News today that Yahoo is playing hard to get with Microsoft - http://www.nytimes.com/2008/02/10/business/10yahoo.html?ref=technology - holding out for more money. They will surely get the money - and Microsoft will get Yahoo - but does any of this make sense?
I don't have much hope that the folks at Microsoft will reverse course. Tech is littered with stupid acquisitions....Ebay buying Skype, AOL buying Netscape etc. etc. MS is trying to take a short-cut to relevancy by buying a search portal that is quickly becoming irrelevant. Yahoo could disappear today and I wouldn't really care. Yahoo is very very lucky that they will be getting Microsoft's money - as this is really the only way the brand can be saved.
What should Microsoft be doing instead? (As the company needs to do something as it's core OS becomes less relevant and software moves to a free service).
1. Build the Windows Laptop. Or more precisely, the $200 Windows laptop. In my house we will never buy another Windows machine as they simply suck compared to Mac's. But we may buy an EEE-PC
Why....because the EEE PC is cheap and small. If MS wants to make it's OS relevant, and it's productivity software utilized outside of slow moving and too rich corporations and institutions (ie the rest of us) then they need to couple hardware with software. Give away the PC to get us using Vista, Office and the online services. Make the OS actually work well by controlling the hardware and integrating the software. Go low-end because this market huge, will get wealthier, and should get hooked on MS services.
MS has done pretty well with hardware (X Box) etc.......so there is some expertise. A good $200 Vista machine would make a splash...and pave the way to a real $100 dollar laptop that could help change the world while insuring that Windows has a future in the 21st century.
2. Buy Newspapers! Lots of newspapers. Newspapers are seen as low growth dogs now. Values are good. They make money. Microsoft should distribute some of its ill-gotten monopoly rents by making some honest investments in content. With $40 billion or so dollars MS could put together a truly compelling slate of papers - national, regional, local - tie it together with MS software and services....etc. etc. Oh yeah..I should say print - buy magazines also. This idea leads into my last idea.
3. Build a "Kindle" killer - e-book reader. But not really for e-books. But for newspapers, magazines and yes - video! The Kindle sucks because it is ugly - but also because Amazon has not figured out the real business model. The real business model is to aggregate content by interest. I would pay $100 a year to read on a good portable device all the tech and higher ed news from around the country (including blogs).....I want my news in topics I want in a reader that makes it easy to read. If Microsoft owned content (and even if they don't take suggestion #2 they should still do this)...then any portable news reading device could be that much more compelling. And the market needs this slab, this thing - that can do text nicely and play video and be a thing for consuming content. Computers are for creating content. We need something good for consuming content....with a form factor like the Sony Reader but that can push all content including text, video, audio etc. etc.
Does this mean that MS should raise the white flag to Google on search? Yes and no. Yes in the browser. But the browser will be less important as mobile devices becoming more important. Win Search on phones - or on the slab content reader I want. Win search when embeded with other devices and applications. Win search by owning content and then being able to give good content (MS should be buying as many video libraries as they possibly can).
In the end this will not happen as I think that MS is basically out-of-touch and slow. The smartest buy this year was Amazon buying Audible (and yes...coming out with the Kindle...which will get better - even if it sucks ugly and is dumb in content now)....
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