Strong opinions, weakly held

Thoughts on Microsoft and Yahoo

My first impression of Microsoft’s $44 billion offer for Yahoo is that this is one of those big mergers that’s doomed to tedium, if not failure. It sort of reminds me of HP buying out Compaq. What was the end result other than some people getting a lot richer and a bunch of other people getting laid off? Was the merger a failure or success? Does anybody even care?

Something tells me that Yahoo is a bad cultural fit for Microsoft. This is a company that built its infrastructure on FreeBSD — not only did they go with an open source operating system, they went with a non-obvious open source operating system.

Yahoo hasn’t even been able to figure out the right way to integrate companies they’ve acquired — note the different ways that Flickr, del.icio.us, Launch, and others have been treated. The problem is determining the degree to which they need to be subsumed into the Yahoo brand. How can merging Yahoo’s disparate online properties with MSN be handled in a sensible way?

I’m very curious to know what other people think, so please comment, especially to reactions to the deal elsewhere (including your own).

Update: Nelson Minar’s analysis is worth reading. (I love the BBC quote.) Paul Kedrosky’s covering the offer as well, but his blog appears to be inaccessible.

Scott Rosenberg on the deal:

These big takeovers — AOL/Time Warner was the biggest — are always about failure in the present and fear of the future.

Here’s one way of looking at the merger, courtesy of Tim Bray:

I have a Yahoo userid. I bet you do too. I wonder how many of those there are, in total? I wonder what that number divided by $44,600,000,000 is?


  1. There is no done deal.

    No details of said deal are out.

    It will be a long time before 1 & 2, hence a long time before I would need to make plans to deal with various Yahoo accounts (mainly Flickr).

  2. It makes sense if all you care about is building the #2 online ad marketplace. Otherwise, it seems a bit nuts. As you mentioned, their tech cultures are diametrically opposed, and their properties compete rather than complement each other.

    I’m curious what would happen to Zimbra. We use it at Lulu, and I’d hate to see it get lost in the shuffle.

  3. I’m not sure what Microsoft is going for. As noted, integrating the properties will be a nightmare if it ever happens. But clearly Microsoft feels this is desperately needed. They are going to be spending every last cent of their legendary cash reserve on this deal. I’ll wager that this is a good candidate for the “beginning of the end” moment for Microsoft as a major force in the computing industry when the history is written in a dozen years or so.

  4. Having been through both large and small tech company mergers, I can honestly say that if the merger happens it’s a short term win for current Yahoo shareholders but otherwise will be a complete mess that in the end will accomplish only one thing: the removal of a potiential competitor of Microsoft’s in the online space. The merger offer is a sign of desperation and weakness by Microsoft and (if accepted) by Yahoo.

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