Much ink — and even more bits — has been spilled over the unsuccessful takeover bid attempt by Microsoft Corp. to grab Yahoo.
When I heard the news, I recalled an incident from my youthful career in the stamp collecting business. Don't laugh: there was such a thing, once upon a time; it still exists, albeit in a smaller scale. But I digress.
Anyway, the gentleman for whom I was working at the time was at an attorney's office, about to turn over a $2 million check to buy a certain stamp firm which had a huge publishing arm and concessions in stores such as Woodward & Lothrop (I told you this was a while ago).
At the last moment, his attorney asked him, "John, what are you buying that you can't duplicate more easily and at less cost?" John, one of the most brilliant people I've known, thought for a moment, tore up the check and walked away from the deal.
With Yahoo, what was Microsoft going to buy that it couldn't duplicate? Not much, I thought beyond online search and some advertising platforms. Turns out I'm not alone in that line of thinking: veteran Microsoft watcher — as in 25 years of doing this — Mary-Jo Foley, author of the new book Microsoft 2.0, about the company from which co-founder Bill Gates retires in July, agrees, as she noted in an e-mail interview today:
"I think [Microsoft CEO Steve] Ballmer and CFO Chris Liddell and Platforms/Services Chief Kevin Johnson initially thought of Yahoo as a quick fix for its search-share and ad-inventory problem.
They really underestimated how much companies in the [Silicon] Valley hate Microsoft. They also underestimated how much their own shareholders and investors thought the deal was too expensive with too little potential payback.... Yahoo's infrastructure is based completely on open-source products; Microsoft's is based on Windows and.Net was it really going to be possible to combine these to leverage the economies of scale Ballmer promised. I think lots of Microsoft watchers were doubtful. … Microsoft came around to realize that they were not going to get $44 billion worth out of Yahoo. …"
As to whether Dulles-based AOL — which sells a fair amount of advertising itself — would be a good target, as some have suggested, Ms. Foley has her doubts: "AOL is seen by many in the tech space as an also-ran, just like Yahoo. What would Microsoft get out of buying [them] — other than some more content and sites it could offer to advertisers as places to run online ads? AOL services overlap with many of the Windows Live/MSN services/sites."
I have to agree with Ms. Foley, and I look forward to reading her book. Microsoft may be the company some users love to hate (and which Apple, Inc., likes to rib in their "I'm a Mac" ads), but there's little denying that Microsoft is a major tech influence, and one we'll be living with for years to come. Understanding them, I believe, is essential if you're a technology decision maker, or an end user.
— Mark Kellner, The Washington Times
