Microsoft's quest to purchase Yahoo! continues to puzzle me. First, there's Yahoo! itself as a company; I can't quite figure Yahoo's business model and why the company might be worth $45 billion — I can't help but thing of advertising revenue as just beer money. And Yahoo! itself evolved from a simple list of Internet resources into a huge aggregation of barely related resources. (I stopped reading Yahoo's new pages when Google News provided a more interesting new feed.)
The other question is about Microsoft itself. As others have pointed out, a hostile takeover rarely works in the Internet world. As far as I'm concerned, however, I can't imagine that Yahoo! would survive a Microsoft takeover even if it were friendly. Despite Microsoft's deep pockets and rigid control over the desktop, Microsoft's internal efforts to create a popular web site relevant to Microsoft's business model failed utterly. Microsoft clearly intends to modify Yahoo!'s operation to support Microsoft's goals (so I expect that Yahoo! will one day suddenly stop working with non-Microsoft browsers, for example).
This entire operation reminds me of AT&T's purchase of NCR. AT&T failed to create its own computer business; they purchased NCR instead, installed the managers who had failed at running AT&T's internal attempts, and promptly ran NCR into the ground. In the end, the mistake destroyed AT&T: AT&T's "trivestiture" allowed them to dispose of NCR while distracting investors by with the creation of Lucent.
Pointless aggregations are not a sign of strength. Disaggregation fosters innovation; random aggregations and forced integration generally fail miserably. Microsoft is about to make a company-killing mistake.
Topics: · business · internet · microsoft
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