Everyone is talking about the $44.6 billion that Microsoft has offered up to purchase Yahoo, so that means I’m obligated to add my two cents.
Stowe Boyd has a good take that I pretty much agree with:
Personally, I think the Microsoft and Yahoo matchup is like two tired swimmers who bump into each other and then wind up drowning each other in their scramble to survive. But Yahoo will be the first to go under in this embrace.The big question I have is, “What will happen to the many overlapping services like Mail and Search?” Will they be combined, will both continue to exist, or what? What I haven’t been able to figure out from what has been written about this merger is exactly what the nature of it will be. Both Microsoft and Yahoo (especially) have suffered from the inability to focus their online offerings - spreading themselves thin, and expanding their services with little rhyme or reason - in my opinion. What happens to stuff like Flickr and Del.icio.us when Microsoft buys Yahoo? That worries me a little. It will be interesting to see how this plays out.
...
Just smells like this decades AOL/Time matchup. It will go through. Microsoft will remove one competitor, but it won't work. It won't be enough to stop the future.
Does Google have anything to fear if this deal goes through? A little bit, sure. They’ll lose some Search market share, have a harder time gaining traction for Google Apps (if MS Office Live ever happens), become slightly less of a de facto standard in online advertising. But it seems to me that they have their eyes on something else entirely, and are gradually moving into a new, uncharted space that no one has figured out just yet.
My impression is that Microsoft and Yahoo are competing with Google, but Google is looking elsewhere, competing only with “Possibility.”
And keep your eye on Amazon. They just doubled their profit, announced they are buying Audible, and their web services division is rapidly becoming hugely important to modern internet applications and services.
Man, 2008 is going to be fascinating. Welcome to February. Don’t get too comfortable.
3 comments:
My only issue with this kind of pseudo analysis (what you quoted) is that it is ultra-simplistic and limited in scope. Basically:
"AOL/Time didn't work out like they hoped, and this is similar."
That's it? One example of a failure is enough to doom this deal? What about the fact, that, statistically speaking, Wall Street thrives on Mergers and Acquisitions?
This isn't the first time two big companies have decided to join forces, and it won't be the last. And the outcome is often very positive (or else no one would do it) even if the failures get most the press.
I'm just saying that most of the "this won't work" commentary is backed by little more than the "they're two big companies with different cultures and overlapping products" excuse.
But you could say that about any big company X merging with company Y. Bottom line: if there is limited correlation between the variable of "failures" and the variable of "big company mergers," well, I'm going to need to see a different variable as the scapegoat of this supposed failure before I believe any "can't stop the future" rhetoric (what does that even mean, btw?).
Bob - great comment. And I definitely agree. My sense is that Stowe (and others) are making gut reactions to the merger. They feel it won't work out, and though Stowe is light on justification, his comparison came across (to me) as a simple "this is what it reminds me of" statement, not a substantive critique with reasoning and comparison. Maybe I misread him, though. Admittedly, what he wrote rang true for me in a certain sense, which is that I see both companies (deservedly or not) as members of the old guard, fighting to remain relevant, and unsure of their direction. Others doubtlessly think differently. And, indeed, I hope they're right. Both MS and Yahoo have made inestimable contributions to technology and the web, and competing with them has pushed many other companies to do some amazing stuff, too. Loathed as they are by many, they are important and good to have around.
I think you're absolutely right that the reasoning most are giving is flawed - mergers, etc. happen all the time - and part of the point, after all is in the overlapping of services. I'm in no position to evaluate the decision - especially not compared to the people in charge, who obviously have done a ton of research into this option, and are thus best qualified to make the decision in the interest of their shareholders. That's why I tried to keep my comments more speculative, wondering how exactly it would work out. That I don't think Google needs to worry is less a comment on the merger/acq itself, than my perception that the companies are moving in different directions - competing in some areas, but not others - similar to how I feel about the Google/Facebook "competition" and even Google/Apple, which some crazy people worry about.
Overall, I'm much more interested in HOW things will play out if this deal goes through, not if the acquisition will ultimately be judged "successful."
Too much economics today. :) Time to take a nap and sip on some Campari.
Thanks, Kevin. It does make more sense as a gut reaction, I suppose, even if I'm still hazy on the "old guard, fighting to remain relevant" type of reasoning.
That could only be referring to the fact that Google has dominant market share in the online sphere? That part in quotes above makes it sound like the Microsoft of today is like Russia, as if there was some sort of major crumbling in the recent past.
Last time I checked, though, Microsoft is doing better than ever and Yahoo actually has slightly more traffic than Google (even if hurting financially, but since we're talking relevance...). But, eh, as you said, these thoughts of the irrelevant old guard are more feelings than analysis, and there's nothing wrong with that.
I definitely resonate with your interest in seeing HOW things will work out for us, the consumers. After all, "success" is typically measured as whether or not total shareholder value will have a sustainable increase post-merger.
And it sounds like we're both more interested in what cool, new stuff this means we get to play with!
Ok, I think I'm done... probably filled the econ discussion quota for the next month. A nap does sound good!
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