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Microsoft Businesses The Almighty Buck The Internet Yahoo!

Yahoo Deal Is Big, but Is It the Next Big Thing? 159

Posted by Soulskill from the keeping-up-with-the-googses dept.
mattsgotredhair brings us a NYTimes article discussing how Microsoft's bid for Yahoo contrasts against one of the core philosophies of Silicon Valley: looking forward. From the Times: "Microsoft may see Yahoo as its last best chance to catch up. But for all its size and ambition, the bid has not been greeted with enthusiasm. That may be because Silicon Valley favors bottom-up innovation instead of growth by acquisition. The region's investment money and brain power are tuned to start-ups that can anticipate the next big thing rather than chase the last one. 'This is the very nature of the Valley,' said Jim Breyer of the venture capital firm Accel Partners. 'After very strong growth, businesses by definition start to slow as competition increases and young creative start-ups begin to attack the incumbents.'"
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Yahoo Deal Is Big, but Is It the Next Big Thing? More

Yahoo Deal Is Big, but Is It the Next Big Thing?

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  • Could it be .... (Score:1, Insightful)

    by Anonymous Coward
    That it ends up hurting the US economy ?

    • Re:Could it be .... (Score:5, Interesting)

      by irtza ( 893217 ) on Sunday February 03, 2008 @12:05PM (#22282452) Homepage
      I doubt this will impact the economy much. Granted that if this deal goes ahead, many redundant jobs may be cut, but in the end I think that market forces would have forced further contraction in either Microsoft's own web initiatives or on yahoo's causing these people to be removed from there job anyways - look at the layoffs at yahoo that have already occurred. Despite my distaste for MS, this would probably be beneficial to the US economy. The real question is if there is still enough name recognition and resources within yahoo to merit such a move.

      Unfortunately for MS, the real threat to Google will most likely be from another startup kind of like what this article is getting at. What I find intersting is that if the patent system actually worked, one of the early search engines such as web crawler or alta vista would still control the market and companies such as Google and MS would have had to bow out secondary to valid patents. - and this would allow these companies in theory to grow their technology - plus they could use the patent clout to recruit the appropriate talent (in theory).

      In the end the thing that will hurt the US economy the most is globalization and the realization that intelligence and the ability to "create" isn't as valuable as it may seem. It can be converted to a commodity along with almost everything else.

      If soft engineers in this country want protection, they will most likely need a union and a licensing exam like lawyers and doctors

      • Re: (Score:3, Interesting)

        by OneFix ( 18661 )
        If MS gets rid of a bunch of the Yahoo employees like some people are suggesting, Google will likely start throwing job offers their way.

        From what I can tell, some of their FOSS developers may already be getting offers from Google, since the new Yahoo will likely be at the best unrewarding for those developers.

        Which brings me to a question...what happens to Zimbra? Which is now a Yahoo product and a major competitor to Exchange...

  • wrong city (Score:5, Funny)

    by User 956 ( 568564 ) on Sunday February 03, 2008 @09:25AM (#22281610) Homepage
    That may be because Silicon Valley favors bottom-up innovation

    No, that's San Francisco.

  • What about Google? (Score:5, Funny)

    by aussie_a ( 778472 ) on Sunday February 03, 2008 @09:29AM (#22281622) Journal

    That may be because Silicon Valley favors bottom-up innovation instead of growth by acquisition
    This explains why Google is so unpopular in Silicon Valley.

    • Re: (Score:2, Interesting)

      by ishobo ( 160209 )
      The valley does indeed favor bottom-up innovation, because that generates properties for acquisitions. Most companies in Silicon Valley would not exist in the form they are today if it were not for acquiring other companies or product lines - Oracle, Marvell, Sun, AMD, National Semi, HP, and yes Google.

  • I really do not get it... (Score:5, Interesting)

    by tgatliff ( 311583 ) on Sunday February 03, 2008 @09:32AM (#22281628)
    How is this the next big thing when MS buying Yahoo shows how frustrated they are with their MSN Live initiative? Yes, I definitely think that buying Yahoo was a smart move at a great longterm price, but other than them building it directly into Vista 2.0, I dont see how much more good it will do them. The move was simply them "buying" marketshare in an attempt to trump Google. Considering that Yahoo has already shown that they cannot compete with Google, I suspect it will turn out just like the early days of the Compaq / HP deal in relation to Dell. This is just my opinion, however...

    • Re: (Score:2, Insightful)

      by Anonymous Coward
      Ballmer wants market share. Logic be damned!

      • Re: (Score:2, Insightful)

        by ergean ( 582285 )
        And this is the stupidest way to get it.

        All they get by this is a lot of duplication of services, they probably will attempt to merge them... and drive all those who never liked Hotmail and/or MSN to say pas and go for Google.

        So if they get yahoo they should not count on its market share.

        I'm not against MS, but I don't like they way they are present on the web.
        Just for fun... to see what I'm saying - go to http://microsoft.com/ [microsoft.com] with firefox and then with IE and watch for the differences...
        If for the front p

        • Re: (Score:3, Insightful)

          by Locutus ( 9039 )
          This is the ONLY way they get marketshare when they can't get it by leveraging their position on the desktop. And look what marketshare purchases did hotmail.com. They took those numbers and tacked them onto their new-ish MS Exchange numbers and for a couple of years drilled it into the market that Exchange was a contender against Lotus Notes. Purchased marketshare allows them to purchase mindshare. While that has never produced profits for them, it has controlled their competitors growth and therefore cont

    • Re:I really do not get it... (Score:5, Interesting)

      by TheRaven64 ( 641858 ) on Sunday February 03, 2008 @09:40AM (#22281662) Journal

      I suspect it will turn out just like the early days of the Compaq / HP deal in relation to Dell
      While the early days didn't go so well in that deal, HP now has 17.6% of the market while Dell only has 13.9% [itworld.com].

      • Re:I really do not get it... (Score:5, Insightful)

        by Anonymous Coward on Sunday February 03, 2008 @10:12AM (#22281808)
        You can't compare the HP/Compaq merger to a Microsoft/Yahoo! merger. First of all, infrastructure plays a much greater role in the Microsoft/Yahoo! scenario. Yahoo! is heavily run on open source software, including PHP, FreeBSD and Linux. It won't look good for Microsoft if so much more infrastructure is running on software they have belittled for years now.

        So either they'll have to do like they did with Hotmail, and let it run on FreeBSD until they've basically re-written in from scratch to use their technology. Of course, that will be very costly, and likely nowhere near as good as the original (like we've seen with Hotmail). They'll be in the same position they are now, except having spent far more money.

        The HP/Compaq merger was far more about combining product lines, management teams, R&D, support teams, etc. That is, it was more about an organizational merger, rather than a technological acquisition.

        • Re: (Score:2, Insightful)

          by berchca ( 414155 )
          The best comparisons I can think of are other major software mergers: IBM and Lotus, SUN and Netscape Server Division. Of course, both of those were massive failures. It seems to come down to this: a company is ailing, so another company buys them either thinking they are going to fix them up or cannibalize them.

          I can't see why MS would do a better job of handling Yahoo's business than they did, so while this merger will give MS a boost, it would probably be the end of Yahoo.

          • Re: (Score:3, Insightful)

            by Locutus ( 9039 )
            but profits is not high on the list of goals for the Microsoft/Yahoo deal. HP shareholders were pissed at how it was handled. With this Microsoft/Yahoo proposition, it's all about Microsoft purchasing mindshare and marketshare so they can LOOK like a contender. Right now, Google looks, acts, and is a mighty technical powerhouse and even Wall Street sees this. It makes Microsoft look like an old out-of-touch company and having Gates leave the company this year is not going to help.

            So don't think that ANY Mic

        • Re: (Score:3, Interesting)

          by pallmall1 ( 882819 )

          So either they'll have to do like they did with Hotmail, and let it run on FreeBSD until they've basically re-written in from scratch to use their technology.
          No, they'll just switch to Novell and hail the operation as a great success for interoperability using MS patent encumbered SUSE.
        • Yahoo! is heavily run on open source software, including PHP, FreeBSD and Linux. It won't look good for Microsoft if so much more infrastructure is running on software they have belittled for years now.

          How many visitors to Yahoo! give a flying fsuck about the infrastructure of a web portal?

          • People who make the decision about buying lots and lots of Microsoft software would care what infrastructure Microsoft's version of Yahoo! runs on. They don't have to visit it.

            Same thing as with Hotmail, they got a lot of crap for running that on FreeBSD. Of course, if they do the same thing as they did with Hotmail, step in and screw it up, that'll look even worse than if they just left it as is. This is a lose-lose for them, unless they can actually make Yahoo! better.

        • It's worse than that (Score:3, Insightful)

          by bADlOGIN ( 133391 )
          There are a number of Open Source contributors working for Yahoo and allowed flexibility in the office to contribute
          back to little things like PHP (Rasmus Lerdorf, creator of PHP is an infrastructure engineer), FreeBSD, Apache, and Perl.
          I have trouble seeing these individuals wasting time doing a like-to-like conversion from open to proprietary
          tools and platforms just because there's money waved in front of them. At that point, what Microsoft has purchased
          is yesterdays tools sans the minds that made them w
    • If Yahoo declines any further then Flickr, Yahoo Mail, Yahoo Messenger, Yahoo Groups could be acquired by Google to give them a position in markets where they are now only minor players. Yahoo is worth 100 Doubleclick's [blogoscoped.com], 44 billion for that is a bargin.

    • Re:I really do not get it... (Score:5, Informative)

      by gEvil (beta) ( 945888 ) on Sunday February 03, 2008 @10:24AM (#22281868)
      Yes, I definitely think that buying Yahoo was a smart move at a great longterm price...
      The move was simply them "buying" marketshare in an attempt to trump Google.

      Ummm, you are aware that Microsoft has not actually bought Yahoo, right? MS has made Yahoo an offer. Yahoo has not yet responded to that offer.

      • Re:I really do not get it... (Score:5, Insightful)

        by Herschel Cohen ( 568 ) on Sunday February 03, 2008 @11:04AM (#22282072) Journal
        Well it really was not an offer. As I read it, it was a statement of intent. That is, most likely they plan to acquire shares from holders that are willing to sell directly to MS at a premium. Once a sufficient percentage is obtained they move to take over the company by a proxy vote. Control is final after a positive review by the DOJ and the EU.

        This is a hostile take over where the purchaser could care less what either the board and the management thinks or responds.

      • Re: (Score:2)

        by Skim123 ( 3322 )

        I, for one, hope that the sale doesn't succeed. Yahoo's importance in the online world has steadily been decreasing since the start of this century. I think the best Microsoft/Yahoo merger comparison is the AOL/Time Warner merger, which was a colossal failure. I see the same thing here for MSFT. If they buy Yahoo, I don't expect Yahoo's gradual slide into obscurity to abate or reverse. I'm guessing that five to ten years from now Yahoo will have about as much marketshare and brand recognition in adolescents

    • Re: (Score:3, Insightful)

      by blind biker ( 1066130 )
      Microsoft has what Yahoo alone doesn't: an almost limitless supply of cash. MS can afford to offer deeply discounted prices to advertisers in order to to eat up Google's marketshare. After they "cut off the air supply" (this is a well-known Microsoft expression), they can start making money from Yahoo. It may take several years, but Microsoft is in no hurry, as long as they can continue selling whatever OS they produce.

      • Re:I really do not get it... (Score:5, Insightful)

        by pallmall1 ( 882819 ) on Sunday February 03, 2008 @02:56PM (#22283758)

        MS can afford to offer deeply discounted prices to advertisers in order to to eat up Google's marketshare.
        They can cut the price all they want in order to get more ads and advertisers, but that doesn't mean they'll get more traffic. Marketing is based on the number of people who see the ad and their demographic. If MS cuts the price without a significant increase in traffic, they'll only be reducing the value of their existing base.
        • Well, I imagine they'll have about the current "traffic" Yahoo has currently. That's more than a fifth of the internet eyeballs. That's not too bad. However, I do agree with you: if MS does something to Yahoo (and anything they'd do to Yahoo would be bad), they would lose their current position pretty quickly. It's arguable what MS would/should do to increase their marketshare, but hurting Google would seem like their first goal.

    • Re:I really do not get it... (Score:5, Insightful)

      by Chriscypher ( 409959 ) <{slashdot} {at} {metamedia.us}> on Sunday February 03, 2008 @01:26PM (#22283034) Homepage
      "More companies die of indigestion than starvation."

      ("The HP Way," Hewlett-Packard co-founder David Packard, page 142)

  • Am I the only one that thinks Microsoft's resources would be better spent fixing some of the more serious complaints about Vista? I know they are going to claim "we can handle both the Yahoo acquisition and improve Vista", but they have addressed few of the major issues with Vista even prior to this announcement.

    Ceding any further market share to Apple (or god forbid, Ubuntu) could seriously threaten their most lucrative monopoly.

    • Do you really think those two things have anything to do with each other? You're mixing up two different divisions in Microsoft.

      Also, do you really think that throwing more programmers at a software project will make it be finished faster?
      • With the amount of programmers at Microsoft they would have been better to let multiple separate teams go and build up from an equal base (2000 or xp) and see which is looking and feeling better after 12 months instead of sending an entire division out to work on a single menu item configuration.

        • Re: (Score:2)

          by xaxa ( 988988 )
          I think that's pretty standard Microsoft practise.

          (Source: said by a lecturer at my university who knows some Microsoft UK managers.)

          But compare: "hey guys, the other team have put in X, it looks really cool, can you add that too?" and "guys, the other team already have X, what are you doing?". It would have to be managed really well to avoid pissing off the developers.
    • Fixing Vista would be like closing the barn door after the horse escaped. if microsoft had any good sense they would follow in Apple's footsteps (sortof) and build the next version of windows on top of a BSD flavor...

  • This is what MS did before and it worked back then (Score:5, Insightful)

    by donscarletti ( 569232 ) on Sunday February 03, 2008 @09:37AM (#22281646)
    It worked when Microsoft bought DOS, it worked when Microsoft bought Hotmail, it's current biggest web service. Microsoft does try to innovate, but most often that stuff just falls flat on its face, when Microsoft buys other people's products though, that's when they hit a winner. Saying that the most wealthy, successful software company in the world is doomed to failure for going against silicon valley reasoning is futile when that's what they've always done and made more than anyone else while doing.

    • Re:This is what MS did before and it worked back t (Score:5, Insightful)

      by Herschel Cohen ( 568 ) on Sunday February 03, 2008 @11:19AM (#22282164) Journal

      Saying ... most wealthy, successful software company in the world is doomed to failure ...
      I don't read it that way, however, in business studies attempts to merge companies with differing cultures can devastate the acquiring company. Moreover, the business being fast paced can doom the pursuer to a more distant relative standing than the sum of the two companies' starting market shares. Take one of the examples you cited: HotMail, how long did it take MS to get that right? The danger is they may not have the time to get it right.

      I really doubt that MS will disappear due to this or other missteps, but that does not mean the probabilities are nil to none.

    • But they already have Search (Score:5, Insightful)

      by msgmonkey ( 599753 ) on Sunday February 03, 2008 @11:23AM (#22282180)
      From what I can remember the aquisitions though have always been for technology they don't already own or do own but inferior. If it goes through they get Yahoo market share, but if they tinker with Yahoo too much most likely people will leave Yahoo since if they wanted to use Microsoft Search they would do. Market share is all well and good, but even with their combined market share they would still be a long way behind Google and Yahoo has nothing that I can see that could be classed as a "Killer App". If the sale does go ahead what is going to happen? Are they going to call it Microsoft Yahoo and have the run side by side with their current offerings? Also Yahoo is also a failing company with no direction, they even brought back an original founder to get things moving again but it has n't made any difference. Personally it does n't make any sense to me, but maybe I will be proved wrong time will tell.

      • Re: (Score:2)

        by coaxial ( 28297 )

        If it goes through they get Yahoo market share, but if they tinker with Yahoo too much most likely people will leave Yahoo since if they wanted to use Microsoft Search they would do.

        All the search engines pretty much give the same results. The differences are at the margins. What people consider quality results is actually personal bias.

        There was a study a few years ago, sadly I can't find it right now (It's probably somewhere in portal.acm.org .), where the researchers had people rate the quality of the results for for different searches. The trick was that all the searches would go pass though some proxy so that the page displaying the search form/results wasn't actually the site

      • I will say this - I've had a Yahoo! e-mail account since roughly 1999. If Microsoft does manage to buy Yahoo!, I will take my services elsewhere - and yes, I pay for my account. The pain of moving away from one centralized account to something else (likely getting my own domain and paying for a hosting service, which would be a lot better than what I have now) would be worth not supporting Microsoft.

    • Re:This is what MS did before and it worked back t (Score:4, Insightful)

      by jonbryce ( 703250 ) on Sunday February 03, 2008 @11:25AM (#22282198) Homepage
      But Microsoft usually buys really small companies with good products where they can use their marketing skills to build up market share. Yahoo is a bit different to their usual takeover target.
    • Hotmail the biggest web service? Just cause you have 5 billion spam email accounts doesnt make it the biggest, Id say its one the biggest used for disposable email spam accounts. Id say gmail is trumping Hotmail.
    • That's mostly true. However... Yahoo's another thing altogether.

      The products you mention there were innovative. They were from small companies that were light enough to be easily assimilated. Yahoo is neither of these things. The company itself is as bloated and dysfunctional as its products. It was dying, not innovating. They've been in steady decline for at least 3 years.

      If MS doesn't buy them they would go the way of AOL within 5 years. The pool on the original article got it spot on this is two di

    • it worked when Microsoft bought Hotmail, it's current biggest web service
      I think Hotmail shows perfectly what may happen. Hotmail went from being the clear leader to an also-ran. MS was slow to expand the service (1GB from Google while still 2MB at Hotmail) and failed to understand that an email service has to be truly neutral while effectively stopping all SPAM (including unwanted emails from MS).

    • for some definition of "work" (Score:4, Informative)

      by nguy ( 1207026 ) on Sunday February 03, 2008 @03:30PM (#22284068)
      it worked when Microsoft bought Hotmail

      Is Microsoft making money off Hotmail? Is Hotmail inducing anybody to buy Windows or Office? If not, it was a waste of money. And I don't think it is: Microsoft lost $77m on MSN in 2006.

      Saying that the most wealthy, successful software company in the world is doomed to failure for going against silicon valley reasoning is futile when that's what they've always done and made more than anyone else while doing.

      Microsoft is making money with their near monopoly: Office and Windows. Anything else is negligible or a money loser.

      http://seattlepi.nwsource.com/dayart/20041022/MicrosoftResults.gif [nwsource.com]

      http://www.newrowley.com/images/blog/2006/msft_profits606.jpg [newrowley.com]

      It's a joke really. Nothing the company is doing is working. Even Xbox only has high revenue because it's subsidized so heavily and the company is bleeding money on it.
      • Correction: The chart you posted shows MSN *making* $77m. More than last year. It also shows that losses across the board are lower, and profits across the board are higher. You can see why Microsoft feels it can be aggressive. They're in great financial shape, all things considered.

        • Re: (Score:2)

          by nguy ( 1207026 )
          Correction: The chart you posted shows MSN *making* $77m.

          That's the 2004 chart. In 2004, they made $77m, in 2006, they lost $77m.

          You can see why Microsoft feels it can be aggressive. They're in great financial shape, all things considered.

          I think Microsoft is being aggressive because every effort they have started to make a big business out of things other than Windows and Office has failed, despite throwing huge sums of money at it. And with Vista being such a dud and their loss of ability to control the

    • Saying that the most wealthy, successful software company in the world is doomed to failure for going against silicon valley reasoning is futile
      It is not the strongest species that survives but the one most responsive to change.

      Microsoft is by far not the first to change nor is it particularly good at it.

  • Is Silicon Valley right? (Score:5, Interesting)

    by Mr. Underbridge ( 666784 ) on Sunday February 03, 2008 @09:38AM (#22281652)

    Sure, Silicon Valley VC folks love startups, because they get a piece of the action. Heck, they were happy as pigs in shit around 1998, despite the fact that about 1% of those startups had any hope of seeing a profit. But it doesn't mean that MS+Yahoo is destined to lose, simply because they're not the chic pick anymore.

    None of that has any bearing on whether MS+Yahoo can beat Google or any of the hordes of little companies coming from Silicon Valley.

    • Re: (Score:3, Insightful)

      by Anonymous Coward
      Indeed. The Silicon Valley VC philosophy seems to be:
      1. Invest in 10 startups while they are cheap.
      2. Push them grow as fast as possible.
      3. One in ten of the startups make it, and the rest implode from capital and personnel bloat.
      4. Cash out of the one successful startup for 20x the initial investment.
      5. Go back to step 1.

      Certainly, this is a money-making strategy for the VC. It's not necessarily good for the 9 failed businesses, some of whom might have been profitable if they had taken a more conserva

  • Other reasons for not being warm to the reception (Score:5, Interesting)

    by downix ( 84795 ) on Sunday February 03, 2008 @09:47AM (#22281696) Homepage
    Microsoft has only $17 billion in cash and easily liquidatable shares (almost all MSFT stock). A $44.6 billion bid requires them to "print money" ie Shares. This deal is absolutely horrid for any responsible stock analysist or stockholder for either company. WHat Microsoft is basically offering is to produce new shares, diluting ownership for all involved, which when paired with the rapid selloff upon deal conclusion, will drive the price of the stock downward even moreso than it has been since (It still hasn't recovered from the recession of '01). Add in that their operating cash is mostly stocks which would be driven down by this, you're looking at the potential for a bite more than they can chew.
    • It's only dilutive if Yahoo! is worth less than $45 Billion. The drop in the stock price is an indicator that some people think so(especially short term).

      They currently have ~$1 billion a month in cash coming in, so even if it is a complete failure, they will have paid for it in a year or three.

      • Re: (Score:2, Informative)

        by downix ( 84795 )
        $1 billion gross - $1.1 billion cost == net loss of $100mil a month, which is what you are finding if you check on their growth charts since 2000.

        Only way for your math to work would be for them to cancel all R&D, tech support, and shut down every server, laying off everyone.

        • Re: (Score:2, Informative)

          by maxume ( 22995 )
          Where are you getting your numbers? Here are good places to look for the net income for the last quarter and last year:

          http://www.microsoft.com/msft/earnings/FY08/earn_rel_q2_08.mspx#income [microsoft.com]
          http://www.microsoft.com/msft/reports/ar06/staticversion/10k_fh_fin.html [microsoft.com]

          I see ~$4 billion for the quarter ~$12.5 billion for the year(2006, they have not reported 2007 yet).

          Note that those numbers are after taxes and such, so they are the 'net' numbers, the operating income is somewhat higher.

          Maybe you were talking about

  • More criticism... (Score:5, Informative)

    by Anonymous Coward on Sunday February 03, 2008 @09:48AM (#22281704)
    Many investors aren't happy.

    http://www.bloomberg.com/apps/news?pid=email_en&sid=am1odVZXMwjk [bloomberg.com]
  • I was inconvenienced enough when I had to switch from Hotmail to Yahoo mail. Yahoo has been my primary spam account (meaning I used to to register an email for all the websites I visited, but I still occasionally scan through emails there) for years now...

    It was really convenient with fetchyahoo.pl ... Yahoo's spam filters (which were pretty good compared to most of the other services I've tried) would have a first pass at it before my computer ran an additional pass. I'm guessing that functionality won't
    • same here

      You have 13017 unread messages: Inbox(7395), Bulk(5622)
    • Comment removed based on user account deletion
    • Hotmail went way downhill after their acquisition, not just because they switched their servers from FreeBSD to Windows server, but the spam filtering got really weak and they added plenty of their own spam.

      Hotmail's spam filters back in the day got worse because spammers got smarter. Hotmail these days has excellent spam filtering. It would be really weird if they bought yahoo mail and made its spam filters worse than hotmail on purpose, thereby decreasing the value of their purchase.
      • I expect you would end up going to mail.live.com and logging in with a yahoo.com address and password.

        Having said that, if the anti-trust authorities in the US and EU do block the deal, it is most likely to be on the personal email provider market. Possibly they would end up having to sell the email and messenger services to another company for the deal to go through.

  • Wha? Isnt being acquired the dream ? (Score:5, Interesting)

    by 140Mandak262Jamuna ( 970587 ) on Sunday February 03, 2008 @10:06AM (#22281780) Journal
    The techies and engineers might respect the startups, the innovators and the one who finds the next big thing, But almost all the startups dream of being acquired by the big boys. In fact for the people with the money, the sugar daddies and the venture capitalists, being acquired is really the business plan.

    Vut that is true for the small startups. For a company that used to be a big boy itself, may be it is not a very "respectable" thing. But respect is probably over rated anyway.

  • But for all its size and ambition, the bid has not been greeted with enthusiasm. That may be because Silicon Valley favors bottom-up innovation instead of growth by acquisition. The region's investment money and brain power are tuned to start-ups that can anticipate the next big thing rather than chase the last one.

    Enthusiasm in "the valley" seems to chase pageviews more than money. Google makes money from one thing: advertising. It's advertising income is leveraged off search (both pageviews to put ads o

  • Favors bottom-up innovation? What about Cisco? (Score:5, Insightful)

    by G4from128k ( 686170 ) on Sunday February 03, 2008 @10:12AM (#22281810)
    Cisco is Silicon Valley's poster child for acquired innovation -- acquiring over 100 companies in the last 10 years (see http://en.wikipedia.org/wiki/Cisco_Systems_acquisitions [wikipedia.org]). Letting someone else's VCs pay for your R&D is a great way to always have the best of the best technology. And don't most of the Valley's VCs and "brain-power" cater to this growth-by-acquisition model. Isn't the exit strategy of a VC or serial entrepreneur defined by getting a Cisco, Google, or Microsoft to by the company?
    • I had the same initial reaction. As a an ex-Cisco employee it's pretty obvious that this idea that "Silicon Valley favors bottom-up innovation instead of growth by acquisition" is someone's fantasy of how things work in the valley. It's more like we only tolerate acquisitions that are done by silicon valley companies, and do not appreciate outside companies muscling into our valley. That's a far less altruistic attitude, but I think it is closer to the reality of the situation than some of the other ideal p

  • Lewis Black's take on this ... (Score:5, Funny)

    by ScrewMaster ( 602015 ) on Sunday February 03, 2008 @10:18AM (#22281840)
    Steve Ballmer must be looking at this from Lewis Black's perspective:

    We need to build a big fuckin' thing. I don't care what it is, so long as it's big ... and it's a fuckin' thing!
  • This would have been bigger news 5 years ago. You get the impression that Microsoft is so big and fat that by the time it gets it's fat bulk moving to the kitchen it's roommate has eaten all the ho-hos?

  • This is about realestate, not rewarding innovation (Score:4, Insightful)

    by postbigbang ( 761081 ) on Sunday February 03, 2008 @11:00AM (#22282052)
    Lots of users. Lots of places to hang signs and ads. Lots of groups. Lots of apps. Lots of little businesses.

    Yahoo is a country with lots of geography. That's what Microsoft is buying.

    It's not a new widget. It's not Web 2.0. It's not some sort of way-kewl social site with a new innovative bent.

    It's the real estate. One more time: Microsoft is buying web real estate, not bottom feeding, not buying rotten tech.

  • MS loses to Google because of their choices (Score:5, Interesting)

    by astrashe ( 7452 ) on Sunday February 03, 2008 @11:09AM (#22282108) Journal
    MS looses to Google because their management makes bad choices. At least their choices are bad when compared to Google's.

    MS's management will continue to make bad choices. If they had enough money to buy Google itself, and if anti-trust concerns weren't a factor, it wouldn't matter. They would break Google and push it into the ground. They problem isn't their strategic position. The problem is in between their ears.

    Look at Hotmail and Gmail. Hotmail was a very early web email service. MS bought them. Then they just let it sit there. MS people saw Oddpost coming down the road, and they should have gotten all pumped up with what was possible. That's apparently what happened at Google -- someone saw that fancy Oddpost ajax email client, and said, let's do this better than Oddpost is doing it.

    MS doesn't try to do much until someone pokes them with a stick, and a lot of times they don't do much even then. Right now the world is screaming at them about all of the things wrong with Vista, and their response is -- no, you are all STUPID, and we are right, and you just don't get how awesome Vista is.

    They're not fixing anything.

    They're the victims of their own monopoly. They're fat and stupid and lazy, and they think the world owes them success. They're insanely profitable, but it's because they're in the catbird seat, and not because they're earning it. They don't have to earn it, and because they don't feel the heat, they can't earn it.

    So you know, sit back in your lavish headquarters, and reminisce about how great it was to go out and threaten to cut off people's air supplies, and how wonderful the world was when you could bully people effectively.

    I feel bad for yahoo. I remember when it was just some page on a guy's workstation at stanford. They did a lot of great things. They don't deserve this ignominious fate.

    And there are stories floating around that yahoo people are saying -- there's no way in hell that we'll work for MS. So, MS, know that everyone dislikes you. And know that it's a direct consequence of your deliberately cultivated culture of bullying and thuggery.

    Everyone at yahoo knows that when you buy that company, you're going to break it, and that going to work on a day to day basis is going to suck. And believe it or not, that has a lot to do with why you will not beat google.

    Someday google will suck too. Their culture will rot, and dumb people will climb on top of the smart people. But that day is a long way off.

    So you know, go off and think about how to make sure my monitor will prevent me from playing unauthorized videos, or how to make my computer's audio system check up on the license status of my music. Because I'm your customer, and believe me, that's what I'm really pining away for. That's what I want more than anything. You know me so well it's scary sometimes.

    • Re: (Score:3, Insightful)

      by DerekLyons ( 302214 )

      Look at Hotmail and Gmail. Hotmail was a very early web email service. MS bought them. Then they just let it sit there. MS people saw Oddpost coming down the road, and they should have gotten all pumped up with what was possible. That's apparently what happened at Google -- someone saw that fancy Oddpost ajax email client, and said, let's do this better than Oddpost is doing it.

      Yeah. And the result is that Hotmail has considerably more users than Gmail.

      And there are stories floating around

      • It is really funny how people brandish the mortgage payments like if it was a couple of shackles.

        Honestly folks, any professional worth his salt (which I am sure most guys in Yahoo are) can change jobs without mortgage payments being an issue...
  • have you thought about this scenario:
    MS offered 60% more than what Yahoo was worth, Yahoos stock skyrocketed. The FTC might forbid the deal (for example because of Zimbra vs Exchange) or MS __MIGHT__ drop the offer... this would lead to panic stock-selling which COULD ruin yahoo (one competitor less for MS...)

    I don't say this defenitely is the plan, it's just something that crossed my mind, because I don't really understand this extremely high offer

    • Re: (Score:2)

      by Pulzar ( 81031 )
      MS offered 60% more than what Yahoo was worth, Yahoos stock skyrocketed. The FTC might forbid the deal (for example because of Zimbra vs Exchange) or MS __MIGHT__ drop the offer... this would lead to panic stock-selling which COULD ruin yahoo (one competitor less for MS...)

      That's not how stock markets work. You can't ruin a company by offering more and then retracting the offer. The "panic-selling" would bring the stock price back to around where it was before the offer, there's no reason at all for anybody
  • Like the DC political Village, the Valley is largely a creation of its own press corps. In buying Yahoo, Microsoft, the perennial outsider has decided to spend the money necessary to grab a real beachhead in northern California, which will, in the long run, allow it to compete directly against the Silicon Valley incumbents for talent. Microsoft's benefits, for instance, make those of any of the big (or small) Valley corporations look like trash, and their salaries are quite competitive.

    I'm betting that MS
  • MS shouldn't be allowed to do this due to their monopoly status. My fear is that too much focus will be placed on the primary mission of yahoo (trying to compete with Google), and not enough on the incidentals. You can bet MS would dismantle as soon as possible use and development of many open source technologies, such as Zimbra, FreeBSD, and php. Yahoo plays huge roles in those projects, and this deal could significantly impact those projects for the worse.

    At the very least, the Zimbra vs. Exchange situ
    • Of course it should be blocked. This is the very definition of monopoly abuse: buy all your competitors with that giant stack of money gained from your monopoly, and crush them. Eventually, only you survive, and are richer than God. Given enough time, and no government regulation, you can buy the world.
      • If I ignore the incidentals for the moment (which I fear regulatory agencies might do), I'd be looking strictly at the online presence situation of the market. MS can't buy google, so is settling for yahoo. The fact that the resultant online presence of MS and Yahoo would still trail dramatically Google (even assuming some people wouldn't abandon yahoo, which they would). The fact is they can't buy off a majority as it stands, and most people observing don't see how MS could possibly use this as a way to

  • Surely MS isn't the Ravenous Blugblatter Beast (Score:4, Insightful)

    by fishthegeek ( 943099 ) on Sunday February 03, 2008 @12:34PM (#22282678) Journal
    Take one company that isn't being successful at competing with Google.
    Add to that, one more company that isn't successful at competing with Google.

    What you end up with is one much larger company that isn't able to compete with Google.

    I find it truly inconceivable that someone thinks this is a good idea for either company. If Yahoo were truly on the bleeding edge I could actually buy this proposal but Yahoo has been in catch up mode itself. The only thing I believe that this does for MS is provide a much larger market share for Google to take from them.

  • What about DSL? (Score:2, Interesting)

    by steltho ( 1121605 )
    If Microsoft ends up buying Yahoo, does that mean I will be a subscriber of AT&T-Microsoft DSL?
  • It's hard for people to tell when a turning point has been reached or when one epoch gives way to the next. Usually it's up to the historians to affix a date or determine the significance of an event. Sometimes a turning point is blindingly obvious, a turn for better or worse. The most deceptive turning points are the ones that occur when everything else appears hunky dory. For a non-Microsoft example, when will we mark the fall of the American empire? Historians mark WWI as the beginning of the end of the
  • outside of being able to leverage their position with the desktop OS, they have lost billions annually on everything else. They are fine with that too, not happy but ok with it since it keeps others in-check. It is the same for this deal with Yahoo since they need to keep Google in-check. They did it with Netscape by forcing MS IE on ISPs and OEMs. They did it to Palm by selling WinCE/PocketPC/PocketMobile/etc at losses in excess of over $10 billion. MSN was an attack on AOLs market position and that too is
  • I don't see what Google has to worry about. If Yahoo and Microsoft lum their customer numbers together (doing nothing else), Google is still way out in front.

    If Microsoft's plan is to acquire Yahoo's customer base for assimilation into Microsoft Live services, that can only play out in one direction: Loss of some customers to Google. Yahoo, as it stands today, is pretty much platform neutral. I use it from Linux systems as easily as others do from Windows or OSX. Microsoft technologies haven't given any a

  • I can just as well proclaim that this offer is unusual because Microsoft is more evil than all Silicon Valley companies combined. Who cares? We already know that Microsoft can't create anything new and can't sell anything unless it is a prerequisite of running the latest version of MS Office or occasionally Visual Studio. We know that its "online business" never was designed to stand on its own but was supposed to be a vehicle of pushing services that require Windows. If they suddenly want to compete with G

  • Seriously. People in the Valley have notoriously short memories, but they do remember the Netscape/AOL/Time-Warner goat rodeo. They also know that the fact that Yahoo! is the #2 search provider doesn't make it a good fit with MSN. Struggling + Struggling != Successful. Nobody has explained how this actually makes any sense for Microsoft, beyond absurd, vague talk of efficiency. We'll see how efficient it is when Yahoo, which has had a hard enough time pulling in all its acquisitions, will be merged with MSN

  • The offer is not what you think it is. Look at who is driving it and compare him with a guy named Phil whose company did exactly the same thing buy purchasing Ashton-Tate way back when. Amazing the similarities eh?

    Board and executive egos aside there are cultures to consider. A friend who works at Yahoo tells me that up to 20% of his department would resign rather than work for Microsoft, and +20% of the rest would take advantage of it as long as they could. The way I see it is both corporate cultures a
  • They'd have to focus on integrating the two company's offerings before they could turn their full attention to R&D. They may be able to push their respective platforms forward faster by staying separate, rather than having to devote resources to an integration nightmare.

  • a major issue that makes younger companies more attractive to industry talent than older companies.

    Starting your own company is inordinately risky, but if you go to work for a pre-IPO company that is already profitable like facebook, or like google was it's IPO, you are basically guaranteed to be make a few million in a relatively short amount of time.

    If you join a post IPO company that is still new and doing well, you can still make your own salary over again in stock options. Also, newer companies are usu

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