget said in his take on Microsoft walking away that he thought it was...
"...a smart move by Microsoft for four reasons:
- We think the combination as proposed would have been a disaster.
- We don't think Microsoft needs to be in Yahoo's business (Microsoft obviously disagrees)
- We think $37 a share would have been too much to pay for Yahoo right now.
- We think there is a reasonable chance that Microsoft might be able to buy Yahoo for less than $30 in six months to a year if Yahoo can't get its act together. </comment>
In the end, I think that our collective customers benefit. Nothing spurs people on than competition, especially in an Internet arms race. Having lived in Silicon Valley for so many years (and, thankfully, keeping up with many friends: thank you email and social networking services), I saw first hand and continue to see that competition -- whether it's for staff, resources, market share or the leadership in a new space -- is what drives innovation. This healthy tension ultimately benefits consumers, helping to bring new goods and services to market, and in this world, to one of the largest sandboxes imaginable: the Internet.
Without that tension, I wouldn't have Flickr in favour of some other photo sharing services and unused: simple drag and drop uploads, links to directly upload photos from your camera and phone and an affordable professional account upgrade. Our own Windows Live group Windows Live Writer blog composition and management app and Windows Live Mail with easy free integration with other email POP accounts are good examples of how the Live group delivers products with good value proposition.
Mediocrity does not bolster innovation, it kills it. Competition is the nanny of innovation.
Being in Redmond (or Beijing, Cambridge, Vedbæk, Bangalore, Fargo, Vancouver, or any other far-flung development and research centre) is no longer a hindrance: the buzz and news from Mountain View, San Jose and SF is only a few mouse clicks away. It seems that each time there is a "major disturbance in the Force" -- say, with a new innovation coming to light, or a product announcement from Cupertino -- my phone rings, RSS feeds update, email appears and IM windows pop up.
On a personal note: it amazes me still that for each step of the Microsoft-Yahoo! discussions, we saw a near-real time stream of updates from "people familiar with the deal" (perhaps I missed the published Twitter ;). Danger was IMHO a good example of where people were able to keep quiet.
Perhaps our marketing team will take more of a Google approach as Scoble noted a couple of years ago - which actually is a Silicon Valley approach (case in point: the way my friends at Zing bubbled up the interest prior to breaking their silence)
"...convince the grass roots influence networks first. Why have Google and Apple done so well in the last three years? Cause the grassroots loves them. That's the powerroot of the industry. Ideas here don't come from the big influencers and move down. No, they start on the street and move up. Anyone miss how Google got big? Not by throwing a press conference. Ballmer should not listen to his PR team and instead should live the blogging way."
Sure, there is plenty of information on new technology, products and services that enterprise customers need long lead times on, but for consumers, nothing works better than buzz. Just ask Steve... Jobs, that is. 😉