Microsoft Chief Steve Ballmer spoke to the Microsofties today about the companies plans. For Yahoo merger followers there was nothign much new as he simply reiterated this point:
Related to Google and our search strategy are the discussions we had with Yahoo. I want to emphasize the point I’ve been making all along—Yahoo was a tactic, not a strategy. We want to accelerate our share of search queries and create a bigger pool of advertisers, and Yahoo would have helped us get there faster. But we will get there with or without Yahoo. We have the right people, we’ve made incredible progress in our technology, and we’ll continue to make smart investments that will enable us to build an industry-leading business.
Some would argue that the reason Microsoft needs Yahoo is that their online strategy has so far failed to do very much. My take is that they have not moved the online market as they’d hoped, but that they also have not worked nearly as hard in this area as they could have because Microsoft (correctly) sees that their huge presence in the software market is where the big money remains, at least for the next few years. They have chosen in large part to protect their huge revenue ship rather than act more aggressively and nimbly (and expensively) to find online revenues or pull market share from Google. I think many analysts – especially those in blogging – fail to recognize that Google’s revenues simply pale in comparison to Microsoft’s. Google has the lion’s share of online money but Microsoft still has the lion’s share of the lion’s share money, which is in software, gaming, and entertainment. I agree that the power curve is shifting from MS to Google, but MS remains the 800 pound revenue Gorilla. Money beats buzz to the bank every time, and this point is not lost on Microsoft or Google.
Disclosure: Long on YHOO