1 + 1 = Zero
February 1st, 2008 by misterarthurPeople all over the web are trashing the announcement today that Microsoft is offering $44.6 billion for Yahoo (sorry, I won’t add the exclamation point). BuzzMachine calls it the Deal of the Dinos. The tech blog at Salon, Machinist, agrees, saying, “the essential problem is that what Microsoft and Yahoo lack, and what Google’s got in spades, can’t be gained through merger. Google’s secret to success is not so secret at all. It has created the ultimate expression of Silicon Valley capitalism — a company of engineers, a firm that elevates technical innovation as its core mission.”
Here’s what I don’t understand. I have a my.yahoo page, and a never-used Yahoo mail account. (It’s a world-class spam magnet, by the way.) So do millions upon millions of other people. That, I guess, is what makes it attractive to Microsoft. But Yahoo reminds me a lot of AOL. Once people figured out that AOL was just an overpriced ISP/portal, they abandoned it in droves. What does Yahoo offer that, say, my iGoogle page or my Google news page doesn’t? Oh yeah, that’s right, an ad on the front page. Other than that, Yahoo got big, early, and hasn’t moved forward since.
So what makes it worth billions? Microsoft must have a reason I can’t see. Eyeballs? Jeff Jarvis summarizes it nicely:
“No, this is a deal about audience and advertising. After the big guys consolidated all the ad networks they could — aQuantive to Microsoft, Tacoda to AOL, Doubleclick to Google (the EU willing) — next they’re buying up audience in bulk. That’s what Yahoo is, really. They call it a firehose: people in bulk, us as masses.”
Us as masses? Isn’t that what TV is for?
I really wish Microsoft would do something original.
Tags: mergers, Microsoft, Yahoo
February 2nd, 2008 at 4:41 pm
[…] So Microsoft tries to make a bid for Yahoo in a move that is being ridiculed on numerous blogs. When will companies stop trying to buy their way into being cool? It doesn’t work. If you aren’t Apple, don’t try to be. Arthur Mitchell says it better than I could. […]
February 2nd, 2008 at 5:11 pm
Bearing in mind the problems Microsoft has had over the years with the European regulators it’s hard to see this one going through without a long fight by which time the 62% premium they’re paying for YHOO might come to look even more extreme.