Tag Archives: microsoft

Oink

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Nick Carr over at Rough Type has one of the cleverest techno posts written in some time as he addresses the  little brouhaha over enterprise vs consumer software.    In fact I’d give him the tech blogging Pulitzer Prize simply for this turn of phrase:

Rubberneckers leaping gleefully onto the Techmeme pig pile

More to the point he’s talking about the silliness of the technobabbling echo chamber as well as the silliness of enterprise software folks making mostly foolish distinctions between types of software.   

There is an alarming trend among mostly “old school” developers and programmers and analysts to make a variety of questionable assumptions about technology that are based on failing to recognize how different things have become.  Even new school folks routinely overbuild websites and application environments simply becausae they’ve been taught that is the way you do technology. Worst is the idea that complex software is needed to run complex companies.   WRONG!    It is true that complex software is almost always used by big companies, but this is primarily a function of legacy issues (ie they started their systems back in the day when there were NO simple solutions) and IT turf issues (e.g pretend you are the head of Exxon’s IT division and you are asking for a BIG raise and more options.   Are you more likely to get the promotion by proposing a shift to Google documents across much of the corporate enterprise, or by proposing a highly customized SAP solution only you understand?   Also, it takes a kind of innovative thinking that I think is sometimes missing from the school of old timers.

Yahoo! WAKE UP!

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It’s very frustrating being a Yahoo shareholder.

Not because Yahoo isn’t a good company, in fact Yahoo is a *great* company.

Not because Yahoo doesn’t seem to “get it”, Yahoo arguably “gets it” better than almost all other companies in terms of Web 2.0, the social networking space, and in terms of the importance of open architectures and developer support.

Not because Yahoo doesn’t have any of the lucrative search market share. They are the clear 2nd place in search with huge search activity and over 20% of global internet search traffic.

It’s frustrating because despite all the advantages, Yahoo just can’t seem to capitalize on all these advantagesto turn a good buck, monetize the site to full potential, and increase my share price. Google, with total traffic levels about the same as Yahoo, has a stock capitalization some *FIVE TIMES* that of the company with arguably very similar potential for profits.

Little internet companies and even many very big ones have a good excuse for failing in profitability – online biz is a cold and cruel world and for all the but the huge players everything can turn on a dime. Yahoo, on the other hand, has no good excuse for failing. They are a market maker in terms of online search, global internet reach, online video, and …. this just in for me …. they are HUGE in the Social Networking space. Yes, that would be the social networking space everybody is so excited about. What do I mean by HUGE? Let’s review this graph from Compete.com via TechCrunch.

First we need to note that Compete.com is not even remotely a perfect measure, and also adding “unique visitors” in this fashion is counting some folks twice. Also, they are listing sites like Geocities that are arguably not social sites, though I’d argue they could be “open socialed” quickly with an effort in that direction. Since the overlap at these traffic levels is probably not a very big deal, and also assuming they spend time as if the Yahoo properties are separate sites their ad potential may be the same as if they were different folks, these numbers are important and relevant.

So, the big players first:

Myspace: 72 million unique visits in October

Facebook: 33 million

Yahoo: 38 million …..

<screeching reverse halt noise here>

What? Yahoo has more social traffic than Facebook?! Yes they do if you add Flickr and Geocities and Yahoo Groups.

Aside from the fact that Caterina and Stuart and the Flickr gang are probably thinking they sold out a bit too cheap at only 20 million, Flickr is an astounding success with some 14 million users and growing. Personally, I’d rather hang out at Flickr than Facebook anyway.

So, where does this huge number of users in the Yahoo social networking juggernaut leave us?

Frustrated baby, frustrated……

Blodget: Microsoft implying they may be poised to buy Yahoo

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Henry Blodget’s got an interesting take on the recent UBS talk by Microsoft where they suggested a plan to capture “30-40%” of the search market over the next several years.  Although the literal reading of this does not seem to suggest a Yahoo buyout, Blodget is correct that it is simply absurd, even given the normal Microsoft bluster factor, for Microsoft to think they can capture this much of the market in a short time …. unless they buy Yahoo, which as Blodget points out gives them all this, and more, instantly.  

Given Yahoo’s modest capitalization of some 30 billion, and Yahoo’s huge online prospects (they have similar traffic to Google but with far poorer monetization of traffic), it would not be prohibitive for Microsoft to nab them.

I’ve noted before this would be an excellent move for Microsoft.  It still is.

Disclaimer: I’ve got some Yahoo shares.   Not that they are doing me much good right now.    But they’d probably jump in value if Microsoft bought them.   Did this influence me writing about this?   I don’t think so, but since money is the root of all evil you can’t really trust me on Yahoo analyses, disclaimers or not.   Also important is that nobody can predict the market swings with any forward looking reliability.   So there. 

Open Social challenge – Guilt by Open-Social-Association ?

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Don Dodge has an excellent post today where he suggests the Open Social hype machine has spun out of control.    I don’t really agree with him because I think Open Social is a sincere effort by Google to create the truly open social networking many have been wanting for some time.    At the same time I would say there are a lot of challenges with Open Social, and it certainly was an aggressive move to kick Microsoft in the Face-book and take the winds out of the Microsoft Facebook partnership deal.    Google is remarkably good at being sincere, innovative, brilliant, and ruthless all at the same time.  In fact it’s become a hallmark of their success though they never seem to acknowledge the ruthlessness of some of their decisions – it’s kind of a collective delusion at Google that what’s good for the Google is good for the gander.   This is often true, but not always.

Back to Don’s interesting point:   What happens if a friend of yours – on whose profile you appear as a “friend”, goes over to a porn site which is using Open Social networking.   Does your smiling mug and name wind up appearing next to objectionable material?   Yikes – you could lose your job, wife, and family all in one fell Open Social swoop and you never even did anything !     

Although I can’t say be sure I’m confident this problem has been solved.  Probably via some form of content controls or content ratings for sites that are allowed to participate.  Will there be bugs in this?  Of course, as Don notes Plaxo already had a problem with their Open Social implementation, but on balance I think it’s still reasonable to see this as a social networking sea change, albeit one that will take some time to shake out.

San Jose Mercury News – A Cautionary Tale from Business Week

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There is a great summary at Business Week of the  remarkable rise and pending fall of Silicon Valley’s newspaper – the San Jose Mercury News.     They note that in many ways the Mercury News saw it all coming, but still failed to position itself to profit from the migration of offline info to online info.  

Although the article does not make this point, to me the failure supports the idea that paradigm shifts do not come from old systems evolving into new ones even when the old systems “get it”, rather they come from new folks thinking out of the old boxes and building the next generation of innovative solutions basically from scratch.  

Obviously new technology rests on the shoulders of old technology, but it seems reasonable to assume that the next big things are not going to come from the previous big things, they are going to spring up from the harsh, quirky, and shifting sands of technology and innovation.     I would suggest that IBM might be an exception to this notion but clearly Microsoft, then Yahoo and Google, now YouTube, Myspace and Facebook all fit this model of major changes coming more from scratch than from a slow simmering of existing ideas.     This also helps explain the challenges of Venture Capitalism in finding “the next big thing”, which may right now only be known by the glimmer in a college kid’s eye.

If so, who is next?

Microsoft loves Facebook

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Microsoft bought a 1.6% stake in Facebook today for $240,000,000.   Reported at NYT here.  This give a market value to Facebook of right about 15,000,000,000.   

WoW

I do think Microsoft is smart (and Facebook stupid) to make the cash outlay much smaller than most had thought, giving them an alliance and a powerful foothold without spending the “billions” that apparently would have been required to buy a big stake in the internet’s latest wonder site.

With *revenues* of about 150 million Facebook is now valued at …. wait for this ….. one hundred times revenues.    This is simply a spectacular and speculative valuation, even by internet standards where  even a Google is only valued at about fifty times earnings.   Note that if Google was valued at 100x their expected revenues over the next year their capitalization would be something in the neighborhood of 1.5 trillion dollars.    

Many will suggest that the value in keeping Facebook away from Google was so great that MS has won big, but I’d predict not much will come of this alliance.     Like many online regulars I’m already tiring of Facebook and looking for a completely open, portable social application.   To justify today’s value Facebook will need to grow pretty much like nobody’s ever grown before.    Sure, it’s possible, but I think this will go down with Google’s YouTube aquisition as good money after bad, because monetizing Facebook traffic will be far more problematic than Microsoft seems to think.

All that said, congratulations to the Facebook team who must be popping a few corks about now…. no champagne is good enough for this news.

Google v Microsoft over Facebook

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Henry Blodget over at Silicon Alley Insider has a thoughtful post today predicting that Google will beat out Microsoft in the Facebook sweepstakes, and that the real winner here is Facebook founder Zuckerberg who will walk away from any deal with a jaw dropping, market driven valuation of Facebook.     Blodget notes that even if Microsoft spends enough to win the Facebook bidding war Google wins again because Facebook will simply milk Microsoft’s cash cow leaving them with little in the way of a superior online MS environment.

I think this last point is particularly relevant, and poses one of the key threats to Microsoft’s long term viability.    Unlike Google and even Yahoo, new companies don’t appear to see a Microsoft aquisition as much more than a big payday.   It’s not clear to me that Google does any more for the companies it aquires than Microsoft does, but I do think the perception is that Google will inject innovation and enthusiasm where Microsoft will just absorb you into their failing online collective.    I don’t think these assumptions are, on balance, valid, but I think they are part of the equation when new companies and their generally young, inexperienced founders are courted by the big players.

Google + Doubleclick? Microsoft cries “Advertiser Monopolizer!”

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Dana Baran over at WebGuild blog has a great short article summarizing Microsoft’s case against a Google takeover of Doubleclick.   The chart (from the MS legal team?) has what appears to be an excellent summary of the total online advertising spend.  I assume this is for 2006 but not sure.   It shows approximately a 20 billion total ad spend with Google scooping up 30% followed by Doubleclick at 22%, Yahoo at 19%, Microsoft at 17%, and all the rest at 12%. 

Microsoft’s point seems to be that Google and Doubleclick should not merge because, as the two leading recipients of online advertising revenue, this would create a player with more than half the market and thus too much power over the marketplace and advertisers.