What an ironic coincidence. Until just this week Yahoo! was my home page for about 12 years running. I liked the news feeds, the stock quotes and the speedy page loads. Despite that, I bet half the time or more my first click after the browser opened was to Google’s search page. Ever since it presented itself as a better alternative to Alta Vista so long ago I’ve been a Google search fiend.
After I got my second home here in Dallas and started blogging, however, the patchwork of my personal IT began fraying. Email with my Atlanta ISP, home page with Yahoo!, search with Google, contacts and inboxes and user names and passwords all over the place. Enough.
So over the past three weeks I’ve migrated most everything to Google and life has gotten a lot simpler and more manageable. My home page is now iGoogle instead of My Yahoo as of Wednesday. More than being convenient, I think it’s a significant improvement.
And then – almost to the day – Microsoft offers to by Yahoo! for a whole bunch of billions. Since I switched to Mac-based computing last year and to Google-based online applications this year I now watch this from a somewhat detached distance. I find that it’s not all that interesting to me as a user, but as a bit of a technologist and historian it is interesting from that angle.
Microsoft and Yahoo! each have been struggling a bit in different ways over the past few years. Yahoo! has clearly played a diminishing role to Google despite their best efforts, and Microsoft is increasingly hemmed in by regulatory powers and what has become a big burden in their core business. Windows carries decreasing relevance and increasing costs while containing way more stuff than any user needs it to or any regulator wants it to. When Windows users buying new PCs are downgrading from Vista to XP while long-time Mac users line up in droves to upgrade to Leopard, something is badly wrong. Yahoo’s problems seem somewhat one dimensional and “first mover” related. Microsoft’s problems are big, broad and damned difficult to unwind. It’s unclear to me how these two problem sets combine to make something better.
Peter Lynch once noted a couple of things that I find very interesting. The first is that fully 80% of mergers and acquisitions fail to meet the expectations set for the them. The second is that among those that do succeed, a big common denominator is that the buying company already has something it believes can add a lot of value when combined with the bought company – not the other way around. As a manager in a company that has bought more than a few, I can say that I believe this is a maxim that company officers should live by. I’ve read lots of speculation regarding what Yahoo! might bring to Microsoft, but little in the other direction. Integrating companies of any size is difficult. Integrating two leviathans like these quickly and to effect will take legendary management skill. Meanwhile, top talent at Microsoft continues to cash out. First Bill Gates and now Jeff Raikes are leaving. Some even speculate that Balmer will go later this year, though I doubt that.
Will these two companies combine to form something more useful to customers and more valuable to investors? Can they do so quickly enough to make a meaningful difference in their competition with Google?
As a business person, I have my reservations but admittedly do not know. As a consumer I find that I increasingly do not care.
