Gillmore Gang on Microsoft Yahoo Deal

I was on my way back to Fountain Hills from Aberdeen and was surfing the tech news on my iPod touch when I found and listened to the a Padcast from the Gillmore Gang . Talk about of a bunch of so called tech experts that don’t have a clue. These guys are so out of touch with technology when it comes to new media and advertising on the internet that it’s not even funny. The sad part is that they do not even understand the law as it applies to monopolies (Have a monopoly is not illegal abusing your monopoly position is illegal.). Even if Google purchased Yahoo it would not be illegal nor would Google have a monopoly in online advertising. Microsoft however is still consider a monopoly is the Computer OS market, and according to information released by Microsoft people they are planning to use that monopoly position to bundle Microsoft Live Services on to every system, just as they did with IE and Windows Media Player, as Microsoft believes this is the only way to force people to us the MS Live services. Their plan is to attach Google, and other online services providers by integration with their monopoly position OS, the strategy worked for MS with IE and Windows Media Player they think it will work for Live too. Microsoft is failing in competing in these new online markets with other online services companies.

The Gillmore Gang portrays Microsoft as the underdog now. But, Microsoft is not the underdog, they are failing in the new online digital media services and online advertising because Microsoft has become a dinosaur. They are slow to act and even slower at learning from their mistakes. Vista is a prime example of just how arcane, slow, bloated and thick Microsoft has become. Longhorn died on the vine after years of MS not being able to make it work, they then jettisoned all the new and real improvements and laid the flashy UI, UAC and the Kernel Mode Driver restrictions from Longhorn on top of a stripped down Windows 2003 Server code base and renamed Vista. It then took them 2+ years of tweaking and hacking the code to make it work, well sorta.

Microsoft Live plus Yahoo is basically two losers in the online services and online advertising space that if it did or does still happen is basically still two losers adding up to be a loser. The only way Microsoft will ever make Live a winner is if they leverage their proven method of leveraging their monopoly position in the OS market to force the other proven players in the market to have less of a market due to Microsoft integrating Live and making it the default without and easy initial setup to opt out. Silverlight will only make it it MS includes it in the OS and/or IE updates.

Windows 7 is being pushed as to be MS next great OS release, if MS stay on it’s current course Windows 7 will just be an update to Vista with Live Services integrations and Silverlight included. Why is any of this important to the topic. Well MS stated that they wanted Yahoo for it’s ability to scale. Well if you look at all the big internet players they all have something in common. It’s the one think MS doesn’t have, and that is UNIX/Linux platforms. Hotmail prior to being purchased by MS was a Linux platform. After MS acquired Hotmail the service was moved from Linux to Windows, as a result all the best developers moved on to other Linux programing opportunities. And durning the OS move (and for the most part, it’s still true today) the service that was Hotmail is a bad service with a lot of problems. If MS acquired Yahoo it’s best developers woud move to other Linux based opportunities as MS would not leave Yahoo Linux for very long.

Microsoft has become so unfocused in the past few years that their core business has become just a distraction from the new online businesses that they appear intent on pursuing even if it means reducing their shareholders value. Why the MS Board was will to let Steve Ballmer proceed on the Yahoo deal as he say fit is questionable at best as Yahoo would not have added any value to Microsoft and it would have just been a wash or a drain on the value as nothing in terms of increased revenues would have ever materialized from the deal. The MS Yahoo stink is now pasted and no Microhoo is the outcome.Is the death of the deal bad from MS? Well yes, but only because MS thinks it’s bad for them, what is really bad for MS is it’s lose of focus as a company. Is it bad for Yahoo? Not really, what was bad for Yahoo was Microsoft’s takeover attempt in the first place. Does Google benefit? yes and no, while Google will benefit in the short term has both MS and Yahoo lick their battle wounds, In the long term MS gets out of touch punters to talk up MS underdog status, like it will make MS somehow look cool and give it some street credit. MS needs all the street cred it needs these days of being unsure and confused on what business model it wants and what business to be in, after all they did loose a lot of their street cred when they name a feature of the Zune "Squirting". A feature they really should have let their customers give a cool name to and then MS adopting that cool name given to the feature by the customers of of the Zune itself. But, after all that is what MS does, how, many Vista versions are there? How many promised Longhorn features ended up in the final Vista release? How many of the features promised for Windows 7 are dropped Longhorn features? Of them how many will make it to the final Windows 7 release version, again not many.

Microsoft is will to bet the farm that search, services and webpage advertising is unlimited growth model hugh and unlimited profit margins. The problem is that the it’s not these advertising types are slowing as the more familiar types of advertising takes off being internet multimedia advertising in Video Podcasts and internet delivered television programing. These advertising media does not require the vast ad delivery platforms as the search, services and webpage ad delivery models do. So, Microsoft wanting to beat Google on Googles turf is well a loosing battle. If Microsoft wants to transform itself into an advertising based company it will need to do so off Googles turf and establish a new model and new ground basically innovating it’s own advertising model turf.