Okay, Microsoft’s attempt to buy Yahoo fell apart — so now what? Well, in his letter to Microsoft employees, chief executive Steve Ballmer says that Microsoft will be just fine going forward without Yahoo. As a company, that may be true. But what about its long term goal of taking the lead online?
If current trends hold, Microsoft is not going to be overtaken by Google in the online realm. It needs to either step up its game or purchase some other big name Internet companies. Luckily, it just saved itself about $50 billion today.
So the question now is, who will Microsoft buy? Already, quite a few people are pointing to AOL. It’s a fairly obvious choice. Time Warner badly wants to spin them off, and they have held talk with none other than Yahoo about a potential merger. While AOL has long been looked down upon in the Web 2.0 world, there are some signs that it could be turning itself around in a meaningful way.
Beyond AOL (and of course Yahoo and Google), Ballmer himself has noted there aren’t too many really large Internet companies out there. Social networks Facebook and MySpace both certainly qualify, but MySpace still has an ad deal with Google and Microsoft already owns a piece of its main rival, Facebook. Could Microsoft try to buy a larger portion, and thus more influence, in Facbeook?
Here’s another idea on a smaller scale: Digg. Microsoft has an advertising deal with the social voting news site already, and can certainly afford the rumored $200-300 million Digg is looking for to sell. As to how that would go over with the Digg community…well, lets just say those Flickr protests (Yahoo owns Flickr and its users were unhappy over the proposed takeover) would probably look pretty tame when compared to what we’d see on Digg.
So here another idea: Twitter. The online micro messaging service could likely be had for what Microsoft would consider pocket change — even the highest valuations are “only” $150 million. There would be a lot of questions as to what Microsoft would actually do with Twitter (as well as what anyone actually does with Twitter), but it would certainly be a nice, buzz-worthy purchase in the short term.
What about another buzzed about service, FriendFeed? Given that most of FriendFeed’s core team comes from Google (with more coming every day), it seems unlikely they’d want to sell to Microsoft.
Who else? Maybe Meebo, the IM service recently pegged at $250 million? The $560 million valued Ning? We’re really just throwing names out there now based on high valuations. It’s simply hard to say what Microsoft will do at this point, but you can bet it will do something — soon.
[photo: flickr/wwhyte1968]
16 Comments
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Wing Yu said:
To compete against Google, Microsoft shouldn’t be buying companies. They should simply work on creating a better product and marketing it. Case in point, how many people out there know what URL to enter into a browser for Microsoft Search? Then again, I don’t even know if it’s called Microsoft Search, Live Search or MSN Search…
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The Old Coot said:
It always had 50 billion to burn, probably more like 100 billion, but why buy a company that in 6 months time is’nt going to worth a quarter of what it was before MS pulled away from the deal.
MS will probably pick it up for a song unless it can reinvent it’s self and in this day and age it better do it in the next month.
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MG Siegler said:
@Wing - I 100% agree with you, but I just don’t see that happening…
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MG Siegler said:
@the old coot - Good point. These next 6 months are going to be the most critical ever for Yahoo. It’s not much of a direct comparison, but remember when Friendster walked away from Google’s $30 million offer in 2003…
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JojoMas said:
Buy a larger share of Facebook? Maybe, but why spend money on a project that isn’t, and probably never will, generate meaningful profits.
Twitter? No. Even if they wanted a similar service, they could easily replicate it. But I’m under the impression Microsoft wants to do real business now, and step aside from failed web 2.0 iniciatives.
Friendfeed? No…
Digg? No…
AOL? Maybe. But they don’t add much value.
I guess Meebo and Ning are good starting points. I could see Microsoft buying working, and proven, web applications as to garner a user base, and probably trying to lock-out niche networks to deliver advertising to, Xbox-Live style.
I guess we’ll see. -
JojoMas said:
*lock-in*
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Sean said:
They are going to wait for Yahoo!’s stock price to drop and Jerry Yang to get fired. With a non-religious CEO in place, they will come back and close a deal at a significantly lower price.
No number of startups will give Microsoft what it really wants: legitimacy online. They want the Yahoo! brand just as much as they want the Yahoo! properties.
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Workpost said:
Microsoft should pour some extra money on the team(s) responsible for ASP.NET, C# and Visual Studio. They have to be among (if not) the most talented and innovative people working for the company.
They won’t waste the funds.
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snyggast said:
osx is taking over the planet. so they need to fix their operating system. Windows 7 should be a linux distro with Vista interface. OSX is the best linux distro there is. First, however, they need to fire all the lazy unproductive employees. If Google got some, I’m sure MS has thousands.
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wallow said:
snyggast, you know osx actually REDUCED in market share this year right?
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A Blogger said:
@MG,
If you read Steve Ballmer’s email- this is about Internet Advertising in Search, Display & Video. With aQuantive purchase MS starts to get in the Agency game. With Yahoo, it would have got in the Search, Display & Video game, and seriously increased its position in Search Ads.
If MS does not go through MS will look at other Advertising companies, Ad Networks and Ad Platforms. Most of Google Search Ads run on publisher sites- not on Google.com, so MS is missing a publisher Ads solution.
I would add other Ad Companies, like AOL bought Ad.com, Comcast bought Adify.com, and Yahoo bought Blue Lithium, Google bought DoubleClick. Vertical Networks like Glam.com, and other Ad Platforms like OpenX.
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Fabian Schonholz said:
It will be interesting to see who they go after and how they execute their acquisition strategy.
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tzik said:
Digg? Twitter? You must be joking. MS is looking for major PV generators, not some tiny web 2 buzz bubbles. We’re talking top 10 sites here.
And there ain’t to many of those up for grabs. Yahoo said no, Facebook is a monetization disaster, so is Myspace even if News Corp agrees to sell, Wikipedia can’t be bought, Blogger is spoken for, so is Youtube.
Microsoft is in deep trouble, Internet wise, and the only solution in site is starting to be creative, more open than open, risk taking and fun. - everything MS knows how to be better than anyone!
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A Blogger said:
@tzik,
Sounds right. MS is in deep trouble and for teh first time could lose everything if it does not make some moves. Unlike last time against Netscape, there is not Bill Gates to move the company so Ballmer has to do something.
As you said tiny Web 2 buzz bubbles starups with unkown ad revenue like DIGG, Twitter, Ning, will not move the needle. The top 10 sites not counting Google, MSN, Yahoo, Wikipedia, eBay & Amazon, Apple by comScore MediaMetrix Top Web Properties are:
1. AOL 100M Uniques ($10B)
2. Fox/MySpace 88M Uniques ($10B)
3. Ask/IAC 55M (10B)
4. About/NYT 47M (Unknown $5-8B)
5. Viacom 44M (Unknown)
6. Weather Channel 40M ($5B)
7. Facebook 36M ($10-15B)
8. CNet 35M ($2-4B)
9. Glam Media 35M ($1-2B)
10. CBS Online 39M ($5B)1.
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A Blogger said:
Microsoft can buy any and almost all of the Top 10 for the price Yahoo wanted!
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Kawika Holbrook said:
Microsoft wanted Yahoo for the page views to “scale” its search/ad strategy. Nothing comes close to scaling, so even if they buy the rest of the top 10, they’re no where near where they wanted to be. How else can they scale? If they really believe in their technology, how about spending billions to sponsor free content?
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