Microhoo!
By Simon Bisson & Mary Branscombe in Editorial
Posted in Uncategorized on
Anyone who’s listened to me rant over the last couple of years will have heard me say that I expect Microsoft to takeover Yahoo!. With Google’s dominance over search, and Yahoo!’s success at what Microsoft wants to build into Live, there’s a certain logic to a merger of the two businesses. Yahoo needs the R&D boost that Microsoft can give it, and Microsoft needs the online presence of Yahoo!.
I wasn’t surprised to see that Microsoft has made a formal offer to Yahoo!, offering $44.6 billion for the company.
Microsoft’s been playing nice with Yahoo! for some time. It’s Windows Live Photo Gallery handles uploads to Flick, andWindows Live Messenger can talk to Y! users. The love goes both ways too, as Y! is one of the first applications to really take advantage of the Vista UI enhancements.
Reading Steve Ballmer’s letter to Yahoo! this morning I noticed a couple of quotes.
The first is the one everyone’s expecting. Microsoft needs Yahoo! to compete with Google:
While online advertising growth continues, there are significant benefits of scale in advertising platform economics, in capital costs for search index build-out, and in research and development, making this a time of industry consolidation and convergence. Today, the market is increasingly dominated by one player who is consolidating its dominance through acquisition. Together, Microsoft and Yahoo! can offer a credible alternative for consumers, advertisers, and publishers. Synergies of this combination fall into four areas:
Scale economics: This combination enables synergies related to scale economics of the advertising platform where today there is only one competitor at scale. This includes synergies across both search and non-search related advertising that will strengthen the value proposition to both advertisers and publishers. Additionally, the combination allows us to consolidate capital spending.
Microsoft has been talking about online advertising as a key play for some time. There’s a lot of advertising money out there, and even if you add in the efficiencies of online over other mechanisms, not enough if it is going to the online side. Google may have a lead at the moment, but it’s one that can be eroded. Besides, there’s enough money out there for everyone to do very well thank you.
The second quote is, for me, the more interesting:
Emerging user experiences: Our combined ability to focus engineering resources that drive innovation in emerging scenarios such as video, mobile services, online commerce, social media, and social platforms is greatly enhanced.
The industry is going through a big change right now, and I thonk it’s one that Microsoft has its finger on. It’s not the move from offline to online - it’s the fact that computing power now has finally reached the point where the boxes on our desks can finally be really useful.
Sure, they can add up and act as glorified type writers. That’s not what we signed up to when we got on the IT train. Management information systems were part of the story, but the real game changer is getting applications to understand context.
Context is a big problem. It’s not just the fact that I’m online now, it’s where I am, what I’m doing, what my diary says, what my friends and colleagues are doing, what my boss wants me to do - it’s everything about me and my world filtered and annotated to help me make decisions. Think of it as SAS-style business analytics about yourself, using self generated social networks from tools like Xobni.
That’s where Yahoo! comes in. It’s been doing a lot of work on tagging and on determining meaning in tags. You’v probably seen pictures of Jerry Yang’s demo at CES, of a map of Las Vegas overlaid with Flickr and Upcoming tags. Yahoo!’s been showing that demo for a while now, and it’s part of the context story: building applications that understand me and my needs.
The endgame is Clippy done right (and on steroids). Instead of an annoying “I can see you’re writing a letter” your copy of Outlook says “I can see you’re going to Las Vegas for a conference. Do wish to contact your colleagues who will be there? Susan has free time in here diary in Wednesday evening. She’s vegan, so here’s a list of suitable restaurants. I’ve also noticed that Jet Blue has a special air fare for the days you want to travel and that will give you enough points for next holiday flight. There’s also a room in your preferred hotel. You might want to pack sun screen - it’s going to be hot.”
Your computer knows a lot about you. Perhaps it’s time for it to start putting it to use. Microhoo! could just be the way it starts to do it…
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