Ballmer's swan song

Ballmer's swan song

Summary: Take 1 flailing Internet company, add a 2nd flailing Internet company, and what do you get? A bigger flailing Internet company.

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Take 1 flailing Internet company, add a 2nd flailing Internet company, and what do you get? A bigger flailing Internet company.

Accentuate the positive The proposal isn't all bad. :

  • It is an OK deal for Yahoo shareholders. Yahoo was trading above $30 just 3 months ago, so today's big premium is where the stock was much of last year. It makes up for the damage a dithering Jerry Yang has done.
  • Jerry Yang can quit pretending to be a CEO. There are a lot of rich people in Silicon Valley. Most of the them are lucky rich - people who just happened to be in the right place when big money arrived. Then there is a much smaller group of smart rich - people who figured out how to generate big money. Jerry is lucky rich, just like 99% of Googlers.
  • The industry needs to consolidate. Companies need to merge to develop economies of scale. This will be Microsoft's excuse to shut down major chunks of money-losing MSN.

Yahoo has a strong base in the email market and other web portal services. They're profitable - no small thing on the Internet - and a well-known, if not well-respected, brand. All real assets.

The downside Where to start?

  • Both companies are clueless on Internet strategy. To be fair everyone else is clueless too. The Internet is new and still evolving. The only certainty is that old models don't work. And the avatars of the old models are least likely to come up with new ones.
  • This looks like AOL plus Time Warner all over again. Why Microsoft thinks it needs to be in the Internet business is beyond me. They are a software company with no demonstrated Internet smarts. How will buying Yahoo change that? It is a Gates/Ballmer ego thing.
  • Neither company is cost-competitive with Google. Integration costs will be huge.
  • Internet advertising isn't turning out to be quite the money machine everyone imagined - not bad, but not change the world either. As a content provider I can tell you that Google's pay-per-click model sucks. As new media networks with a pay-per-impression model develop, Google will be left selling ads on content that no one cares about.
  • Paid web-services are the future. Google's non-economic model for most of its services has depressed prices. But as services like SmugMug demonstrate, the best customers are willing to pay for quality. But you have to be really good. Microsoft is mediocre at best and Yahoo not much better.

Ballmer's swan song Pity poor billionaire Steve Ballmer. His entire career has been spent in the shadow of Bill Gates. For years he was the world's richest man who worked for someone else. Since his elevation to CEO he's done nothing to fix Microsoft, instead pursuing one ill-conceived venture after another. This is his biggest yet.

If the Yahoo deal goes through, Steve will have one last chance to show that he is an executive on par with Chambers, Jobs, Hurd or Palmisano. He is, sadly, too smart. Lucky smart.

Comments welcome, of course.

Topics: Microsoft, Browser, Google, Social Enterprise

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17 comments
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  • Better keep your tin hat on

    I thought you would have had enough from the last blog you did on this.
    Joeman57
  • Anti-Trust Oversight / Kibosh?

    [url=http://www.informationweek.com/news/showArticle.jhtml?articleID=206100319]FYI[/url]
    D T Schmitz
  • Not likely.

    "Paid web-services are the future. " Not likely. I absolutely despise anything that wants me to establish any kind of paid subscription. So far, for pretty much anything I need, there is always a free alternative. If I was ever going to actually pay for something like that it would be a highly unusual circumstance. I'm certainly not going to allow myself to end up with dozens of different "paid web-services".

    About the only thing I've heard of using this model thats making any money is Porn. Then again Porn has always been the biggest money maker on the internet!
    cornpie
    • I agree

      I have never paid for web services and it's highly unlikely I ever would. SmugMug? No way.

      I think Ballmer has done a lot of good at Microsoft, making it more likely to settle lawsuits, and stop acting so arrogant.

      However, all software will eventually be free and I wish I could do without windows even now!
      ron.cleaver@...
      • Yes, that conclusion surprised me too

        But I left it in anyway. With a market as huge as the Internet many niches - like
        photo sharing - will support profitable, fee-paid services.

        Even if only 0.1% of the photo sharing community is willing to pay for a quality
        service, that could easily be a million people in a few years - and a $40-$60
        million business.

        And think about how wonderful your customers would be? They appreciate what
        you do. They care about their photos. You can work with them to give them added
        outlets that they value and you monetize. They want you to succeed.

        I'll have to think about this some more. Thanks for writing.

        Robin
        R Harris
    • World Of Warcraft goes against your belief

      Made more than $1 billion USD for Vivendi for 2007.
      DonRupertBitByte
  • Google needs the competition

    Google needs some good competition. I'm not sure if this will result in true competition for Google, but it's not a bad thing.

    Having said that, I use Google myself almost exclusively, so I am in no way anti-Google. Just like I'm an avid Windows Vista fun, but also believe that Apple providing competition for Windows is a good thing. Let the market decide!
    Tiggster
  • My Dear Sir...

    Steve Ballmer is a true genius. I have met this man, I have spoken with this man. If it were not for BillG, this man would be the smartest man in the world. As for Microsoft not having a clue on the Internet, excuse me but who invented IIS? Who invented IE? Exactly, Microsoft. Therefore, Microsoft (not Al Gore) invented the Internet. As a sign of my support for this deal, I have temporarily re-opened www.yahoo.com internally and allowed 3 of my top-Top-TOP MCSEs to access it. My rep warned me to remain cautious and vigilent, and I did send an internal memo stating that Live Search is still our MANDATED search engine.
    Mike Cox
    • 7.0

      It would've rated lower, but the mandated Live Search at the end brought it up a point or two.
      ac2_z
    • I'm shocked

      Any company that would turn down a buyout offer from MS must be run by the most evil monsters imaginable. You must block Yahoo until it surrenders. Western civilization depends on it.
      John L. Ries
    • If it were not for BillG?

      What did he say about it in 1993? Musta
      wizened up?

      "The Internet? We are not interested in it"
      -- Bill Gates, 1993
      Ole Man
      • Here, fishy, fishy, fishy . . . ;)

        Shame on you!!! Responding to Mr. Cox that way!! Haven't you been paying attention in the forums???


        9.0, Mike! you got one of the long-timers on this one!!
        JLHenry
        • Some hooks have more than one barb

          Did it get you too?

          Not that I'm too smug to get hooked, mind
          you.
          Ole Man
    • Almost right

      except Microsoft didn't invent the internet, the just made it a joy so big and wonderful that we're all happy to pay through the nose for it.

      Everybody knows that without Microsoft, we'd be living in caves and hunting wild board with sharpened sticks ;-)
      fr0thy
  • RE: Ballmer's swan song

    Nice post, Dad.
    <3, B
    woot@...
  • RE: Ballmer%27s+swan+song

    ever notice how all those Windows get on the internet - of course MS is an internet company. What happened to all the bright journalists?
    Paul Fletcher
    • Wow!

      You must let MS know this awesome news - maybe they refuse to buy the Yahoo - they are an Internet company already!!.. LOL This reminds me the Crystal ball saying that MS will never go on those browsers and Internet fashion.. or when he said MS will never have a 32 bit OS... The MS take on Yahoo came the delayed and failed way. What happened to all the bright readers??
      green alien