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Why Microsoft Is Chasing Yahoo 245

latif writes "Microsoft has been chasing Yahoo for quite a while now. Most people think that it all started with Microsoft's acquisition bid for Yahoo, but this is not so. It is well-known that Microsoft and Yahoo have been negotiating since at least May of 2006, and may have been negotiating since 2003. I have done a thorough analysis utilizing information made public over the past five years and my analysis suggests that most people are completely wrong about what Microsoft wants from Yahoo."
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Why Microsoft Is Chasing Yahoo

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  • Re:Jealousy (Score:5, Insightful)

    by stokessd ( 89903 ) on Wednesday July 09, 2008 @10:49AM (#24117685) Homepage

    ARE there software companies that people actually like?! Google used to be up there, but they keep poking at the "do no evil" mantra. Every other software company I can think of has a core group of users that like the product, but those same folks also seem pretty ambivalent about the company.

    It seems that the hardware companies get the love because you can touch the shiny. Examples: Tivo, Apple, Harley Davidson, Crispy Creme...


  • by myCopyWrong ( 1310641 ) on Wednesday July 09, 2008 @10:57AM (#24117819)

    They have to show revenue growth but it is impossible. What do they have without their monopoly? A lot of third rate code that no one wants. Between Vista and Open Office, they are showing revenue problems. Buying Yahoo makes it look like they can extend their monopoly to the web but it's Hotamail all over again. They are proving that they can spend even more money to be an also ran. At best they can crush and rob Yahoo, but that won't do anything to Google or anyone else who wants to run services with free software. The harder M$ tries, the more obvious it is that their game is over.

  • In other words (Score:3, Insightful)

    by MikeRT ( 947531 ) on Wednesday July 09, 2008 @10:59AM (#24117855)
    Once again a business method patent has stymied the development of a market. A bad idea that was obvious to everyone but lawyers and the courts for its ability to damage competition.
  • by kriston ( 7886 ) on Wednesday July 09, 2008 @11:02AM (#24117913) Homepage Journal

    Wow. Yahoo definitely does not have stale search offerings or second-rate search technology.

    Just because you're not the flavor-of-the-month search engine doesn't mean your technology is stale or second rate.

    The only thing I can agree with is the unmotivated workforce--but they are in no way a mediocre bunch.

    YHOO survived the dot-com bust because they are a well-diversified and complete web service company.
    GOOG is striving to become that, but GOOG is flavor-of-the month because GOOG is the glamorous company that avoided the dot-com bust because they started later.

    Come on, try to be objective when comparing YHOO and GOOG.

    Good press does not necessarily mean better company.

    Bad press does not necessarily mean worse company.

    It's a shame so many of you feel this way without any sort of objective research.


  • by markov_chain ( 202465 ) on Wednesday July 09, 2008 @11:31AM (#24118415) Homepage

    We have never needed a good summary as much as this time!

  • by Anonymous Coward on Wednesday July 09, 2008 @11:34AM (#24118455)

    Just because you're not the flavor-of-the-month search engine doesn't mean your technology is stale or second rate.

    Except that Google's become synonymous with search and has pretty much owned search for the last half decade -- and Yahoo has made no appreciable gains. I would say by definition Yahoo is at least second-rate. I don't think you can call a market leader for years running, with a brand ubiquity like they've got, a "flavor of the month".

    When was the last time you heard someone tell someone to "just Yahoo that" or "I AltaVista'd so-and-so"?

    I work with several ex-Yahoos, they're all wonderful and bright people... but Yahoo needs to adopt the Avis mentality and try harder. They're behind in search, Musicmatch->Y! Music didn't pan out, and they've got a whole raft of other unneeded sites/services. (omg.yahoo.com anyone ? )

    Living in denial about your competitive ecosystem is the surest ticket to irrelevance and extinction.

  • by Captain Splendid ( 673276 ) <capsplendid@@@gmail...com> on Wednesday July 09, 2008 @11:42AM (#24118593) Homepage Journal
    but GOOG is flavor-of-the month

    Yeah, they're so flavour of the month, I've only been using them since before the turn of the century.</sarcasm>

    Note to all the clueless idiots out there: Google got popular quick because they had a search page that would load in under a minute back when most of us were still on dial-up. Having search rankings that worked as well as anybody else's was just icing on the cake. The hardcore techies might have gone nuts over their algorithms, but the rest of us were just happy to get our search results quickly and not wait for ages for a bunch of cruft and advertising to load first.
  • by Toreo asesino ( 951231 ) on Wednesday July 09, 2008 @11:52AM (#24118761) Journal

    Yup. Over indeed it is, as their crashing stock and sales shows......

    Wait a minute....

  • Is it or isn't it? (Score:3, Insightful)

    by ktappe ( 747125 ) on Wednesday July 09, 2008 @11:58AM (#24118837)

    Most people think that it all started with Microsoft's acquisition bid for Yahoo, but this is not so. It is well-known that Microsoft and Yahoo have been negotiating since at least May of 2006

    Contradictory statements. If it's well-known that they've been negotiating since 2006, then (by definition) most people would know that.

  • by TubeSteak ( 669689 ) on Wednesday July 09, 2008 @12:05PM (#24118935) Journal

    GOOG is striving to become that, but GOOG is flavor-of-the month because GOOG is the glamorous company that avoided the dot-com bust because they started later.

    How long does a company have to remain flavor-of-the-month before they get upgraded to preferred-flavor?

    And how many Dot Com Failures had Google's billions of dollars *cash* in the bank (as opposed to hemorrhaging venture capital) before they imploded?

  • by GeffDE ( 712146 ) on Wednesday July 09, 2008 @12:16PM (#24119111)
    Backwards. That copy of OS X you get with your MacBook or iPhone is a selling point for the hardware. Apple makes diddly on their software (~$140 million for the release of Leopard and you can bet that sales of iLife and iWork will be less than that...), compared to the ~$2.5 billion they make per quarter on sales of hardware.
  • Legtimacy (Score:4, Insightful)

    by fermion ( 181285 ) on Wednesday July 09, 2008 @12:21PM (#24119211) Homepage Journal
    MS has been a failure at search. This was not a big deal until search became ad revenue, and ad revenue became the new profit center in the IT world. Like the World Wide Web, MS failed to innovate, but unlike the WWW, MS was not able to use it's monopoly of the desktop to compensate for that basic, persistent, and enduring lack of imagination. MSN remains the laughing stock of search.

    Even with billions of dollars in the bank, 90% of the browsing population using IE, which forces people to MSN, MSN still has less than 1/2 the market of Yahoo, and not even twice the market share of AOL. This tends to indicate that MS has no clue how to direct users to content, but that they don't even know how to learn how to do such a thing. Basically, because MS cannot force MS Windows users to search with MSN, beyond what already exists in IE, and MS cannot undercut the prices of the product, as it did with XBox, MS is not succeeding in the search market. Those are it's two primary tools for success, and neither is suitable here.

    The only option is go after Yahoo. There are two benefits to this, only one seems to be covered in the link. By far the most important is that the combined Yahoo/MS market share will be 35% This should help market ads. The downside risk is how many people will stop using Yahoo because of MS ownership, and the changes that the clearly incompetent MS staff(remember MSN only has 10%, that is for a reason) make to the service. This gives MS legitimacy in the marketplace.

    The second, as implied by the link is that MS may be able to make trouble for google. This will result in what MS does best, funneling money from productive interests to fuel it's unproductive coffers, but will not likely affect Googles market share.

    Here is why. Google is still innovating customer service. There are free apps on the web to do all sorts of stuff. They know their core business, bringing eyeballs to ads, and do what it takes to keep those eyeballs happy. Google is free to do whatever it takes. MS is not free to do whatever it takes. For instance, why is MS charging a subscription fee for MS Office. Why aren't they putting a Web version on MSN. Tell me how many people would create an MSN account and use it as their portal if they got to use even a limited version of MS word for free in the deal.

    Why indeed. There are only two possible reasons. First, MS does not have the technology to do what Google is already doing. Second, the MS Office franchise, stale as it is, is still too valuable for MS to use to drive what is clear to become the future profit center for any large software concern. Again, MS looks back, everyone else looks forward. This is not bad, MS makes a lot of money on it, but it why MS can and does overpay for new tech(re: facebook), and why Yahoo is a deal that has to be done, even it eventually fails and means the end of Yahoo, and 80% market share for google.

  • by MightyMartian ( 840721 ) on Wednesday July 09, 2008 @12:23PM (#24119247) Journal

    Now Microsoft wants to buy search. Given that "search" is basically a text box that returns URLs, and Microsoft already has that capability, one has to look at what is the difference between MS and Yahoo? Why is Yahoo more valuable than Microsoft in paid search? Really, I don't know. But I can guess. Yahoo doesn't care if you're using Microsoft technologies. This has two sides - 1) you get equal support in FF and IE, 2) developers don't have to use Microsoft technologies. The "not invented here" does not apply. It's about getting a job done.

    It's called a "brand name". Microsoft, since its first foray on to the Internet with MSN in 1995-96 has never been able to produce a popular online presence. Guys like Lycos, Altavista and Yahoo were already filling the search market, and Microsoft was unable to puncture their dominance. Google, of course, pretty much kicked the shit out of Yahoo, which now holds a very distant second place, and yet, Microsoft still isn't on the map. I think Microsoft (correctly) has come to the conclusion that it matters not at all what they do, people don't care about msn.com or live.com. They go into Tools-->Options when they get their brand new Windows computer and change it to google.com. Even having a search box that defaults to Microsoft's search has failed, as basically threats that the EU is going to go medieval on their ass have pretty much forced them to open it up more easily to competitors (read: Google).

    With more and more apps set to be delivered via the Web, this is about getting a platform that they have a hope in hell of someone actually using. I still think it will fail. Yahoo is, as I said, a very distant second place. Google is indeed the new Microsoft, and as with Microsoft's competitors in the past, Microsoft is finding itself being very effectively locked out of a very important market.

    I'm not at all comfortable with yet-another-computer-monopoly, and I don't buy at all into Google's "do no evil" mantra, since, so far, they've done plenty. But there's a great deal of irony. It couldn't have happened to a nicer company.

  • Re:In other words (Score:2, Insightful)

    by teknopurge ( 199509 ) on Wednesday July 09, 2008 @12:45PM (#24119621) Homepage

    Things are always obvious in hindsight.

  • by Anonymous Coward on Wednesday July 09, 2008 @12:51PM (#24119707)

    I wish I could mod this post "-1: Wishful Thinking."

    Amen to that, brother.

    Slashdot is an odd place. While there are a lot of posters here whose contributions I greatly enjoy, it's chock-full of bullshit liars who live in an anti-Microsoft fantasy land. If I had a nickel for every "I work for a Fortune 500 and we're ditching Microsoft/Adobe/IBM/CorporateSoftwareWhippingboy" anecdote I've read here, I could retire and live off the interest. In their made up little world, .NET could never be used for an enterprise application, their parents/grandparents have all ditched Windows for Linux, and Ron Paul is currently statistically favored to win the Presidency of the United States.

    Thankfully, these people probably don't wield much influence outside of the online world (or really in it, if we're going to be honest about it.) I do wish they'd migrate over to digg, where their "Microsoft infidels are committing mass-suicide in the streets" FUD would be more at home, but still.

  • by jimicus ( 737525 ) on Wednesday July 09, 2008 @01:04PM (#24119931)

    Note to all the clueless idiots out there: Google got popular quick because they had a search page that would load in under a minute back when most of us were still on dial-up. Having search rankings that worked as well as anybody else's was just icing on the cake. The hardcore techies might have gone nuts over their algorithms, but the rest of us were just happy to get our search results quickly and not wait for ages for a bunch of cruft and advertising to load first.

    I'd add another thing to that. This is my experience, your mileage may have varied etc etc.

    Way back before then - circa 1997 - AltaVista was king of search. However, around 1999 or so the results from AltaVista started to go down the tubes - most of the hits were either spam or totally irrelevant.

    Out of practically nowhere comes Google - with results which were actually useful and little or no spam. Doesn't take a superbrain to decide to stick to using Google. But the Internet is a fickle place, and it's a lot easier to visit an alternate website than it is to take your bricks & mortar business elsewhere. (For one thing, "there's only one shop in this town that sells N" is not a valid argument). The mighty can fall, and I don't doubt it will happen again.

  • by strings42 ( 1155255 ) on Wednesday July 09, 2008 @01:05PM (#24119965)
    There's a lot of speculation here, but it's all just conjecture. There's definitely not any new facts in this article, and it is only "analysis" in the sense that it contains a much larger volume of speculation than most of the 1,000,897 other articles on the same subject. Obviously a new definition of the word, "analysis" of which I was not previously aware ...
  • by jellomizer ( 103300 ) on Wednesday July 09, 2008 @01:16PM (#24120127)

    Google has been around for quite a few years. I don't see it as a fad. Just like back in 1994 when people said Linux is just a fad.
    With software you may be first rate but if you don't innovate fast enough it becomes second rate.

  • by hairyfeet ( 841228 ) <bassbeast1968@@@gmail...com> on Wednesday July 09, 2008 @01:44PM (#24120527) Journal

    While what you are saying is true,the simple fact is I have NEVER seen hatred for a product like I have for Vista,and that includes WinME. I have been building,selling,repairing and customizing PCs and networks since the days of DOS and Win3.1,but the sheer public hatred for the stink that is Vista is just unreal. I recently built a machine for a customer whose sole requirement was that this machine be upgrading for a long while so he wouldn't have to touch Vista,and this is for a guy who has been happily using WinME for the past 8 years! And when the teenyboppers come in with their parents to have a new machine built and I mention Vista as an option I get a VERY loud EEEEEW!,like I took a crap in front of them or something.

    The simple fact is they have based a lot of their revenue projections on everyone upgrading every 3 years or so. After all,that was the way it went through most of the history of Windows. But I am typing this on a 1.1GHz Celeron with 512Mb of RAM that runs great as a simple Netbox,and I have plenty of customers that are quite happy with their 1.7-3.2GHz Intels and AMDs. Computers have gotten "good enough" for what most folks use them for. And then they really shoot themselves in the foot with Vista by killing XP, which means that those who can't afford Apple or don't have a friend with a pirate XP disc will end up on some sort of Linux like the EEE,simply because the bottom of the Line Dell and Compaq that sell so well to the average home user runs like a crippled slug on Vista. I recently talked to the head of the electronics department at a Wal Mart supercenter about Vista and he said it has been a nightmare. He said they are now offering to "preload" XP onto any Vista laptop they sell simply because they can't move them any other way.

    So what does MSFT do? Do they do the smart thing and keep XP on the lower end and only sell Vista on machines powerful enough to run it well? Maybe put out a Windows 2008 professional to get those businesses and home users that are avoiding Vista like the plague to continue buying MSFT? Nope,they kill off Vista and force the Best Buys of the world to either convert their machines in the back to XP or have a bunch of complaining customers because a non dual core with 1Gb or less of RAM simply won't run the bloat. When Allchin himself [nwsource.com],who oversaw some of the most profitable years of Windows,says he would buy a Mac rather than take Vista and retires the second it comes out to keep from being blamed you know they are in trouble. It is like the marketing department has taken over MSFT and as we have seen time and time again,most marketing departments can't see the forests for the trees. I predict if MSFT gets the chance they will take search,maybe Yahoo mail while they are at it. And frankly it won't help them a bit. Because they same guys that made the Vista sludge will concentrate all the efforts on maximizing ad revenues instead of having searches become more accurate and relevant and Yahoo search will suck just as bad as Live search is now. But that is my 02c from out here in consumerland,YMMV

  • by scorp1us ( 235526 ) on Wednesday July 09, 2008 @02:52PM (#24121783) Journal

    I agree. With business being business, I am considering shorting their stock since I have not seen any new value being created. And customers buy value.
    Windows 95 was value.
    Windows 2000 was value.
    Office 95/97 was value.
    DirectX was value.
    Visual Studio 98 was value.

    XP was not value. (It was nothing substantial over w2k)
    Windows Vista was not value. (Negative value) .Net/Silverlight was not value. (Attempt to re-lockin developers, with POSIX un-compliance, whole new libs). C# is no value because it is 1/2way between C++ and Python (or Ruby).
    IE was not value.
    Office 2003/2007 was not value.
    Visual Studio after 2008 was not of value (a side effect of .Net)
    All Microsoft services are not of value.
    Virtualization is not of value (VMware leads)

    So up until about 2001 MS was providing value. Since then it's all been maintenance or catch-up. But during this period, competitors advanced. What MS had provided as value was commoditized. (Linux, OpenOffice) Or people started doing it better (Apple). MS does not have a value proposition anymore.

    As you indicate, they are floating on cash. If MS can't re-invent themselves, things rest on the bottom when there is no water left. Its like a ballistic trajectory, and without another rocket stage, it's going to come down. But MS does not operate in a vacuum. Ubuntu and OSX are my main reasons for supporting the short position. The EEE PC is nice anecdotal evidence of Linux providing sufficient value. I also like Qt as a good platform for Win/Lin/OS development.

    Further backing the short position is that there is no one or set of technologies that needs to be delivered. In 95-2000, we needed a stable kernel and apps, we needed networking. We got those. In 2001 we needed a safe, stable browser. We got that (in 2007 with FF2).

    I buy stock in what I use. This is good for me in the tech sector because I am ahead of the curve. I use FF, Apple, Yahoo, Google, Adobe, Verizon (FIOS). I keep watching Ubuntu. I'm not pining for anything Microsoft has in the pipeline. I am pining for FF and Apple, and Adobe (AIR, though I'd rather a W3C platform).

    I'd get behind MS again if they ever brought value back, but they are just focusing on taking it away from others (.Net, SilverLight, Search). That is a sign to me that they don't know what to do next either.

  • by UnknowingFool ( 672806 ) on Wednesday July 09, 2008 @03:29PM (#24122475)

    Yes. "Locking out" is implying that Google is doing something to prevent MS from competing. MS has every opportunity to beat Google. Even with MS leveraging their OS and browser as much as they can, Google is still handily beating them. Even with MS buying every little new search technology they can get, Google is still beating them.

    In the future, everyone might not be as loyal to Google as they are now, but Google understands that their business is service. Services traditionally have had no lock-in. If someone can perform the service better/cheaper, they'll get more business. If they can't come up with better services than the next guy, they're toast. MS still thinks that they are selling products. Their products have a lock-in and they can be mediocre or horrible (ME), but their customers are stuck with them. MS has to be more than mediocre. They're not used to that.

  • by bluefoxlucid ( 723572 ) on Wednesday July 09, 2008 @05:36PM (#24125173) Homepage Journal

    GMAIL: Ajax, magic.

    YMAIL: Flash dog shit.

  • by hairyfeet ( 841228 ) <bassbeast1968@@@gmail...com> on Wednesday July 09, 2008 @05:37PM (#24125193) Journal

    You were the one that started with the rudeness,your entire reply was basically how wonderful Vista was and how i didn't have a clue what i was talking about. does Intel not have a clue too? because Intel [cnet.com] is skipping Vista. And i can find you example after example of the same thing. We have NEVER had Fortune 500 companies elect to stick with an old OS rather than simply upgrade when the 3 year cycle comes around,ever.

    Um,you do know that dual cores with 2Gb of RAM aren't what you find at Dell,Best Buy,Wal mart,etc,right? In fact the big market is right now a Celeron or Sempron with 1Gb of RAM,although I still see plenty of machines with 512Mb,although those are finally being fazed out. You do realize that one core is pretty much dealing with Vista,right? Here is a little experiment you can do to see the difference between Vista and XP: make an image of your HDD. benchmark Vista,then install XP and benchmark it. The performance gains will probably make you cry. And as for gamers switching to Vista? I have had a few build $2000+ SLI rigs switch to Vista for DX10,although I have had two come back and ask for dual boot simply because of performance and compatibility issues. The biggest thing I have been seeing here is the hacked DX10 on XP trick. I recently played Halo 2 and Juarez on a customers new gamer rig and DX10 ran great.

    And finally what does the EEE have to do with it? Are you kidding? Surely you can't be serious,unless you want us to honestly expect us to believe you are not a shill. Laptops are selling like hotcakes,and they aren't those Alienware monsters. I have personally seen my college campus spread with EEEs and other minibooks in less than a year. I have had Housewives,salesmen,office managers,etc come to me to order them machines in the last 12 months,and the first thing out of their mouths after saying they want a laptop is "Can you get one of those EEEs?" Companies like Intel and Nvidia don't spend the serious R&D money required to build new chips without doing serious market research. People want cheap,small,eay to use laptops that they can slip in a handbag or briefcase and just go. Vista is bloated(15Gb default install,WTF?),sucks power,and on mini machines like the cloudbook,EEE,Mininote,etc it is simply too slow to use. Do you really think all these companies are coming out with netbooks because there is no market?

    IMHO the only thing you got right in your post was the Apple iPhone,and I think they will end up the future,which scares the hell out of MSFT. I am betting within the next two years you'll see all the cell phone providers offering small EEE style laptops for free with a 2 year service agreement to use their wireless data plan. The phone companies can lock in all those customers,and for what the average person is using a laptop for(webmail,surfing,document editing) any lightweight Linux distro with Open office will work beautifully. Why do YOU think MSFT is so disparate to get into the ad business? Because they know if Win7 isn't a hit they are going to be seriously hurting. Most folks aren't buying gamer rigs,they are buying based on price. And on what you get from Dell,HP,etc for a basic PC Vista is a truly painful experience.I have already had two customers bring in single core Dells that the HDD literally thrashed itself to death.

    If you have read anything put out by Ballmer in the last three years or any of the emails in the class action suit you know that Vista wasn't designed for users,its "protected path" top to bottom DRM was designed to appeal to big media in the hopes of becoming the iTunes of video. But folks by and large are not using their pc as a HTPC,they are watching their videos on their Chinese DVD player or their PS3. All MSFT has done by trying to force eveyone into the same DRM overloaded box is p*ss off a large portion of their customers,who are know looking at alternatives. Whether that alternative will be Linux or Apple,or MSFT getting its act together with Win7 I

  • Mr. AC, you're acting like it's just your debating opponent's opinion versus yours, as if you haven't heard the endless bad press about Vista.

    You can't possibly have missed all of that bad press, so pretending it doesn't exist is what makes you sound like a completely fraudulent shill. If you want to sound honest, acknowledge the widespread bad press and try to address it.

    Or continue as you have been, and expect to have zero credibility with 100% of the readers -- why even bother?

"How many teamsters does it take to screw in a light bulb?" "FIFTEEN!! YOU GOT A PROBLEM WITH THAT?"