Why Microsoft+Yahoo>Google

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The Yahoo Microsoft Merger is a very good idea.   Although Yahoo is in some ways a different culture from Microsoft, It seems to me that both of those corporate cultures have become bureaucratic, sluggish, and uninspired when compared to Google’s freewheeling yet very productive approaches.    Yet very importantly, the thousands of Yahoo and MS employees are very impressive, and certainly capable of great things as the online world is reinvented on a regular basis.

If Microsoft can pool the innovations of the LIVE project with Yahoo’s superb developer support programs, and hire and inspire more people to have the evangelical zeal of Googlers, it could be a whole new online ballgame.

The big reason this makes sense is actually very simple, yet is seems to be missed by many analysts now ranting about this as a bad idea.    It’s a mathematical reason.    The traffic from Yahoo+ Microsoft is very substantial.    Yahoo had more total traffic than Google before the merger – it just didn’t have as much of the lucrative search traffic and did not monetize the traffic as well.  With Microsoft traffic, the combined Yahoo Microsoft company will still initially lag Google in search traffic, but it will have *far greater* total web traffic.    This is hugely significant, especially if Microsoft begins to focus more on how important it is to drive potential searchers to search portals inside their own network.    Fear of lawsuits and lack of interest in what for Microsoft was a small revenue source led them to failure in the search business.     Although the LIVE project was inspired, search share still lags so far behind Yahoo and Google that rolling all this into Yahoo search makes a lot of sense.       The combined company would control an enormous share of  global web traffic, and it won’t take too much imagination or innovation to redirect this far more profitably than now.  

Microsoft remains the overwhelmingly huge legacy player in the information technology space.    Google is the clear leader as the new  player.   Can Yahoo inject enough energy into the monstrous Microsoft machine to compete effectively in the online space?    I think there are many potential pitfalls, but on balance  you need to do the math, which says that in online footprint, content, and market capitalization:

Microsoft +Yahoo > Google.  

News release from Microsoft

Disclosure:   I have Yahoo shares.  In fact I doubled them on Tuesday!  Yippee!

Microsoft offers to buy Yahoo

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I’m feeling kind of smart today after feeling stupid *yesterday*.    I had doubled my Yahoo stake before the earnings call, wrongly thinking that a good report was in store.     However just fair earnings and poor guidance knocked the stock back a few dollars the next day.     But it’s surging today as Microsoft has offered 44.6 billion for Yahoo, effectively making it worth a lot more than yesterday.

Perhaps the price hit after earnings drove Yahoo to some sort of strike point for Microsoft.    At CES I  think I may have been right to suggest there were high level meetings between Gates and Yang regarding a Microsoft Yahoo Merger , clearly MS must have been thinking about this for some time.  Rumors have been swirling for over a year.

China Visa

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It’s about time to get a Visa for the April trip to China.    Hey, this is more than a Passport!   And what’s up with the pricing – $130 for Americans and less for *everybody else*.  Hey, I thought ping pong diplomacy worked!? 

Number of Entry

American

Citizens of other countries

Single Entry  

$130

$30

Double Entry 

$130

$45

Multiple Entry for 6 Months

$130

$60

Multiple Entry for 12 Months

$130

$90

Multiple Entry for 24 Months

$130

$90

Intel Booth, CES 2008 Pic #225

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Intel Booth, CES 2008 Pic #225

Originally uploaded by JoeDuck

I’ve posted a lot more of my pictures from CES at Flickr. I was uploading from my Treo before, but these were taken with a decent camera.

Intel had one of the largest and most impressive display setups, complete with this “green screen” booth where they’d create special effects on the screens.

The carnival style booths at CES where the companies did some creative thing were a lot more interesting, though some of the gimmicks were pretty lame. Parties and concerts probably gain a lot more attention for a company than booth babes or silly actors, though the ROI on many of the CES events would be hard to measure because much of CES is devoted to schmoozing customers or representatives rather than making actual sales or even brand building effects.

Google’s reinclusion nightmare

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John Honeck has an excellent piece about the challenges with Google’s site reinclusion process, a virtual nightmare of inconsistency and confusion.     I’ve seen the benefits and pitfalls of good and bad Google rankings and indexing at many sites, and “inconsistency” is the only clear pattern.    On the one hand I don’t have enough information to fully “blame” Google for the problems.  They have their hands full deleting junk or deceptive sites created by extremely sophisticated spamming operations around the globe, but as I noted over at John’s blog:

This is an *excellent* set of observations, and with all due respect to my pal Matt I’ve always been totally unmoved by Google’s suggestion that making the reinclusion and webmaster information process more transparent would somehow jeopardize Google’s ability to kill spammers.

In fact from my observations over the years I think the lack of transparency, along with initally vague webmaster guidelines (now fixed), have caused many if not most of the spam problems as both spammers and regular web folks vie to push the limits of the rules while staying in Google’s good graces. The big problem now is the profound inconsistency in the way sites are indexed, and the fact that it’s very difficult for webmasters to get much feedback from Google.  Google would be well advised to consider better automated or customer pays routines to examine websites for problems and allow reinclusion, because the frustration is building more than they realize in the webmaster and small business community.

Current TV filing for $100,000,000 IPO. Initial PE ratio = infinity!

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Today Current TV, with Al Gore a prominent investor, is filing for a big IPO.    But there is a problem.   They lost a lot of money “making” their 64 million in revenues last year.     Will they ever be profitable?  Global warming or not, I’m guessing they will be profitable about the same time that hell freezes over.

I still just don’t get it.  I understand why video clips are fun and a significant development online, but I don’t get those who express *economic* enthusiasm for online videos produced by … you and me.   As I’ve noted before about online video, I don’t understand why people think video sites can make money.   Youtube cost Google 1.6 billion but doesn’t make money.   Podtech had a brilliant, well executed, forward vision of the online video landscape.   They even had the ultimate forward looking blogger spokesmodel Robert Scoble (who has just moved to FastCompany.com and is right now hanging in Davos with the uber-economic-elite).  Despite this Podtech failed to deliver on the promise of monetizing quality content to the larger user base.   I had a chance to talk about this with John Furrier at CES.   John told me he’s still very bullish on video, but Podtech is going to focus more on a model where they’ll be producing company videos for corporate clients, helping them to leverage social media advantages.   We also talked about how hungry many big companies are for those who understand social media and want to leverage that power to their corporate advantage.    This, in my opinion, is where you’ll see most video and podcasast production efforts moving over the next few years.   The money is in leading corporate clients into the uncharted social media waters rather than trying to build website visitation and monetize clips.   The latter is a very dead end in my view.

So, should you invest in Current TV’s IPO?   Sure you should, right after hell freezes over.

Yahoo carnage coming at conference call.

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As a Yahoo enthusiast and shareholder it’s been hard to watch the company struggle so hard over the past few years only to lose ground to Google, especially because Yahoo’s social networking efforts and web 2.0 initiatives have in most ways been superior to Google’s.    Flickr is the best example of a superb Yahoo application that is more used than Google’s Picasa (which is also excellent but was late to the scene so most early adopters are sticking with Flickr, which is somewhat better anyway in my view).  

Henry Blodget at Silicon Valley Insider is reporting that Yahoo will proceed soon with the drastic layoff scenario – rumored to be some 1500-2500 people.

Human issues aside, this will likely be very good for the stock price and company’s future prospects.    Google learned early on that the key to profitability was scaling up systems without comparable scaling up of staff.   Google thus leveraged the incredible efficiency of computers to generate more profits.   Yahoo, on the other hand and especially with Terry Semel in charge, sees themselves as more of a media and content producer with all the labor intensiveness and lack of internet efficiency that approach entails.    Google was right, Yahoo was wrong.    Even Google’s own Youtube, a masterpiece of creating cheap content without staff, is struggling to monetize all the content and traffic.    

I’m oversimplifying the relationship of content production to profit here, but in general terms I continue to believe that the expression “content is king” was *never* true on the internet, and that in many ways sticking to this mantra cost Yahoo a big part of the ballgame.    Yahoo actually used Google search as Yahoo’s search tool for many years, and could certainly have aquired Google in the early days for millions of dollars rather than becoming eclipsed by Google which now has a market capitalization of about five times Yahoo.   Why didn’t they do it?    Google was “search”, not “content”, and Yahoo foolishly believed content was king.    

Content is a pawn in the big online chess game, and don’t forget it.    

No Country for Old Men * * *

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This finely crafted film has been judged by many to be a masterpiece, but I think this over-rating is simply because it offers a “different” approach to the genre – something critics who have seen far too many films enjoy a lot more than they should.   No Country for Old Men is another quirky vision of America from the Coen Brothers.  It’s a grim, gray, and violent vision of the Western landscape.   Mostly centered on a psychopathic murdering rampage by a the seemingly indestructible Anton Chigurh, the film’s characters stand as stark metaphors for various features of humanity. 

I read Roger Ebert’s glowing review and still don’t see why he loved the film so much, but clearly I’m in something of a minority to suggest that a film like 3:10 to Yuma is a better movie in both style and treatment of the theme of morality, violence, and moral ambiguity.

Gutenberg + 550 years = Our ADDd Internet

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John Naughton, writing in the Guardian, has a nice piece about the reading revolution inspired by Gutenberg and the uncertain future of our online equivalents to the books we have held dear for several centuries. 

Studies are noting how fleeting our attention has become, especially in our young folks.   In terms of “total enlightenment” I actually favor the quick skim to the in-depth read because I believe retention is better for the short bits of information as well as better for the “key concepts” that you get quickly from surfing on a topic.  

Thus if I read a carefully crafted work I’ll be moderately informed but then lose most of the information over the years, where if I jump around to 20 sources I’ll be similarly well-informed but will retain it better.

All that said, I’d agree with internet critics who suggest we may be losing our ability – to the extent it was ever there – to quietly and deeply reflect on topics.    Also I’d agree we don’t know the consequences of this shift, though from the national dialog about politics, religion, and other things I’d say we aren’t really falling back or making much progress.   We are a modestly contemplative primate, and we can’t escape that fate regardless of how we input the information.