So you’d have to be living under a rock this week if you haven’t heard about Microsoft’s bid to takeover Yahoo!   But just in the off chance that that is the case, allow me to give you a brief synopsis… and by brief, I mean bare bones.

 Last Friday, February 1^st, Microsoft made an unsolicited $44.6 billion bid for Yahoo.  If the sale goes through, it would combine the second and third largest web search providers. Whew!  That took a lot out of me.

Well being the full service internet marketing agency that we are, and having search as one of our core competencies, it shouldn’t surprise you that people around here had some things to say about the potential takeover of Yahoo.  

Weighing in first is pepperjam’s heavy weight contender, CEO Kris Jones.  When asked about Microsoft’s bid to but Yahoo, here’s what Kris had to say:

“On its face, Microsoft’s hostile bid of Yahoo seems nothing more than a desperate attempt by Microsoft to compete with Google’s dominance as the world’s leading search-engine. However, there is a problem here – the Yahoo search-engine isn’t that good and neither is MSN. Both of these firms have had quite some time to differentiate, but failed. On the paid search front Yahoo’s Panama seems to be a big failure and Microsoft’s AdCenter is small. Will the combined MSFT / YHOO entity be something Google should be worried about? No, not really. Google’s search-engine is just that much better. Take the best search features of MSN and add it to the best of Yahoo and nothing really changes.”

Wow, Kris.  Why don’t you tell us how you really feel?  But he does make some excellent points! (no surprise there)  Even if Microsoft and Yahoo combine, taking the best of both companies, does it still stack up to Google?  If I were a magic 8 ball, my reading would say “all signs point to no.”    Neither MSN nor Yahoo have a big enough market share, even combined, that could challenge or persuade others to leave Google.

After speaking with Kris about this, I decided to ask Brian Watkins, our Director of PPC Account Management, what he thought of both the take over and Kris’ comments.  Brian said, “  I agree with Kris.  But on top of that, why would Microsoft even want to take over Yahoo?  Why would they invest money in Yahoo’s subpar technology when they could be using that money to reinvest in their own technology and internal ventures?  Doesn’t really make sense if you ask me.”

Brian’s comments echo something I read earlier today in the International Herald Tribune.  Mark Mowrey, editor of The TechValue Report, a newsletter, was commenting on the bid.  He expressed his frustrations of “Gates’s pursuit of his white whale when Microsoft has bigger fish to fry, like parrying the challenge from free operating systems like Linux; adapting to the migration of computing from the desktop to the cloud, and competing with Apple as it insinuates its hardware and software into people’s living rooms, cars and telephones.  An acquisition of Yahoo has the potential to force management’s eyeballs away from what are keys to the company’s future. I would much rather see Microsoft focusing on breadwinners, as well as the ancillary businesses.”   The Windows operating system and Office productivity software make up the first category; the second includes devices like the Xbox game console and Zune media player.

 Both Brian and Mark Mowrey make excellent points though – why risk a $44.8 BILLION gamble on technology that isn’t even on par with your own, when you could be using that capital to reinvest in your own company’s core competencies?  Right now Apple really is one of the biggest, if not THE biggest competitors for Microsoft right now.  While their search and online portal space is no doubt important, Microsoft is at least still in the ball game with its Xbox console (especially with the success of its Halo3 release), the Zune, which is going head to head with the ipod, and its Microsoft Office Suite which, whether you like or not is in every corporate office, college campus, and home across the globe.   What does a takeover of Yahoo really add to what Microsoft already has, beside a slew of headaches?  (I mean, have you thought about how Microhoo! is going to choose among two e-mail systems, two ad platforms, two instant-messaging systems, and two search platforms, just to name just a few)

Who knows how all of this is going to turn out… but it sure does look likely that Microsoft’s bid will be accepted by Yahoo’s board of directors.  I guess we’ll just have to tune in next week to see the outcome…

Till then, have a great weekend!

KAT

This entry was posted on Friday, February 8th, 2008 at 7:39 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.