Forgot your password?
typodupeerror
Microsoft Businesses The Almighty Buck The Internet Yahoo!

Yahoo Bid shows Microsoft on the Ropes 402

Posted by CmdrTaco
from the i'm-available-for-one-percent-of-that-offer dept.
Ponca City, We Love You writes "One day after the announcement of Microsoft's plan to buy Yahoo, there is an interesting piece from the NY Times analyzing the reasons behind Microsoft's bid and proposing that the bid is a tacit, and difficult, admission that Microsoft did not get its online business right and that online losses continue to mount while Google makes billions in profit. Microsoft "finds itself in a battle where improving its search algorithms and online ad software is not going to be enough," writes the Times. With the Yahoo bid Microsoft is trying to buy a big enough share of the market to be a credible alternative to Google with online advertisers. "This shows just how worried Microsoft is by Google," says David B. Yoffie. "Microsoft has faced competitive threats before, but none with the size, strength, profitability and momentum of Google.""
This discussion has been archived. No new comments can be posted.

Yahoo Bid shows Microsoft on the Ropes

Comments Filter:
  • Eh? (Score:5, Insightful)

    by Dan100 (1003855) on Saturday February 02, 2008 @11:33AM (#22273080) Homepage
    How can a company that can afford to pony up $44.6 bn possibly be described as being "on the ropes"?!
    • Re:Eh? (Score:5, Insightful)

      by tomhudson (43916) <.barbara.hudson. ... bara-hudson.com.> on Saturday February 02, 2008 @11:37AM (#22273116) Journal

      "How can a company that can afford to pony up $44.6 bn possibly be described as being "on the ropes"?!"

      Here, let me fix that for you ...

      "How can a company that feels it has to pony up $44.6 bn possibly be described as being anything but "on the ropes"?!"

      ... and its not an "all-cash" bid. 50% Microsoft stock. At least they aren't paying in

      At least they're not offering to pay in Bush coins [blip.tv] ... yet!

    • Re:Eh? (Score:5, Interesting)

      by jonbryce (703250) on Saturday February 02, 2008 @11:39AM (#22273130) Homepage
      Look at for example GEC/Marconi. It can happen.

      People aren't buying Windows Vista and Office 2007 because they have Windows XP and Office 2003 that does the job just fine, and possibly better, and it costs nothing to continue using it. None of their other attempts to diversify - Zune, X Box, Windows Live etc have been very succesful, so there are problems ahead.

      They aren't bankrupt yet, but they are taking action to try and avoid it while they still can.
      • Re:Eh? (Score:5, Interesting)

        by rustalot42684 (1055008) <fake AT account DOT com> on Saturday February 02, 2008 @12:13PM (#22273352)
        Actually, I was helping my neighbour with their new computer the other day, and when I pointed out that you didn't need to pay $150 for Office 2007 Home&Student to write letters, they were very open to the idea of trying out OOo. I think they'll be very happy with it, mostly because they saved $150.
        • Re: (Score:2, Flamebait)

          by RobBebop (947356)

          I pointed out that you didn't need to pay $150 for Office 2007 Home&Student to write letters, they were very open to the idea of trying out OOo.

          So, ten years later, the identified threat [wikipedia.org] turns out to be true, albeit moreso in the Office monopoly than on the OS. How quaint.

          These documents acknowledged that free software products such as Linux were technologically competitive with some of Microsoft's products, and set out a strategy to combat them. The documents were embarrassing largely because they contradicted Microsoft's public pronouncements on the subject.

          I wonder if the "strategy" was DRM and to adopt uncooperative practices. I guess that didn't turn out so well...

          • Re:Eh? (Score:5, Insightful)

            by mrchaotica (681592) * on Saturday February 02, 2008 @03:24PM (#22274980)

            I wonder if the "strategy" was DRM and to adopt uncooperative practices. I guess that didn't turn out so well...

            They're still pursuing that strategy, and it remains to be seen how well it turns out. They've lost the using-SCO-as-a-front gambit, but they're still fighting on the bludgeon-ISO-into-making-OOXML-a-standard and kill-OLPC-in-favor-of-Windows-running-stuff fronts.

        • Re:Eh? (Score:5, Funny)

          by tsa (15680) on Sunday February 03, 2008 @04:55AM (#22280666) Homepage
          My father didn't want OO on his new laptop, 'because it is different from MS Office.' So I bought him Office 2007. Mwuhahahaahha!!!
      • Re:Eh? (Score:5, Informative)

        by Dan100 (1003855) on Saturday February 02, 2008 @12:22PM (#22273422) Homepage

        People aren't buying Windows Vista and Office 2007 because they have Windows XP and Office 2003 that does the job just fine, and possibly better, and it costs nothing to continue using it.
        Please folks, RTFA. To quote:

        [Last year] The Office division alone had quarterly revenue of $4.8 billion equal to Google and an astronomical $3.2 billion in operating profits. The Windows unit is even more profitable.
        In fact, Microsoft's Q1 results last year were the best for seven years [guardian.co.uk]:

        Microsoft stunned Wall Steet with its latest financial results, based on the success of Windows Vista, Office 2007 and the Halo 3 game. First quarter revenues jumped by 27% to $13.76 billion, and profits by 23% to $4.29 billion. Sales beat expectations by more than $1bn.
        Microsoft dwarfs Google in both revenue and profit. It's just lost out in the online services market (where despite rising revenues it still makes a loss), and wants to catch up. To do so, it can afford to make investments nobody else can, such as buying out another huge company with a big (if not terribly profitable) portfolio of online services. Together, the "network effect" would make both much more profitable than they are operating seperately.
        • Re: (Score:3, Informative)

          by MightyMartian (840721)
          Or not. There's no guarantee that buying Yahoo is going to make it a uber-profitable division, nor does it mean that Microsoft somehow magically gains from it. Yahoo may be the next biggest, but Google dwarfs it. Yes, Microsoft will buy some market share, but even if it manages to maintain it, it's going to be an ironic twist, a sort of online market share version of the Windows/OSX split.
      • Re:Eh? (Score:5, Interesting)

        by smallpaul (65919) <paul@@@prescod...net> on Saturday February 02, 2008 @02:34PM (#22274526)

        Just about everything you said is incorrect. You said:

        You said: People aren't buying Windows Vista and Office 2007 because they have Windows XP and Office 2003 that does the job just fine, and possibly better, and it costs nothing to continue using it.

        But the facts are: "Better-than-expected worldwide PC shipments, tougher anti-piracy measures and growing numbers of businesses switching to long-term volume software licenses helped boost revenue for the two Microsoft divisions responsible for Windows and Office to a total of $9.14 billion, 50 percent more than a year ago."

        Microsoft has never depended on people going out and buying Windows and Office as shrinkwrapped software. People buy them when they buy computers because it is the easiest thing to do.

        You said: . None of their other attempts to diversify - Zune, X Box, Windows Live etc have been very succesful, so there are problems ahead.

        But the facts are: "The division responsible for the Xbox 360 video game system swung to a profit on rising sales of games and accessories, which deliver better margins than the console itself. Microsoft said the division is still on track to be profitable in fiscal 2008."

        You said: They aren't bankrupt yet, but they are taking action to try and avoid it while they still can.

        But the facts say: "Microsoft blew by Wall Street's expectations for a second consecutive quarter." (announced just a couple of weeks ago) Quantitatively speaking they are not only "not bankrupt yet" but not even heading in that direction.

        My reference: http://www.kval.com/news/business/14266747.html [kval.com]

        Do I think that all is well in Microsoft land? No way: but no massively profitable company with a gargantuan bank account can be said to be "on the ropes". There is a big difference with "perhaps pointed in the wrong direction" and "on the ropes". It would be more accurate to say: "There are indications in the early rounds of fighting that the current champ will have to adjust strategy to win against a promising upstart competitor."

        I'm no Microsoft fanboy: I think that they need to fire Ballmer and reform the culture. But that's actually an easier thing to do than the sorts of things that their competitors need to do to become as entrenched and powerful as Microsoft is. Or to put it another way: Microsoft will lose if they don't adjust strategy, but the fight is still theirs to lose. i.e. they are a bit bloodied, not "on the ropes".

    • Re:Eh? (Score:5, Funny)

      by Wowsers (1151731) on Saturday February 02, 2008 @11:55AM (#22273234) Journal
      Let's google for the answer.
    • For example, here's an unrelated article about "OS share" where they count the iPhone as an OS [cnn.com].

      What possible reason do you have to count iPhone, the Wii and Playstation (even in sub-percentage amounts) in a story of "Mac OS" gaining ground on "Windows"? (BTW, they have it at 7.57% MacOS vs 91.46% Windows, that's 99.03, Linux is at .63%). I guess tossing in random stuff is more interesting than saying Windows still has 90%+ of the desktop...

      • Actually, considering mobile devices OSs makes sense, if you consider that in 10-15 years fewer people will be using desktops than mobile devices. Though mobile devices make for a small percentage of OSs today, the tendency is that they'll make a bigger percentage every year, until they surpass the desktop OSs.

        That's why all desktop companies are struggling to get their OSs running on mobile devices. Microsoft has Windows CE, Apple has OSX running on the iPhone. There's been a lot of buzz on Linux for mob

    • by emil (695) on Saturday February 02, 2008 @12:17PM (#22273390) Homepage

      With rumors of NSA backdoors into MS operating systems, and Google maintaining search history until the end of time, both of these companies practically have the power on their own to become George Orwell's big brother. If we had any sense as citizens and consumers, there would be a huge rush for the exits (yet here I sit on Windows searching with Google).

      I don't like this power over society. Whichever one takes more effective means in demonstrating that their power is benign will have my support. Neither has taken effective measures to prove their goodwill towards consumers as of yet.

      Oh, and you can throw in AT&T in that mix, too.

    • Good question... which leads me to this statement:

      "This shows just how worried Microsoft is by Google," says David B. Yoffie. "Microsoft has faced competitive threats before, but none with the size, strength, profitability and momentum of Google."

      Though probably true to one extent or another, this is just normal business for Microsoft. They routinely buy their competitors, whether they (or we) think their competitors have a better product or not. Thus, I am sure that DBY has not hit upon MS's full reasoning behind this move. Even if MS Live Search were the best "product" out there, this would be a way for MS to gain more market share in a very short period of time, and thus also increase revenue (

    • Now, now. Before all you naysayers and Slashdot cynics read too much into this, consider that there may be some real madness to their methods. Consider this report, on the front page of my newspaper, retrieved by my time-traveling teletype machine.

      Reprinted from the Bizarro World Times
      April 1, 2010

      Headline:
      BALLMER PLAYS FIDDLE AS MICROSOFT BURNS
      Reported by Peter Perplexed and Wally Whathehelljusthappened

      Federal investigators with the SEC and FBI, along with Interpol authorities, today released preliminary
  • by QuatermassX (808146) on Saturday February 02, 2008 @11:39AM (#22273128) Homepage

    search algorithm ... it would certainly help make the "service" an actual service! Over the years I've watched as Microsoft has released meh product after meh product. Isn't that their real problem - when the vendor lock-in wears off, they have DAMN weak products.

    I have never understood the popularity of Windows with consumers (beyond the obvious monopoly power they wield with personal computer manufacturers), I find their software mostly blech (frankly, anything NOT Word and Excel is just junk) and their online products and services NEVER work as advertised. NEVER.

    If I were Microsoft, I'd try and refocus the company culture and align it with the interests of its customers and not ... well ... whatever hellish alliance of businessmen, content producers and bean counters they're currently serving.

    I think the XBox 360 points the way, really ...

    • Re: (Score:3, Insightful)

      by MonoSynth (323007)

      If I were Microsoft, I'd try and refocus the company culture and align it with the interests of its customers
      The 'customers' in the search engine industry are the advertisers, and the main interest of advertisers is reaching as many consumers as possible. A perfect search portal with a perfect algorithm doesn't work. Buying the world's number two might work.
      • by filbranden (1168407) on Saturday February 02, 2008 @12:43PM (#22273626)

        A perfect search portal with a perfect algorithm doesn't work.

        This isn't about the search algorithm. Microsoft is clearly after Yahoo's user base and users that go to Yahoo for search. For what it's worth, they could scrap Yahoo's search algorithm completely, replace it with MSN, as long as they believe that users will still go to Yahoo after that.

        Of course, Microsoft has done that before. Look at Hotmail for instance. They couldn't stand the fact that it was not Microsoft technology under it, so they just had to "improve" it on their way. Results? After Microsoft's "improvement" Hotmail ceased to be #1 in webmail and now must be around #957 in market share.

        It's probable that if they finally buy Yahoo it will be just the same. Users will deflect in masses. First it will be the users that leave Yahoo because they don't trust Microsoft (say around 5-10%), then it will be the users that leave Yahoo because Microsoft "improves" the service with their own ways of "improvement" (say around 10-20%), and finally it will be the users that leave Yahoo because Microsoft will introduce its silly single platform locked-in technologies, like Silverlight, and they will try to integrate Yahoo with the desktop, which will make Yahoo no longer as "convenient" it is from the point of view that you can access it anywhere without restrictions (say around 20-40% users leaving because of this).

        In the end, Yahoocrosoft will lose from 35% to 70% users, and Google will be a yet bigger #1 with a distant #2. I think Microsoft buying Yahoo will be bad for the search/ads market, but it will be good for the OS/desktop/browser market, because Microsoft will certainly weaken from this. I think it's worth to give Google that much power if we get rid of Microsoft in the process, so I'm happy with this and I actually want it to happen, as much sorry I am for Yahoo, but hey, if they take the bid, they're just asking for it.

        If I were Microsoft, I'd try and refocus the company culture and align it with the interests of its customers

        Yes! Exactly my point. If Microsoft tries to think "as Yahoo does" and doesn't intervene that much, it could use its money and power to actually make it grow and defy Google. But Microsoft is too clever! They'll want to turn Yahoo in Microsoft, they'll want to use their MSN knowledge to grow Yahoo. They'll want to "improve" Yahoo services by migrating them to Windows servers (as with Hotmail), they'll want to "leverage" the desktop on Yahoo services. That will be their biggest mistake. But it's inevitable, there's no way that Microsoft will buy Yahoo and not do that.

        • I'm without mod points at the moment, and this guy is spot-on.

        • Rest of the post aside, Silverlight isn't a single platform technology.
        • by xeoron (639412)
          This makes me ask the question-- should Google do anything in response to this announcement? The first thing I thought of-- what if Google offered to buy Microsoft-- surely Google could run it far better than they can. And, just think of what they might release for a Post Visa OS...
      • The 'customers' in the search engine industry are the advertisers, and the main interest of advertisers is reaching as many consumers as possible.

        And in a recession, advertisers scale back their ad buys. Instead of buying in the top 2 in any market, they buy from #1 only. Even Microsoft admits that Google is #1.

    • by KokorHekkus (986906) on Saturday February 02, 2008 @12:22PM (#22273424)
      Except that the Xbox and Xbox 360 has been major economic sinkholes. From 2002 to 2004 the then Home and Entertainment Division made an accumulated loss for 3.5 billion dollars. From 2005 to 2007 the new Entertainment and Devices division made an accumalted loss of 3.7 billion dollars. So over those 6 years they lost 7.2 billion dollars. Imagine how hard it will to make that money back (plus the lost interest on it) from a division that has a 6 billion revenue per year and never has shown a profit.

      Microsoft has tried several directions when it comes to break into new markets but let's face it, they haven't done a very good job of it. Their money comes from the Server and Tools Division and the Business Division (Office etc.). And I don't think it's going to change... perhaps because they aren't used to competing on merits alone.

      2004 10-K (has the 2002 to 2004 numbers) http://www.sec.gov/Archives/edgar/data/789019/000119312504150689/d10k.htm [sec.gov] 2007 10-K (has the 2005 to 2007 numbers) http://investing.businessweek.com/research/stocks/financials/drawFiling.asp?docKey=136-000119312507170817-22AR89VDNH3I307BANT6DSD928&docFormat=HTM&formType=10-K [businessweek.com]
    • Actually, MS Office 2007 is a great improvement. If it would run on Ubuntu (and save in odf format without the stupid non-working plugin) then I would pony up the money for it. Media Player, up to version 10, was a great program as well. All they need to do is refocus and get a decent operating system out the door to save themselves. And no, I haven't used MS software in my house for over two years. But not because I hate them.
    • by Bombula (670389)
      I have never understood the popularity of Windows with consumers (beyond the obvious monopoly power they wield with personal computer manufacturers), I find their software mostly blech (frankly, anything NOT Word and Excel is just junk)

      Now I'm no M$ fanboy, but I think there are some clear and simple explanations for Microsoft's enormous success aside from simply their OS and Office suite market dominance as a near-monopoly. In a nutshell, I think they all boil down to the mass-market effect. I'll invok

  • by Gopal.V (532678) on Saturday February 02, 2008 @11:39AM (#22273134) Homepage Journal

    I think the public nature of the bid suggests that private behind-closed doors negotiations have failed and they're trying to attempt a near-hostile takeover. YHOO [yahoo.com] shares have jumped about 10 USD over friday and a lot of us have been getting rid of them. And I wonder who's buying all of these, in reality? Someone who'd pay 31 dollars for a share, when they could instead buy it in-market at 28?

    I'd really hope it was some sort of last-ditch effort to put shareholder pressure onto Jerry Yang (yes, I do work at Y! and I do have a very nice job [php.net], which I'd be really sad to leave ...). And yeah, read my domain to figure out exactly why I would have to :)

    Here's to hoping that it doesn't happen (for YUI, flickr, freebsd, hadoop and del.icio.us!)

    • Re: (Score:3, Interesting)

      by Anonymous Coward
      I made a comment over on another site about hoping that the buyout doesn't happen, specifically because of what Microsoft would do to the useful software/services that Yahoo! has built up and acquired (Y! mail, flickr, del.icio.us). Someone else responded with a "Quit being so childish. Look at all the money they'd make!" comment that quickly got modded up. The sad truth, however, is that one of the major assets that MS is buying is the customers, and if the buyout goes through, quite a few customers will l
    • by Gopal.V (532678)
      Just for the record, I'm on vacation and out of office (well, I'm on the wrong side of the equator from office).

      So, my comment is completely uninformed, baseless speculation (wishful perhaps too).

      PS: thanks to the dude who pinged me and told me to shut up :)
    • by DTemp (1086779) on Saturday February 02, 2008 @12:01PM (#22273274)
      Here is a quote from the letter Ballmer wrote to Yahoo:

      Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!'s shareholders are provided with the opportunity to realize the value inherent in our proposal.

      That sounds like a full-fledged hostile takeover threat to me... "we can do this the easy way, or the hard way."

      I think we can all agree that what Microsoft needs most is a complete change of corporate culture, not Yahoo. This would require a complete replacement of at least 80% of the Microsoft brass, however, so it's not likely to happen until the company is near-dead.

      However, if Microsoft realizes that they need to change their corporate culture to attract a bigger audience/customer base, but doesn't want to go through the hassle of actually doing it, then theres one VERY EASY way to impart this realization onto the purchase of Yahoo: for the love of fucking god, DONT FUCK WITH YAHOO!! That means: no changing their servers from FOSS to Windows, no firing all of their managers, and no adulterating Yahoo's way of doing things with Microsoft's shittastic attitude (among other things).
      • by Dystopian Rebel (714995) * on Saturday February 02, 2008 @12:57PM (#22273722) Journal

        for the love of fucking god, DONT FUCK WITH YAHOO!!


        Unfortunately, at the end of the letter under his signature, Ballmer wrote in ballpoint pen, "Microsoft reserves the right to fuck with Yahoo."
      • Re: (Score:3, Informative)

        by OakLEE (91103)

        DONT FUCK WITH YAHOO!!

        From a business perspective, I think Microsoft has to fuck with Yahoo. The company's profit margins have been falling hand over fist for the last couple of years, and they've got way to much bloat, as evidenced by the fact that they will have to lay off 1000 people this year. They've gone through at least two CEO changes in the last year, and despite the increasing viewership of their sites, their ad revenue has been flat to decreasing. I think Microsoft must absolutely make managem

        • Re: (Score:3, Insightful)

          by adrianmonk (890071)

          From a business perspective, I think Microsoft has to fuck with Yahoo. The company's profit margins have been falling hand over fist for the last couple of years, and they've got way to much bloat, as evidenced by the fact that they will have to lay off 1000 people this year.

          From a business perspective, I think somebody has to "fuck with Yahoo", but I don't think Microsoft is necessarily qualified to do it right. Microsoft and Yahoo compete directly in the same market (online search/portal), and Microso

    • I wonder who's buying all of these, in reality?

      Probably short term speculators and day traders looking for a quick in and out profit. (Or, possibly Yahoo has one or more white knights.)
       
      Actually, at current prices, buying YHOO and taking the cash (or the conversion) yields a small profit
    • by pangu (322010)
      From your link : "can be located at the pool table during office hours"
      I'd be sad to leave that job too.
    • by OakLEE (91103) on Saturday February 02, 2008 @05:31PM (#22276078)

      And I wonder who's buying all of these, in reality? Someone who'd pay 31 dollars for a share, when they could instead buy it in-market at 28?


      To answer your first question, they are called risk arbitrageurs [wikipedia.org]. They essentially buy the stock of the target company and short sell the stock of the acquiring company. They make a profit as the target's stock price appreciates to the offer price and as the acquiror's price decreases because of the costs of the takeover (e.g., cash paid out, dilution in stock value, debt taken on).

      Their presence, and the reason Yahoo!'s stock only trades at ~$28 is due to the risk that the deal will not close. Deals have to go through a lot of vetting both by the government (DOJ, FTC) and by the parties making them. There is always a risk that at some point along the way either the government will not approve or one of the parties will get cold feet. This is especially true of hostile takeovers, which this offer is similar too, because the target is by its nature an unwilling participant.

      As for why Microsoft is not buying in the open market, the short story is that there are a lot of rules and regulations that would just make it a stupid idea. For example, their are lots of disclosure rules that go into effect as an individual (or corporation's) stake in another company increases. Since Microsoft cannot buy all of Yahoo!'s shares on the open market all at once, it would have to fulfill these requirements and essentially announce to the world that it is acquiring Yahoo! before it has done so. This would probably cause a lot of investors to hold out from selling in an effort to get Microsoft to pay more for their shares. If Microsoft is far enough along in its purchases, it would have to capitulate because the cost of backing out and dumping all of its shares would be too high.

      That's where the risk arbitrageurs step into the picture in a funcitonal way. Microsoft essentially announces what it will pay. All of the antsy Yahoo! shareholders sell to the arbitrageurs who then must try to help the deal close so they can make their money. This effectively allows Microsoft to offer $31 a share without incurring any of the hold out risk inherent in trying to buy in the open market.
  • Regulators? (Score:4, Informative)

    by TubeSteak (669689) on Saturday February 02, 2008 @11:40AM (#22273142) Journal
    Will the regulators let this happen?
    If MS buys Yahoo, the top 5 search engines will becomes the top 4.

    Not to mention that many of the 2nd tier search engines are "powered by" Yahoo & MSN
    • by STrinity (723872)

      Will the regulators let this happen?
      If MS buys Yahoo, the top 5 search engines will becomes the top 4.


      Considering that one of them is so far ahead of the others that people use its name as a verb for "Internet search," I don't see why the FEC would object to two competitors merging to become a stronger alternative.
  • wait (Score:2, Funny)

    by ionix5891 (1228718)
    so who do we hate this week here on /.

    microsoft or google?
  • by perlchild (582235)
    I wonder if any of Google's customers go there because it's more competitive, has better mindshare, etc... Or if a part of Microsoft's insuccess lies in its reputation, etc... Meaning if they are trying to go anywhere but Microsoft, merging with Yahoo would just doom Yahoo too...

    Any thoughts?
  • by Progman3K (515744) on Saturday February 02, 2008 @11:44AM (#22273178)
    they stopped giving what the CUSTOMER wants.

    Whenever you push an agenda different from the client's, the client walks.
    • They never did that (Score:5, Informative)

      by Tony (765) on Saturday February 02, 2008 @02:33PM (#22274520) Journal
      Microsoft was never about giving the customer what they wanted. Microsoft has been about making sure the customer only had access to Microsoft products. That meant they had to have products in the first place, sure; but Microsoft has manipulated the market so they were the only ones available. (This is heavily documented in their anti-trust trials).

      They started doing this once IBM gave them an exclusive contract to provide MS-DOS for the original IBM PC. By the time Compaq and co. had their clones ready, MS-DOS was the only game in town. Later, when DR-DOS came around, it started making *serious* inroads. Microsoft then made per-processor deals with the OEMs, making sure a copy of MS-DOS was sold with every processor, whether it *shipped* with the processor or not. This made it economically difficult for the OEMs to sell DR-DOS instead of MS-DOS. (DR-DOS was *far* superior to MS-DOS.)

      It's these bundling deals that kept Microsoft at the head of the market all those years. Once they got a significant lead, it became impossible for any other competitor to create a competing product.

      Microsoft was helped by some incredibly stupid decisions by other companies, true. (SEE Novell, and their handling of Word Perfect and Novell Office, for instance.) However, it' Microsoft's ability to warp the market to their own ends that has kept them on top, *not* giving the customer what they wanted. (They were so successful at market manipulation, the customer often never knew there *was* an option.)

      When there's only one trail, the customer can't walk. That's what monopoly abuse is all about. We don't call it "lock-in" just to amuse ourselves.
  • SOP (Score:5, Insightful)

    by the_skywise (189793) on Saturday February 02, 2008 @11:46AM (#22273186)
    This has always been Microsoft's way. They bought "Word" and (depending on how you interpret it) they bought "Dos".

    Not 10 years ago people were proclaiming the death knell for Microsoft because it missed the internet... then they bought "Internet Explorer" and... well you know how that turned out.

    Microsoft has always made stumbles. Where they've excelled is their resilience to find the right solution and implement it in a good enough/cheap enough fashion that it doesn't make sense to buy the other guy.

    Can they do this against Google? From a customer stand-point I'm not sure. I'm not just going to use Microsoft Search(tm) over Google so long as Google remains free and provides decent results. So Microsoft can't really win there. But they can steal ad revenue from Google by making their business/web-ads side more appealing to businesses. Get that, control the ad market and you'll be able to embrace and extend Google...

    But this is a sign that Microsoft is "failing"? Not on your life...
    • by Alomex (148003)
      They bought "Word" and (depending on how you interpret it) they bought "Dos".


      They didn't buy Word and anyway you interpret it, they bought Dos from Patterson (for about $50K upfront, and eventual payments of $500K to resolve some licensing issues later on).

      then they bought "Internet Explorer" and... well you know how that turned out.

      They bought the code base of Spyglass. They would have been better off starting from scratch, so the first IE based on Spyglass was a joke, the second IE based on internal deve
    • Re:SOP (Score:5, Insightful)

      by waa (159514) on Saturday February 02, 2008 @12:25PM (#22273460) Homepage
      I once saw a site that had a detailed list of all the companies and the technologies that Microsoft has purchased over the years. The list was staggering...

      In addition to DOS and Word that you mentioned, one thing that people might not know is that Microsoft bought a company called "Webcorp" in the '89-'91 range (I can not recall exactly). This company had created a rather slick Lantastic-like networking system on top of DOS. Being a BBS sysadmin (sysop in those days...) I was one of their beta testers and as a thank you for being a beta tester, I was always given the latest version of their software and watched it grow fro "functional" to "excellent."

      long story short... Microsoft bought Webcorp and the Lan technologies they had created and hey... What do you know... Suddenly, out of Windows 3.1 was borne "Windows For Workgroups". Now with NETWORKING!... Another Microsoft triumph and INNOVATION...

      The point of my long winded story? Microsoft is _NOT_ an innovator. Unless you define innovation as: a. Purchasing companies, or licensing technologies in order to incorporate them into an existing product or b. Purchase companies or technologies only to shelf said technology in order to promote their less capable, more buggy product.

      I for one have been watching this endless cycle for years now (since '89 or '90) and have been fed up with it since just about that time. :(

      • Re:SOP (Score:5, Insightful)

        by Khuffie (818093) on Saturday February 02, 2008 @12:47PM (#22273656) Homepage
        May I ask...who cares if Microsoft is not an innovator? In your example, Microsoft recognized a technology that, per your admittance, is excellent. So instead of them developing their own networking system for Windows, they realized that incoporating an already developed and tested system is far better for them and their users.

        Everyone purchases other companies or licenses technologies from them. Guess what? OS X? Built off BSD and NextOS. Safari? Built off webkit. Google purchased Picasa, Sketchup and Earth Viewer (ie Google Earth). This 'endless cycle' you speak off is not limited to Microsoft.
        • Re: (Score:3, Insightful)

          by Skreems (598317)
          And hell, being bought out by Microsoft has become a tradition. There are dozens of startups out there doing their damndest to TRY to get bought out by Microsoft. If you can prove an idea in a startup and get enough word of mouth to get noticed, it's a much, much quicker paycheck to let Microsoft buy you. No slow building of your customer base, no bugfixes, no updates to support new APIs in Windows. Just a quick windfall payment, and then all those pesky details become Someone Else's Problem.
      • Re: (Score:3, Informative)

        by man_of_mr_e (217855)
        According to this article:

        http://www.betanews.com/article/1079773789 [betanews.com]

        Microsoft bought Webcorp in 1993, Windows for Workgroups was first released in October of 1992 according to this document http://support.microsoft.com/kb/126746 [microsoft.com] from MS. WfWG was in development for more than a year before they bought Webcorp and was released at least several months before.

        What's more, WfWG was not just an add-on for Windows. It was really the entire basis of Windows 95. It introduced the VMM model that Windows 95 was bas
    • by RattFink (93631)

      Not 10 years ago people were proclaiming the death knell for Microsoft because it missed the internet... then they bought "Internet Explorer" and... well you know how that turned out.

      It turned out not that great for them, the part where they actually make money, the server market has played out miserably for them because of that mistake. Yes they do have a high install rate of the browser but that is only due to aggressive bundling of it in windows, something that you cannot do with a search engine.

    • Re:SOP (Score:4, Interesting)

      by xtracto (837672) on Saturday February 02, 2008 @01:26PM (#22273978) Journal
      This has always been Microsoft's way. They bought "Word" and (depending on how you interpret it) they bought "Dos".

      Exactly what I thought, this is what Microsoft knows how to do best. They bought DOS (CP/M QDOS), they bought SQL Server, they bought powerpoint (forethought), Fox, Sourcesafe, Visio, etc... among LOTS [wikipedia.org] of other companies.

      Microsoft does is not a "software" company per-se, it is a technology company which objective is to buy out the competition. They are just doing what they know to do best!
  • Want to know why Google is beating MS, I mean besides the fact their search engine rocks?

    Google gives you all this cool stuff for free, with minimal ads, or none at all. Gmail, Google Chat, Google Earth, etc, and all its all class platform. They don't try to lock you into IE and Windows Media. It isn't perfect but its far better than MS which makes no effort.

    On top of this is the perception that Google is a cool company that really looks out for its users. People see MS and wonder what pile of horse puc
    • by thewiz (24994) *
      Agreed. Don't forget, however, that Microsoft has a habit of MS-itizing everything they buy. Remember Hotmail? It originally ran on a Un*x-variant and Microsoft had many problems with the switchover to NT. Yahoo runs it's services on FreeBSD and Apache; I have the feeling that, if the deal goes through, we'll see similar issues. Doing so will probably drive YahooMS! into a lower rank or destroy it all together.

      I'm hoping that Yahoo! sees the light and doesn't accept the offer, EVER!
      • by drspliff (652992)
        Honestly, I don't think they have a choice, they can either accept the offer.. or be witness to a hostile takeover.
    • Re: (Score:3, Interesting)

      by the_rev_matt (239420)
      Actually I think it was Rob Enderle (of all people) on NPR this morning pointing out that Google has their ad network all over the web, whereas the Yahoo/MSFT portal model requires users to go to them. It's a merging of dinosaurs who can't adapt without starting over from scratch. Combined they barely have 20% of the market to google's 60%.
    • Re: (Score:3, Insightful)

      by STrinity (723872)

      Want to know why Google is beating MS, I mean besides the fact their search engine rocks?

      Because Sergei Brin looked at the way MS got pilloried in the mid-90s and decided that Google should have a propaganda arm devoted to convincing people that the company isn't evil. Thankfully for Brin, people are gullible and will believe simple assertions of Google's goodness even after Google reaches the point where they have more information aggregated about every person on Earth than the NSA could ever dream about

  • Buy buy buy, Microsoft simply can't come up with a winning online service to rival Google, they have to buy the competition.

    It makes you wonder if they should forget software and make more hardware as the XBox 360 is fairly popular. But given the failure rate on the early 360s it would probably lose them even more money in warranty claims.

    They're still living in the 1990s, they'll have to cut costs and start to shrink the company, it won't grow and make substantial profit for shareholders. Ballmer further t
  • Overconfidence (Score:5, Interesting)

    by Alomex (148003) on Saturday February 02, 2008 @11:50AM (#22273212) Homepage
    Microsoft has been overconfident in its approach to the internet from day one. First by believing they could deploy an alternative, then ignoring the Netscape threat early on instead of buying them outright (back when they were still up for sale for a few hundred million). They repeated the same mistake with the search engine market, with a myriad of failed search engine initiatives from within rather than buying outright an external player.

    About a decade ago, Microsoft balked at paying $8M for one of the key players, about three years ago, they were wincing at spending $20M in a decent search engine effort. "You'll end up paying billions for a search engine company if you don't spend this money now", was my advice. They didn't listen and here we are $46 billion dollars later after the FAST and Yahoo! acquisition.
  • by Scareduck (177470) on Saturday February 02, 2008 @11:57AM (#22273246) Homepage Journal
    Salon had a very similar piece today [salon.com] in its "How The World Works" column by Andrew Leonard. Leonard can be a very dogmatic statist when it comes to economic policy, but I think he pretty much nailed the tenor of this deal:

    Except that this Microsoft bid, made at the late date of February 2008, even if it can't be considered a move made out of desperation, is at the very least a move generated by massive frustration. Try as it might, Microsoft cannot gain ground on Google -- the company that currently claims ownership of the soul of Silicon Valley [salon.com] (as in -- we can have fun and make a bazillion dollars). So where once a Microsoft bid for Yahoo would have been seen as presaging the long-awaited total triumph of Gates and Co. over the freewheeling Valley, now all it does is prove that winning every battle it fights is no longer a Microsoft birthright. Microsoft is playing catch-up from further behind than ever. The future requires a major beachhead on the Web. Microsoft, after at least a decade of Herculean effort, still doesn't have one. So it wants to buy the biggest one it can find.
    I wonder what effect a Microsoft buyout of Yahoo would have on various open-source initiatives Yahoo is involved in. Microsoft wouldn't be so dumb as to kill them off immediately -- that would be bad press, and possibly invite retaliation from the next Attorney General -- but their history at Hotmail indicates a revulsion to all things open source.
  • by MLCT (1148749) on Saturday February 02, 2008 @12:02PM (#22273282)
    He is now in the driving seat. While MS have always bumbled along with things I now see this getting a bit personal and a bit more precarious. Ballmer is an interesting character. A lot on here (probably rightly) have characterised him as mental. He seems like a deranged and obsessed guy. I mentioned MS "bumbling" along because that is what they did under Gates (sure they embraced, extinguished), but they never took vast risks. Now that Ballmer is in charge I can't shake the feeling that MS's future is a lot more risky - for Ballmer's personal obsession with "destroying" Google could take MS into a very different neighbourhood from Gate's more careful approach. Ballmer is now starting to risk the family silver on beating Google. You only have to look at the comments from the conference call yesterday to realise it - "The market continues to grow, and the leader continues to consolidate position," - never mentioned them by name, but he is clearly obsessed about Google - if I were a shareholder I would be worried that his personal obsession is impairing his business decisions.
    • by Shados (741919)
      Correct. Average slashdotters may agree, but aside for the whole monopolist part (which, I'll agree, is a pretty big issue), Microsoft has been a decent company, deliver quite a few decent products (2 bads for each good, but the good ones are really good), and I can't shake the feeling that Ballmer is going to make em lose it all. Beating Google is just not worth it. Stop it Microsoft.
    • by Dystopian Rebel (714995) * on Saturday February 02, 2008 @01:20PM (#22273936) Journal
      The Ascension of Ballboy to the Throne of Microsoft is the clearest sign that Microsoft has weak senior management and is embarrassingly impoverished in vision.
      Ballboy's unwillingness to speak the name of the "fucking guys" he was supposed to "kill" years ago shows how charmless and obsessive he can be. He is like a less personable Joseph Stalin with no big fur hat. His reign of terror will come to an end when Microsoft's shareholders start worrying about ~their~ value.

      Microsoft has muscle, big teeth and claws and a walnut-sized brain. People like a company with cool ideas and vision. Google hits many notes perfectly. Apple hits some notes extremely well. Sun can sing but its ears are plugged. IBM gave up singing and now likes to set up the microphones. And Microsoft is the Michael Bolton of software.

  • by G4from128k (686170) on Saturday February 02, 2008 @12:03PM (#22273292)
    Looking at the market's response to this announcement, it seems that the merged YHOO+MSFT are worth at least $6.5 billion less than they were as separate entities. Yesterday MSFT lost $19.3 billion in market cap, but YHOO only gained $12.8. (If you factor in NASDAQ's overall rise, then these numbers are even worse -- suggesting perhaps a $9 billion loss of value from the merger.)
  • by iknownuttin (1099999) on Saturday February 02, 2008 @12:09PM (#22273330)
    Exxon Mobile. They're a bit more profitable than Google (ROE: 33.33% (XOM) vs. 22.74% (GOOG))and the synergy towards a truly evil empire would be achieved faster.

    I think, I need to send my resume over to MS for the position of V.P. of Evil Strategy because they're just not cutting it anymore. I mean, really, Google is still around!? Geeze!

  • But is there any way possible Microsoft can buy Yahoo and not destroy it? Converting all of the Yahoo services to the Microsoft platform (just the red ink this will make Microsoft bleed boggles the mind), hordes of the employees being laid off or leaving, every open source project they currently support fleeing to greener pastures (hint Google, you might consider offering them a safe place to flee to?) And any service interruptions will cause viewers to go elsewhere (Google). Is there any way possible this
  • by victorvodka (597971) on Saturday February 02, 2008 @12:24PM (#22273442) Homepage
    Their comeuppance is happening at the same time, so (when I'm not thinking consciously) I have trouble distinguishing in my mind the feeling of schadenfreude I feel for Microsoft (particularly the Vista OS) from the one I feel for Giuliani.

    There's no way Microsoft can catch Google just like there was no way anyone could catch Microsoft. That train has already left. The only way to catch Google is for someone to develop something entirely new that can be dominated with new network effects. Something new like Facebook or Ebay.

  • by C0vardeAn0nim0 (232451) on Saturday February 02, 2008 @12:24PM (#22273448) Journal
    When microsoft started, it was a young company, with a new view of technology. they "got" that microcomputer toy thingie a lot better than traditional mainframe and minicomputer makers like IBM, DEC, honeywell, etc. this allowed them grow exponentially, based not only on their own capabilities, but also on the series of mistakes and fuckups of the competition.

    well, now it's against them. now THEY are the "traditional" guys with a backwards vision of computers, while google, yahoo and - surprisingly - apple have a grasp of how people see the digital world. google and yahoo caters to the connected crowd, and apple to the people that sees digital gadgets as fashion statements, two things MS with can't get a foot on.

    of, course, MS is not going away anytime soon, the same way IBM, unisys, bull and HP are still around. what they need to do is recognize that they're pretty much irrelevant in those two markets, find a stable but big niche and stay on it. we don't see HP or IBM making atempts on the on-line or digital fashion markets, yet they're still huge and profitable.

    so, here's a tip for microsoft: leave online services and fashion for the likes of nokia, apple, google, yahoo, etc. and go take care of what you do well: corporative operating systems like win2k (the only version of windows i dare saying i liked) and office tools.
  • If I had owned any YHOO I would have sold late yesterday. At this point they could withdraw the bid, various people have already made craploads of money.
  • ...the MS teams who have been slaving on Search, Advertising, and Windows Live feel? Ballmer has just admitted that everything they did was so shit that the only way to fix the situation is to spend nearly 50billion on acquiring another company.
  • Put ads on their knowledgebase site.
  • I just about choked when I heard the news of this acquisition. We just migrated to the Zimbra Open Source Edition at my company. I adore this product. Now Microsoft will own Zimbra, which is a direct competitor to Exchange. This sucks royally. In the past they have - to a degree - continued to develop competing packages (Fox Pro vs. Access for instance - I know, not a real fair comparison). How will this play into an open source acquisition? My only question is can Zimbra, if necessary, be forked?
  • They seem to be losing profitability as well. Probably MS sees a turn around soon, but they may be paying too much. I Yahoo continues to slide MS may be able to pick up Yahoo at a better price.

    http://www.thestar.com/Business/article/298769 [thestar.com]

    BTW, MS is very much following the GM model. A bunch of investors saw the automobiles as the next big thing and pasted together a mega car company by buying up smaller compaines (Pontiac, Chevy, Buick etc.). Nothing new or innovative here.
  • So if YAHOO says "Thanks, but NO thanks" Microsoft could use that money to replace chairs.
  • Where is Google's OS? Where is Google Office?

    MS should be putting 44Bn into improving its products instead of buying failing web companies in order to compete with a company which has yet to enter MS's market.

    The bid does show a Microsoft on the ropes, but from bad management not competition from Google.

    TWW

  • "Don't be evil" (Score:5, Insightful)

    by Dammital (220641) on Saturday February 02, 2008 @01:42PM (#22274110)
    A lot of people have faith in Sergey Brin's corporate motto. The creation of class B stock at Google, which gives Sergey and Larry ten votes for every share, ensures that they will be able to keep Google from being corrupted, so long as they themselves remain uncorrupt.

    Microsoft has no such public image. They were found [justice.gov] to use their monopolist position to kill Navigator and hurt Java. Their CEO is belligerent and takes shots at the FOSS community. More recently they've tried to buy the ISO vote for OOXML [os2world.com]. They don't trust their own customers, as evidenced by periodic, rude and disruptive Genuine Advantage challenges [wikipedia.org].

    We're about to enjoy a big, fat, open class C block in the US spectrum, courtesy of Google. They purchased Android, and then opened its SDK to the world. In contrast, Microsoft has promoted hardware restrictions [wikipedia.org], media restrictions [wikipedia.org], and discourages use of unemcumbered codecs such as Ogg Vorbis.

    Which company would you rather do business with, all things being equal? That is Microsoft's problem. They can spend all the $billions they like on buying market share... but they can't buy a reputation. When the FTC clears the Yahoo deal... Microsoft will still be Microsoft.

Swap read error. You lose your mind.

Working...