WinInfo Short Takes: Micro-Hoo Special Edition

A largely irreverent look at some of the week's other Microsoft-Yahoo! news. I wish there was more going on. But there isn't...

WinInfo Blog

Different people have different ways of measuring the passing of the seasons. For example, according to my calendar, March 21 was the first day of spring, but given how miserable that day was here, we simply ignored the calendar and got on with our lives. I measure spring by the first sighting of an ant in my kitchen: These little unwanted co-inhabitants of our house show up every spring for a few weeks and then disappear, and while we're never really sure what combination of temperature and conditions triggers their arrival, it seems like a good measure. On that note, spring started here in Dedham a week ago, on April 5, when I spotted the first little expeditionary scout ambling across my kitchen floor as if he owned the place. (A funeral at sea followed. Sorry.) But there's also that magical first combination of temperature and sun, which drives people outside in sudden numbers, and that happened here just yesterday: Temperatures soared past 70, if just for the day, and half of New England was out walking, jogging, and otherwise just happy to be outside. I actually went for a bike ride, shocking onlookers.

But don't worry, this is New England. It will be 20 degrees cooler today and in the 40's again by the end of the weekend. As I recently explained to my son, who has an April birthday and would love to be able to plan an outdoor activity for that day well in advance, spring here is a messy affair, with plenty of false starts and plenty of rain. You can't count on the weather here.

Leo is still in Australia, so the Windows Weekly vacation continues. That said, we'll finally be back next week with a new episode. As you might imagine, there's lots to discuss.

Short Takes

Yahoo!, Yahoo!, Yahoo! ... Why Does It Always Have to Be About Yahoo!?
Every once in a while, a Microsoft-related story grabs the headlines and then holds on for dear life. The most obvious examples are the company's two major antitrust dramas, first in the US and then with the EU, but this year's Yahoo! debacle is turning into a serious contender, especially now that things are really heating up. In fact, it's getting hard to figure out what else is going on right now, since you have to wade through all the Yahoo! baloney to even find out whether there even is anything else going on. With that in mind, a quick recap of the week's events. My hope is that this event will be concluded sometime soon so we can get on with life.

Microsoft is Still Trying to Buy Yahoo!
I can't understand why Microsoft is trying to meld its own losing online services on to those of Yahoo!, which is also struggling and losing share at an alarming clip. But I'm told that Microsoft's interest in Yahoo! has absolutely nothing to do with Web-based email clients and instant messaging. This is all about search engines and ad clicks, because this market is expected to grow dramatically in the coming years and, right now, only market leader Google is positioned to really take advantage of this trend. This brings us, I think, to an interesting side-point....

What About All Those Web Applications, Services, and Sites?
When you combine two overextended online giants (Microsoft's MSN/Windows Live and basically all of Yahoo!), you get ... a mess. So how in the heck will Microsoft combine all these pieces into a cohesive whole with no overlap? Maybe they won't have to: One of the more interesting things that's developed this week is that both Time Warner/AOL and News Corp. have emerged as unexpected dance partners, offering different outcomes than a pure Microsoft/Yahoo! deal. Consider the following possibility: Microsoft and News Corp. combine to acquire Yahoo! and then spin off MSN/Windows Live, News Corp.'s MySpace, and most of Yahoo! into a separate company. You never know. Another, less likely, option is that Yahoo! accepts Time Warner's offer to combine its AOL online properties into Yahoo! and then the combined company foregoes developing online advertising all together and farms that out to Google instead. (This particular scenario requires Yahoo!'s shareholders to look the other way from a value standpoint, so I don't see that happening.) Suddenly, anything is possible.

Hulk Smash!
One image that always makes me smile spontaneously is that of Microsoft CEO Steve Ballmer as The Great Destroyer (tm), pushing Yahoo! to make a deal with scare tactics and threats. I picture him in green body paint and torn clothes, a la Lou Ferrigno from the TV version of "The Incredible Hulk," bursting through the door of yet another Yahoo! board meeting at which nothing will be accomplished and just going Road House on a desk. But maybe that's just me. It breaks up the day at least.

Speaking of Yahoo! board meetings
Not being on the board of directors of a company larger than my own family (at which I am apparently a junior partner at best anyway), I of course have only fantastical notions of what occurs when these great captains of industry get together to decide the fate of their company, their employees, and, of course, their leash-holding shareholders. And maybe this is just me again, but doesn't Yahoo!'s board of directions seem particularly inept and unable to get anything done? How is it that we've been able to watch these guys actually meet in real time over the past few months? For example, there's a story in "The Wall Street Journal" today discussing the fact that Yahoo's board will actually meet today to discuss Microsoft's takeover bid and various alternatives. No offense, but how is it that they've done anything other than that since early February, aside from a few side-trips to Stop & Shop for Grey Poupon refills? When Yahoo!'s board holding an actual meeting in the wake of a $44.6 billion hostile takeover bid makes the news, something is wrong with those guys. The story should be that Jerry Yang and the rest of the executive staff hasn't shaved since February 12th and now employees are now calling in with fairly regular Yeti sightings. If it's anything less than that, they're not doing their job. Sorry.

One More Bit About the Yahoo! Board
I was about to move on from the Yahoo! board, but then I spied this line from the WSJ article about these guys: "Yahoo's directors aren't expected to make any big decisions Friday about their direction." Yeah, why would they? Decisions are hard. Put it off a few more days, play some golf. Then you can have another meeting 11 days from now. Don't hurt yourselves. The world, as they say, is your oyster.

Hypocritical or Ironic? You Be the Judge
Another bit I found amusing was that earlier talks between News Corp. and Yahoo!, which occurred in the wake of Microsoft's original offer, broke down because Yahoo! found that News Corp.'s $10 billion to $15 billion valuation for MySpace was too high. I find this interesting coming from a company that spurned an over-valuated $44.6 billion takeover bid because that was too low. No offense, Yahoo!, but MySpace is at least as financially effective in their market as you are in yours. Which isn't saying much, I know.

Microsoft vs. Yahoo!, Round Two: The Quickening
Here's what I'd like to see happen. Microsoft should simply withdraw its bid for Yahoo!. The company (Yahoo!) is floundering and isn't worth anywhere near what Microsoft first offered, and while I'm no math whiz, I'm pretty sure that adding two zeroes together doesn't result in a positive number. What Microsoft is after, ultimately, is a bigger slice of the online ad market, a market in which their share has fallen steadily for four years now. But then so has Yahoo!'s. If the ultimate conclusion of this merger is that a combined Microsoft and Yahoo! artificially gain ground on Google temporarily and then just continue to fritter it away in the coming years, then why bother? I don't see any huge architectural or mindshare advantages to either online platform, and I don't see that changing just because they decide to duct tape them together. This deal doesn't make sense. That said, I will have to fall back on my own comfortable role as a reviewer/critic: That is, I can readily point out problems, but I don't actually have any solution myself. (Asking for one would just cause a lot of sputtering and an awkward change of topic.) Yeah, it's a great gig and if you can earn a living doing this, you can even put the word "analyst" on your business card. Everyone should have goals.

Which Reminds Me...
OK, one related but non-Yahoo! note and then I'm out of here. I was meeting with a senior Microsoft executive (and, it should be noted, someone I truly respect for various reasons) at TechEd a few years ago, and we sat down at a table in one of those makeshift pseudo-rooms they construct for this purpose at trade shows. As I was opening my laptop to take notes, he turned to me and said, "Before we get started, I'd like to ask you a few questions." I looked back at him and said, "Then you apparently have no idea how these meetings work."

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