December 21, 2014

Microsoft's Own Problems Could be Reason for Wanting Yahoo

If you’re watching the Microsoft and Yahoo situation at all, these next few weeks will prove to be the most fun yet. It’s getting down to crunch time, albeit one that Microsoft has imposed. I’m getting this feeling like it’s an inevitable deal between the two and the companies are just going to play out some charades for the public until it’s finalized. Yahoo just wants to get the price of their stock up before any buyouts, takeovers, or mergers and who could blame them? So why does Microsoft want Yahoo so badly? The short answer is this – Windows Vista and MS Office.

Wait a second, aren’t those the two big products that helped Microsoft get to be as big as they are? You bet. The problem is, people don’t care anymore about how cool Windows Vista is or all the features in Excel. Ask yourself this question: How much of what I do on the computer can I not do for free or through the internet? People are spending increasingly more time online doing the bulk of their daily work. There is of course the occasional document or spreadsheet to be had but that sums up the general consensus.

Microsoft has invested buckets of money to develop and enhance Windows but it might end up being money that could have been better spent. Once you’re online, who cares what happens behind that browser? None of those features matter when you have Firefox or IE up all day. As far as the suite of office applications goes, you’re not using 1/10th of the capability. Did you know that you could do essentially everything you want or need with Google’s Documents… online? For free.

The skies over Redmond must have been cloudy these last few years because Microsoft apparently didn’t see the growing trends. As people are migrating to mobile devices, using their phones for most of their daily tasks and communication, Windows Mobile will be more important to Microsoft than the next version of Windows. We’re at a point right now where there are a handful of different operating systems and platforms vying for adoption. We no longer have only two choices with PC compatible or Mac. The next few years will see various offerings from the likes of Research in Motion (RIM), iPhone, Symbian, and Android competing with Windows Mobile. Let’s not forget Palm and the other forms of Linux hanging around either. All of these stand a chance at being the first operating system someone gets to know.

The PC trend is slowing and laptops are going ultra-mobile with 7″-9″ screens becoming acceptable. Smart phones are getting a little bigger and mobile internet devices (MIDs) are going to take off this year. Your 15 year old nephew may never even buy a desktop computer or 8lb notebook. The first operating system he buys for himself is likely to be a mobile one. Generally speaking, people are not concerned with how big or small something is anymore. They just want to be able to do what they need to with it. Microsoft must not have seen this coming. Yahoo, on the other hand, did.

The first thing that Yahoo offers Microsoft is online advertising. Sure, it’s not the same as what Google offers with AdWords but it’s still better than anything they’ve got right now. Yahoo also has Yahoo! Go, oneConnect, onePlace, and oneSearch. See, Yahoo made themselves into what they are because of the internet. They were synonymous with it for many years and they understand it better than most companies. They’ve moved away from just being an online portal and gravitated towards the mobile industry being among the first major outfits to offer mobile content. They’ve also gone from being just an information and networking hub to a company offering services that can be used at the touch of a button. These are services that Microsoft wished they offered.

A deal might be finalized within the coming weeks, but the long term ramifications won’t be felt for months, perhaps a year or more. What a company like Microsoft-Yahoo end up looking like is anyone’s guess. My advice for those left standing at the top when this shakeout occurs is this – Do more of what Yahoo was doing and less of what Microsoft was.