Microsoft + Yahoo = Big Mess?

Ylive!Everyone on the sideline seems to be very excited about possible Yahoo and Microsoft merger, but I’m not so sure it’s going to turn out pretty. Microsoft has a history of making acquisitions, and few comes to mind of anywhere close to a success. The recent exception being Bungie, and only because Microsoft left them alone.

For example, in 1997 Microsoft acquired Vxtreme Inc for their web theater technology with $75 million. What web theater?

With the help of Josh Philips from WindowsConnected.com we’ve compiled a list of existing Yahoo services and matched it with existing Microsoft offerings. It’s an astounding number of overlaps. Of course there’s many more services from Microsoft without Yahoo equivalents (ex. Office Live).

Now imagine for each and every one of these you have to make a decision – to keep it as is, integrate Yahoo’s into Microsoft’s, integrate Microsoft’s into Yahoo’s or even come up with a new hybrid. Simple branding aside, I think the developers are going to have to work quite a few late nights to integrate what I believe are two monolithic systems together.

Whatever they do, they better not ruin Flickr.

Service yahoo.jpg
Yahoo Equivalent
microsoft.jpg
Microsoft Equivalent
Content Portals Yahoo.com
Yahoo Auto
Yahoo Finances
Etc…
Msn.com
MSN Auto
MSN Finances
Etc…
Country-specific Content Portals ex. Yahoo7.com.au ex. Ninemsn.com
Account Management Yahoo ID Live ID
Personal Homepage My Yahoo! Live.com
Search Yahoo Search Live Search
Casual gaming Yahoo Games MSN Games
Mapping Yahoo Maps Live Maps
Instant Messenger Yahoo Messenger Live Messenger
Mail Yahoo Mail Live Hotmail
Community Help Service Yahoo Answers Live QnA
Photo Sharing Flickr Live Spaces
Blogging 360° Live Spaces
Widgets Yahoo Widgets Windows Sidebar
Search Advertising Yahoo Search Marketing Microsoft adCenter
Mobile Yahoo Mobile Live Mobile
Web Development Yahoo Developer Network Dev.Live.com
Web Mashup Tools Yahoo Pipes Popfly
Website Services Yahoo Small Business Office Live
Geocities
Social Events Upcoming Live Events
Social Bookmarking del.icio.us (Advertising deal with Digg)
eCommerce alibaba  
Music Service Y! Music/MusicMatch Zune Marketplace, MSN Music
Music Software Music Jukebox Windows Media Player

Did I miss anything? Please help me correct it.

91 insightful thoughts

  1. The fact is that Microsoft is loosing in the search game and the only way they can compete with Google is to buy Yahoo. This buy would really only be for the numbers, and Microsoft would finally have >10% of the search market (they would be at ~33%).

  2. “Microsoft has a history of making acquisitions, and few comes to mind of anywhere close to a success.”
    ========
    Hotmail is also a success, and it is fully integrated into MS’ online service.

    And to comment if the merger will be a success or mess needs more business knowledge, it cannot not that one throws out huge amount of money just for a sole purpose (e.g. search as someone replied). Yahoo has full range of product line, and in many countries (for example in Japan) it is much more popular than any other competitor.

  3. @Heran: True, Hotmail is a success, but it was also a success before Microsoft’s purchase. Only until recently with Live Hotmail I think they really did something worthwhile with the brand, otherwise it was pretty much Hotmail as it were.

  4. I agree that it will be a big mess. This acquisition is purely for acquiring customers/search share.

    If this acquisition were to go through, I do not see the Yahoo! or MSN brand to completely disappear ever. The best they can do is:

    1. Provide better integration of services (For e.g. seamless inter-op between Yahoo! and Live Messenger)
    2. Provide combined content on Yahoo! portals and MSN portals
    3. Pick/integrate underlying technologies/platforms
    4. Over the long long-term phase out portals/services/software which becomes less popular and replace it with the other.

    IMHO, for the foreseeable future, if this acquisition were to happen, the only change we will notice is… Yahoo! – A Microsoft company :)

  5. Well, I always put Microsoft at the bottom of the barrel with any software/web services and Yahoo not to far behind (I’m not happy my Dad uses Yahoo Messenger, but I’d force him to change if he were using Live Messenger). So now Microsoft + Yahoo = A big sloppy mess I wouldn’t touch with a 10 foot mouse cord. I think this is enough to get my non techy friends and family off Yahoo services and into Google before things get scary.

  6. @Long: Yes, you could argue that Yahoo is also already a success (well maybe not so successful compared to google in search market, but overall…) before this possible purchase, that’s why it’s worth to buy it.

  7. @Long

    Something inside me tells me that this deal would not go as expected if it takes place. This deal spells doom for the free web culture that we are used to for years.

    Microsoft’s oppressive monopolistic culture could possibily kill Yahoo and services that we have come to assoiciate Web2.0 with namely Flickr and Del.icio.us

    For more on this read my thoughts at my blog here : http://dailyapps.net/2008/02/what-does-a-combined-microsoft-yahoo-look-like/

  8. Clearly, this is another attempt by Microsoft to strengthen its position against Google in search engine and web based advertisement market. The ultimate beneficiaries, however, will be web-publishers and advertisers as both Google and Microsoft-Yahoo will try to expand their market share by offering lucrative deals to both sides of the table.

  9. They also overlap in providing content/services to ISPs. In Canada the main ISPs are Rogers Yahoo Internet and MSN Sympatico. Both use webmail, content, and other services from their partner.

  10. MS + Yahoo = Mess. It’s like you guys read my mind :)

    And here’s one more:

    EMail/Collaboration servers: Zimbra (Yahoo) vs. Exchange Server (MS)

  11. I bet Microsoft is going to either murder or mess up Yahoo after they acquire it. Livo Search: Microsoft’s site for that porduct would be: Welcome to the future of Live Search, Livo Search. For the first time in history a search more powerful than Google. The merge with Yahoo has enabled large possiblities, big enough to control the Internet. With Microsoft and (Microsoft Owned) Yahoo by your side your productivity and fun will be your top priority for the first time:
    Look on my blog for what I thing about it: electtechs.blogspot.com

  12. I can’t help thinking that Yahoo! messed up somewhere along the line.. Back in the mid-late 90′s i systematically used Yahoo! It was as automatic as my typing “Google” into the address bar. At the end of the day, if Microsoft don’t buy Yahoo!, they will be eaten alive by Microsoft of Google

  13. You might make mention that even though Bungie was a successful acquisition, they’ve also since **left** Microsoft. ;)

  14. For those thinking this is completely bad news for the web, stop being pessimistic.

    @Karthik : “Microsoft’s oppressive monopolistic culture”? Yes, Microsoft is such a monopoly, that there’s obviously no choices and they’re the only ones we have to rely on. What silly talk. You’re talking about MS in the late 90′s and early 2000′s. I think they’ve changed their policies around a bit since then.

    And I doubt Microsoft will just blunder in, buying Y! then tossing them into a building somewhere on campus. MS does that, and buying Y! would just be worthless as every user runs off.

    Y! has some pretty good site designers lately, and maybe some of Y!’s work ethics could make it into the Windows Live division. who knows.

    This could also bring together some of their great sites and services into one umbrella. There’s always been some things I like about the other, and wished were in the other one.

    And as for being a “web monopoly”, there’s tons of choices and alternatives out there. If you seriously hate MS, then move on. Hating is stupid, and assuming the worst of a company is dumb.

  15. Looking at that table I see a lot of room for synergy…
    Turning Microsoft’s Live Services from a bunch of small streams to a big organization.

    Most of the services on the left column do kick the ass of the ones on the right…

  16. @Chris doesnt micrsoft own google?

    Chris wrote
    Feb 2nd, 2008 at 12:45 am

    The fact is that Microsoft is loosing in the search game and the only way they can compete with Google is to buy Yahoo. This buy would really only be for the numbers, and Microsoft would finally have >10% of the search market (they would be at ~33%).

  17. @Chris: What is the dominant IM client in your part of the world? I have never met anyone in Melbourne who uses anything other than Windows Live Messenger (or previously MSN Messenger). I know some other clients are compatible with WLM, but the only people that I’ve known to have non-Microsoft IDs have been from foreign countries. This is of course anecdotal experience – I’ve always wanted to see reliable figures on marketshare around the world, but my searches have turned up nothing.

  18. I reckon they should incorporate the best features of Yahoo! services under the Live branding. Like, use the Yahoo! search algorithm for Live Search.
    This would, of course, happen over time. Maybe some sort of migration – so you can use your Yahoo! account as a Live ID, and get your emails and everything through Live Mail. I just think the Live services are a lot better put together, and everything works with each other.

  19. Holy crap.

    Please stop confusing “loosing” with “losing”. Loose = easy fit / unfettered / etc. Lose = fail to retain / be without / to deprive.

    Confusing the two words makes you look like a moron. Stop doing it.

  20. I don’t get it, why do they want to expand even more? Microsoft was never too small, they should focus on improving their services. They now didn’t get their products work together really well, so this could be a really really bad move.

  21. I think if MS acquires Yahoo, it’ll surely take view of those overlapping services, and will keep the Popular Yahoo services along with its MS services running along with the Yahoo Tag.

  22. How hard do you think it would be to incorporate the Yahoo! Widget Engine into Sidebar gadgets!??! That’d be nice. But I’m afraid it’d be too hard/messy.

    Yeah, that pretty much sums it up. Messy. We’ll see.

  23. Yahoo! Calendar vs MSN Calendar/Live Calendar
    Yahoo! Notepad vs –nothing–
    Yahoo! Briefcase vs Skydrive
    Yahoo! Video vs Soapbox
    Yahoo! Desktop Search vs Windows Desktop Search
    Yahoo! Toolbar vs Live Toolbar
    Yahoo! Groups vs –nothing–
    Yahoo! TV with TiVo remote record vs MSN TV with Media Center remote record

    also, you forgot My MSN compared to My Yahoo!

  24. Well I think it will be better for Yahoo right now to sell itself as there is no point losing business to competitors everyday. Stakeholders should be pretty happy right now to get 62% premium offered by Microsoft when Yahoo’s shares are all time low.

    What say ?

  25. Display Advertising platforms. Both Msft and Yahoo have and very different biz from search advertising. For more info google Yahoo’s project panama.

  26. I thought VXTreme’s technology became Windows Media Video, which became VC1–used by Xbox Live’s video service, HD-DVD, and BluRay. (Progressive Networks similarly bought a few software companies for their video technology.)

    I think you want to pick another example–VXTreme was a tiny company acquired for their technology and experience. Microsoft + Yahoo! looks to me a lot more like AOL + Netscape.

  27. Agreeing to Mark, I think Microsoft’s Windows Live Favorites is a suitable social bookmarking tool by MSFT. But it’s just so inferior that a more profitable deal with Digg was placed instead.

  28. Yahoo! is also one of the biggest corporate sponsors of the FreeBSD project, providing infrastructure and other things. Some of the committers are even deployed by Yahoo!.

    Microsoft has had a history of killing off FreeBSD servers (remember Hotmail’s transition). So from an open source perspective as well as a web developer one (http://developer.yahoo.com/) I am not optimistic. There is much at stake that has too much chance to lose out.

  29. Hotmail a success? It’s only a success because teenagers use it. But they bag out Microsoft and laugh…what are you using? Windows, MSN, Microsoft Office, Internet Explorer…haha.

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  31. First of all Microsoft does not have a monopoly, they are a powerful leader dominating an oligopoly. Go back to school to learn the difference.

    Secondly, I agree that integration is going to be very, very, very difficult as the context of integration has caused many failures for any type of business making acquisitions. But let’s look on the bright side…

    #1.) It will create more jobs for web developers. Lots more jobs and we can all stop worrying and complaining about Prakesh and Johnny Wu for awhile.

    #2.) I doubt Ray Ozzie is going to f*ck things up –unless– the bald one somehow corrupts the vision thing and extra-ordinary architectural skills Ray Ozzie has developed.

    #3.) Many of the old-school Microsoft employees are retiring and new blood bringing a fresh perspective is being hired.

    #4.) If Microsoft finally accepts they have developed the worst piece of sh!t software in the history of computer science –IE– and can be mature about it by really, really, really getting serious about IE8 they will release a high quality browser that is 100% W3C compliant by default –AND– if IE8 is released as an extensible application without requiring C++ skills to build and integrate add-ins (ala Dreamweaver’s Extensions model or Firefox) –and– if IE8 has features for example that allow Favorites to be saved as RSS compatible with the Windows RSS Platform so people and researchers with tens of thousands of Favorites in their collections can dynamically load what Favorites they need on demand –and– if they can do this without dragging the computer to a halt etc…

    Then by all means there’s really nothing to worry about eh? :-)

  32. Microsoft might have achieved better search market share results if they didn’t have an advertising model that was a complete rip off. That is why Google is what it is today; Advertising models that weren’t a rip off. Or at least provided opportunity for small business that didn’t start with $1,000s of dollars of commitment.

    Why spend a fortune buying Yahoo when you have the skills and resources to make a better product? We loose on this deal because the investment will simply consume cash that MS could have put into real development and therefore job creation.

    It’s what management do when they realise that they were idiots for not listening to their staff and clients with big ears. Sure they will get advertising clients and perhaps even some of Yahoo’s patented technologies but the big benefit will be delivered to Google. Where will Yahoo-7 (Australia) go if this deal goes ahead? Will they willingly become part of a place where 9-MSN live? I don’t think so! They will be knock, knock, knocking on Google’s door.

    And Google will have no shortage of willing staffers once the MS razor gang enter Yahoo.

    Google should start now and double the HR and client service departments. ;)

    Yani

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