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Thread: Microsoft (Decline Of)

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When it comes to Humility, I am Exceptional!

Clash Of The Titans (1)- Can Microsoft Money Buy Love?


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Date: Mon, 04 Feb 2008 23:17:32 +1100

Say you don't need no diamond ring and I'll be satisfied
Tell me that you want the kind of thing that money just can't buy
Cos, I don't care too much for Money ...
Money can't buy me love.


-- The Beatles, Can't Buy Me Love.

This morning, I was walking through the tea-room, and I caught the sound of the TV in the corner. It was the Super Bowl. The Giants vs The Patriots. Even though it's not "Real Football", I felt the perpetual allure of telecast Football. It seems that no matter what the code of football I can get drawn in to watching it on TV. I will get up early in the morning to watch the Australian "Socceroos" in the World Cup, reserve time for the AFL grand final. I'll even watch the strange and convoluted American Football, which has a body of rules more complex and substantial than the Australian Tax Act. And of course, I'll always make time to watch a telecast of "The Game They Play In Heaven" (Rugby Union - or "Real Football").

In a similar way, I feel the irresistible tug of the great "Microsoft Buys Yahoo" hype. Since I heard about it on Saturday morning, the Internet and the media have started to buzz with chatter about this. And I can't resist following the news, and adding my own two bob's worth.

Many commentators have remarked "how significant" this event will be for Internet users. According to this group there has been a seismic shift in the user landscape. This speculation is generally along the lines of how this bold move by Microsoft will create a new formidable combined entity that will be able to challenge the Silicon Valley Giant, Google.

And there is speculation that regulators may not approve the deal. And more speculation about how the Europeans will take it. And yet more speculation about how this might put some steam back into the flaccid NASDAQ.

In fact most of this speculation misses the mark entirely.

Because Search Engines have built their business on providing relevant data to customers (users). This allowed them to build customer loyality. The strategy Microsoft is currently adopting is to attempt to buy market share. This raises the question: "Can Microsoft money buy love?".

And this is why the speculation misses the mark. Because Microsoft and/or any combination of Microsoft and Yahoo will not form a search engine that comes close to rivaling Google.

This is because Microsoft does not have the expertise, the technology or the business culture to create a search engine like Google. They are buying Yahoo primarily because Google is now too big to be taken on directly in a share market raid.

Moreover it will be difficult, if not impossible, to merge the divergent cultures of Microsoft and Yahoo. And even if they did manage to cobble together some patchwork of the two cultures, it is unlikely that it would produce a viable business model capable of competing with their more efficient, tightly integrated, Open Source rival.

Sadly for Microsoft, the grandiose scheme of a grand master tapestry weaved from search engine, MS Office, Windows Live and Vista and laid over all the desktops in the world, forming a magic carpet over which Microsoft can stride Megatron-like, crushing their insectile open source foes, is pure fantasy. Even if this figment of Steve Ballmer's imagination could be rolled out, it is clear that users do not want it. They want to be liberated from the desktop, not chained to it.

Microsoft have too much cash and too few options. There is nothing else they can do. It has come to this because they have shown a preference for "zero-sum" games. Even though buying Yahoo is not a good move, there are few other moves available to them. The board has been cleared of other major pieces and it is now too late to regret the wrong moves made in the past. Microsoft find themselves locked into the inevitable endgame, largely of their own making. And their obdurate hostility to Open Source has stunted their growth opportunities, stifled innovation and earned them too many enemies. The superior performance, reliability and interoperability of Open Source systems, and Open Standards gives Google an insurmountable technological edge. There is daylight between them and the nearest search engine.

Even though there are figures that claim that Google has sixty percent of the market, anyone who runs a (serious) website knows that the real value is more like 95%. The supposed 30 to 40 percent of the market that Yahoo and MSN own mostly consists of people using hotmail and Yahoo accounts and then searching for "Hot Gossip about Paris" or "Cool Stuff" etc. Anyone who is serious about finding something, i.e. questions about genealogy, an address and or phone number, a date of some historical event, the atomic number of Argon, the precession of the equinoxes ... those people are all using Google because Google works! And quite a few of the people searching for "Cool Stuff" and "Hot gossip about Paris" are finding that Google does that as well.

In an earlier article, I speculated that the search engine market may be the closest thing in the world to an ideal market. In which case, unless there is government interference, we have the levelest of level playing fields. And if the players choose to play a zero sum game, the best search engine will triumph, and the losers will become fertiliser ... bovine excrement to be sprinkled on the freshly turned sods of NASDAQ.

There have been too many missed opportunities for Microsoft. It seems that they are now trying to woo the Open Source community. But after so many years of bad behaviour, there is no more good will in the well. Microsoft doesn't have much left in the tank ... except money ... and as the Song says "Money can't buy you love".


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