On Microsoft, Google and Fear

Michael Lankton | Feb 02, 2008 | Comments


Yesterday’s news regarding Microsoft’s offer to buy out Yahoo shouldn’t surprise anyone. LiveSearch is almost irrelevant as a search engine, and MSN has seen declining traffic in the latter half of 2007. Yahoo, if not the most used search engine, is still the number one stop on the internet, edging out Google in overall traffic, despite the latter’s prevalence as the search engine of choice.

The amount offered is somewhat of a surprise, but it only shows how desperately Microsoft wants Yahoo’s investors to green light this deal.

Microsoft had one of the most dismal product launches in history with last year’s release of Windows Vista. Universally loathed, it had to further illustrate to Microsoft that they need to add some sure producers to their lineup. Nintendo learned this lesson in the late 90’s and early 00’s when their videogame division was tanking and Pokemon saved their bacon. Nobody knows this better than Apple, and if Steve Jobs doesn’t sell a copy of Leopard or a Power Mac for the rest of 2008, Apple will still make a fortune off iPod, iPhone and Macbook sales.

Google produced 11.8 billion USD in revenue in 2007, up 21% from 9.3 billion USD in 2006. I don’t have a breakdown on what branches accounted for what percentage of their profits, but let’s examine how much has Google infiltrated your life:

  • Best search engine, couldn’t live without it.
  • Analytics.
  • Adsense.
  • Adwords.
  • I don’t use GMail…
  • …but I rely on Google Reader to read my feeds when I’m at work.
  • Pagerank (and it’s associated neuroses).

Let’s face it, Google has gone from a search engine produced by two grad students that originally appealed to linux geeks because it ran on linux servers, to wiping out everything in it’s path. C’mon, how many years has it been since you switched from Lycos, Excite, Hotbot, or whatever search engine you used to use?

Depending on your geographic location, you may or may not be aware that the presidential primary elections are going on in the USA right now. A couple of days ago the Democratic Party announced that the Republican front runner, John McCain, had spoken to Democratic Party leaders in 2001 about possibly jumping the fence and becoming a democrat. This is their attempt to discredit McCain and swing some people over to one of the democratic candidates. You know what it tells me? It tells me that the democrats are afraid of McCain. They must think he’s electable, otherwise they wouldn’t be throwing this out there.

Microsoft is afraid of Google. It’s a lot of money, but they realize they need to make a serious move before they get left in dust like everybody else.


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About the Author: Have you been a bass player in a hardcore punk band? Built stroker Harleys? Have you been in a fight this month? Written an article about SEO that somehow managed to turn into a social commentary editorial?Mike has.Since 2007 Mike has been sharing his unique worldview with Connected Internet readers. Stop back to see what Mike is thinking about next week.

  • @Michael

    I never said that MCST are innovative or lack creativity. What I said is that I don't think the deal was done out of fear. Reading your poing about MCST buying market leaders makes me think we both agree that one of the reasons MCST have purchased Y! is to acquire scale.
  • Everton: Well, you're wrong. Despite the fact that you sign my check every month, I have to disagree strongly with you on this one.

    This move is so typically Microsoft.

    Microsoft has never innovated. They have always had success in a market because A) there was no competition, or B) they purchased a market leader in that niche. Nothing they do is about creativity, nothing they do is risky. None of their products are outstanding, and the successful ones I would qualify as adequate.

    Microsoft has a mega-corporation mentality. They have much more in common with General Electric than they do Google, and this move just further illustrates that. Buying #2 is what #3 does thinking that will somehow add up to #1. They simply don't know what else to do because there aren't any fresh ideas in their corporate culture.
  • I don't think the deal was done out of fear. I don't think Microsoft are afraid of anybody and are willing to scrap with anyone. I really think it is to do with scale. They have had their eye on Yahoo! for a long time and I think they've decided to launch a semi-hostile takeover as they feel they can turn Yahoo! around quicker, plus acquire more arsenal to take on Google.
  • You know when windows live messenger connected the yahoo messenger .. I felt something is up.. Microsoft wants this deal desperately ... Lets see..
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