Microsoft – Yahoo Merger

Microsoft wants to buy Yahoo… I don’t even know where to begin. I could go on for hours. This merger would be a disaster of epic proportions and I would get to see it first hand from start to finish. I guess to express my viewpoint you need to understand my thoughts on each company individually.

First Microsoft – Microsoft is a run away success story with one chapter left. It was exciting for years, but they have CLEARLY lost their way. They are trying to do so much at the same time that they fail miserably across the board. Vista is a pile of garbage, MSN is technically inferior to both Yahoo and Google and is marketed so poorly that I can’t see anything I like about the direction its going. However, the one main thing that really defines Microsoft’s decline is that they no longer care about the small individual customer and ALL their offerings showcase this ignorance. For them its all about the dollar and nothing about whats best for the user. You can’t win going forward with leaders that have that attitude. So in my mind they have already lost, we all just have to sit around and continue to watch it happen for the next 20 years (Maybe 10 if we are lucky).

Next Yahoo – Yahoo is a company I respect and admire. Yahoo’s culture is one where they actually care about the client and the customer experience. They try and treat their employees with respect and in turn those employees treat users of their vast internet resources with the same level of courtesy they are shown within their own company. Yahoo’s slow but inevitable decline comes because their product is technically inferior to what Google has to offer. They have struggled mightily to change that perception, but in the end unless something drastic happens their market share will continue to diminish quarter over quarter.

The Merger – So Microsoft a company that can’t get its ducks in a row wants twice as many ducks. Lets get serious for a minute. Microsoft CAN’T win because their viewpoint is skewed from the want the customer wants to what it wants. Microsoft believes whole heartily that the ONLY reason that it isn’t where Google is now is because they were late to the game. They sincerely believe that if they started focusing on search a few years earlier that they would be where Google is now. Thats the problem. They don’t understand that when users truly have choice that Microsoft products rarely win. Microsoft does well because of the closed nature of its business.

In five years time if Microsoft were to buy Yahoo they would have piddled away what market share Yahoo still has and only have a 45 billion dollar hole in their pocket to show for it. Heck, if they want to do it go for it because I will be the first one in line to short Microsoft stock!!

Matt Heaton / President Bluehost.com / Hostmonster.com

15 Responses to “Microsoft – Yahoo Merger”

  1. E says:

    Interesting analysis. Given that you think Yahoo will have its market share eaten away quarter after quarter, do you suggest that it is in Yahoo shareholders’ interest to accept the bid from Microsoft? (Or just sell their stocks at the now inflated price?)

  2. I can not agree more!

  3. Henri says:

    Actually, I think you are missing one possible alternative.

    Perhaps Microsoft knows what kind of company they are now. It has been discussed in many circles that MS will never change “from the inside”. The only way they could possibly steer their ship on a different course is with a HUGE turn of the wheel.

    Yahoo could represent that turn. Microsoft could simply be acknowledging their misdirection, without publicly acknowledging it. Yahoo could be the best thing that ever happened to both companies.

    If MS was seriously wanting to just buy marketshare, then they’d do better to buy up ever non-yahoo search company in the market. it would be cheaper, and would probably yield a better return, since the law of probability means there is more likely a “next google” in one of those smaller companies, then there is in a giant single company like yahoo.

    MS is not looking to buy Yahoo because of market share. they are looking to buy yahoo because it has what they know they lack in order to compete in the next 10 years. (A heart.)

  4. John says:

    Good article.

    The thing is, we know there has to remain *some* competitor to Google. Nobody likes a one-horse race (e.g., Apple vs. Microsoft, Avis vs. Hertz — there’s always a market for the underdog, or the we-try-harder-No. 2′. Yahoo needs to figure out it’s niche in the Google era. Eventually Google’s going to collapse under the weight of its corporate imperialism. Just like Microsoft. It’s only a matter of time. I’m already tired of seeing their ads everywhere.

  5. Aaron says:

    Yahoo! is like a lost child trying to find its mother when child protective services swoops in and takes the kid away and places it with a much better (adoptive) family being Microsoft. Yahoo! has no idea what their doing anymore, I mean they started out being a search engine then became so much more so fast they lost their way while Microsoft has never lost their way and know exactly what they’re doing, hence why they’ve become the largest and damn near a monopoly in the tech industry. Watch out Google, you’re next! ;)

  6. Steve says:

    Microsoft lost their way long ago. They are in the same position relative to Google as IMB was in relative to them in about 1993/4. I guess it is possible that they have actually realised this and are attempting to turn it around but I think they left it too late. Their August 1995 can’t be too far in the future now.

  7. Jason says:

    However, the one main thing that really defines Microsoft’s decline is that they no longer care about the small individual customer and ALL their offerings showcase this ignorance.

    This small individual customer would LOVE Subversion support on Bluehost, as would many others. How ’bout it?

  8. icyone says:

    Moot as yahoo turned them down…

  9. Charles says:

    Matt,

    Like your article and could not agree more.

    I too feel that this merger or takeover would be a big disaster for Yahoo and would be their down fall. They now have a lot going for them.

    Microsoft, on the other hand, cannot seem to keep it all together.

  10. John says:

    I couldn’t agree more Matt. I was suprised that you actually can articulate yourself pretty well. This is the first CEO blog I’ve read I just stumbled upon it because our site B-Study.com on BlueHost is down right now. I was kind of fishing around looking at various stuff.

    I will say that Aaron did a good job of taking my call and moving us up the chain of command.

    This is what I believe take it and a buck and buy yourself a cup of coffee.

    If the dollar keeps going south like it has been it aint gonna matter. Our economy is in deep trouble I think most people don’t realize how serious it is right now.

    So I don’t think the question of the hour is not will Microsoft be around in five to ten years? The question is will the U.S. of A still be around in five to ten ?

    Batton down the hatches Charlie we’re going for a ride.

  11. Dave Doolin says:

    I am actually hoping Microsoft does manage to buy Yahoo, because I do not think they will be able to survive that purchase in their current form. They’re talking about taking on debt!

    It would be a good thing for everyone having MS a smaller, more nimble, more customer oriented company.

  12. Bryan Dorr says:

    There is always Linux and OpenOffice. It may not have all the bells and whistles, but it may get the job done.

  13. Ken Fine says:

    MS has not changed from within in its “phagocytotic” psychology to rudely engulf attenuated and limping organizations. MS should concentrate to maintain its existence rather than to bully Google’s might in search engine market.

  14. Pin says:

    The web-based in rising, and that is pretty much nothing MS can do and to stop. Pity enough, Yahoo didn’t change fast enough! Google, with its Big but small concept, wins customers’ heart and continue to grow.

  15. johnk says:

    Google has a few great apps. Yahoo has some great apps too, but not the market’s favor (and more bloat apps unfortunately).

    Microsoft – I avoid their sites. They aren’t that good. I hope they don’t buy Yahoo.

    My main reason why – Yahoo bought Zimbra. Zimbra’s an amazing app. If MS buys Yahoo, they’ll either kill Zimbra, or hold it hostage. I want to develop on top of Zimbra, not a hybrid Zimbra/Exchange monostrosity.

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