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Jewish World Review
Feb. 8, 2008
/ 2 Adar I 5768
Microsoft, Yahoo Deal Ignites Passions
Could Web-based applications be the key to what may be the computer industry
deal of the decade?
It's still an open question - in this observer's mind, at least - whether
the proposed acquisition of Web search near-giant Yahoo and software titan
Microsoft Corp. will either come to pass, or have a major effect on the
world as we know it. But if it does happen, the shifting of computer
applications from the desktop to the Web may be a part of the big picture.
For Yahoo's shareholders, eyes misty recalling a near $120-per-share price
during the dot-com boom, the $31 Microsoft is offering for each Yahoo share
is nice, but nowhere near the former heights those shares once reached. For
Google, which competes with both Microsoft and Yahoo, the deal is rightly
seen as competition and a challenge, one which Google is poised to oppose.
For the rest of us, well, there's not much there, yet. Microsoft's "Live
Search" is good, but not Google-killing; Yahoo's search engine is very good,
but Google has leapt into the number-one spot with grit, determination,
"viral" marketing and, oh yes, a better product. Or at least a product that
much of the world believes is better.
This is, however, a case where the whole might equal a lot more than the sum
of the parts. There are millions of people using Yahoo's e-mail services,
with an untold number paying $20 per year for extra online storage. They're
already loyal to the Yahoo "brand." Microsoft's customer base is well known:
just about everyone with a computer, Macs included, uses one Microsoft
product or another. The online base for Microsoft is substantial as well.
For many observing this deal, the question of online advertising is central.
Can a Microsoft-Yahoo team take a leading position in selling ads? It's
possible, but one of the key lessons of the dot-com boom and bust is that
winning combinations aren't always apparent, or guaranteed. Bigness counts,
but not always; after all, Yahoo was once exponentially bigger than Google.
However, much of the chatter about online advertising may overlook, again,
the question of online applications. This is one area where Google has made
some inroads, offering word processing, spreadsheets and presentations
online. All of these are compatible with Microsoft's equivalents, and
Microsoft has its own online versions of key applications, something to be
discussed here further in coming weeks.
But if Microsoft can combine the online apps with both Yahoo's reach and
online ad sales, and the game can suddenly change. The two firms together
would have something special to give that vast audience: online applications
that are as identical to their desktop counterparts as Microsoft wants them
to be, available globally.
Think about it: With sufficient computing power and Internet connectivity,
you could be connected to your work anywhere in the world, via a "thin"
notebook or desktop computer. If the software application and your data both
reside on the Internet, then you don't need as much hardware power as you
might otherwise. That could expand productivity on many levels, as well as
make powerful applications available to those not otherwise able to afford
It would be interesting to see both Yahoo's e-mail and Microsoft's Hotmail
augmented with some of the strengths of, say, Microsoft Outlook, but in an
ad-supported, Web based form. The advertising would have to be somewhat
discrete, since looking at a big Coca-Cola ad might not be all that
interesting or helpful in an office setting. But there are ways to
"monetize" such applications, I believe, and I wonder if this isn't part of
Microsoft's grand design.
Of course, time will tell: the deal will face strict scrutiny in many
quarters, likely including the Congress and the Justice Department's
antitrust division. If it clears those hurdles, not to mention those of
Yahoo's board and shareholders, we may be on the verge of a brave new world
in applications, one that will be fascinating to watch.
Every weekday JewishWorldReview.com publishes what many in in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.
JWR contributor Mark Kellner has reported on technology for industry newspapers and magazines since 1983, and has been the computer columnist for The Washington Times since 1991.Comment by clicking here.
© 2008, News World Communications, Inc. Reprinted with permission of The Washington Times. Visit the paper at http://www.washingtontimes.com