Business Insight Zone

So far I’ve only alluded briefly to Microsoft’s proposed takeover of Yahoo, figuring mainly that there was plenty of talk already going around. But a couple of friends have asked for my take, so here it goes, in short format:

• Microsoft can’t compete with Google on Google’s turf, and neither can Yahoo. Google commands a majority — and still growing — chunk of the world’s search traffic, and there’s no reason to expect that the combined Microsoft-Yahoo would have any better traction against it.
• If MicroHoo did enjoy any competitive advantages against Google — Microsoft’s deep pockets fueling Yahoo-led innovation, for example — we could guess that it would take the combined companies a long time to deploy these advantages. The reason: Neither Microsoft nor Yahoo has a great track record in delivering innovative products to market in bang-bang time. Why would the combined entity, which no doubt would be facing the usual internal frictions that accompany megamergers, do any better? And the time lost to friction inside MicroHoo would be more time for Google to make hay.
• Overall, a Microsoft-Yahoo tieup looks to me like a lite version of the Alcatel-Lucent tieup: two ineffective also-rans teaming up to become . . . a bigger also-ran. In this analogy, Google = Cisco, i.e. the suave bully who keeps taking your lunch money, but in a friendly way.
• From the perspective of Yahoo’s owner/managers, they either need to get religion about changing their ways for the better, or they need to take Microsoft’s money and run.

For more, let me recommend this short take by George Colony, and this long, detailed one by Dave Livingston.