Thoughts on crazy Microsoft offer for Yahoo

Back when I worked as a contractor at Microsoft this small web-based email company sprouted out of nowhere. Nearly everyone I knew setup an account. It was called Hotmail and back in 1996 it was pretty cool to be able to access your email from any computer connected to the net using a web browser. Microsoft’s fledgling MSN Services group came along and bought Hotmail for $400 million which was a staggering price at the time. The joke among many of my coworkers was that Microsoft paid a mint for a domain name believing that $400 million should be able to build a pretty sophisticated web mail platform. But Microsoft was really paying for Hotmail’s nearly 9 million users.

What does this have to do with Microsoft nutty offer to purchase to Yahoo for over $44 billion? Well, I believe Microsoft is in a similar position with their online advertising platform that they were over 10 years ago with online properties such as web mail. Purchasing Hotmail was publicly admitting they missed the web mail trend and that it was better to overpay for an existing business than build one from scratch. Microsoft’s hostel bid for Yahoo is publicly admitting they would rather buy their way into the online advertising game with Google than build their own. If I worked for any of Microsoft online advertising efforts I’d take the Yahoo offer as a slap in the face and assume Balmer doesn’t trust his own troops to build a Google competitor. Both Microsoft and Yahoo’s efforts in the online ad space pale in comparison to what Google has been doing for years now. Does Balmer believe that two negatives will make a positive?

Part of me would like to see the purchase go through if only to inject some excitement into Microsoft. Microsoft has basically given up on the consumer space (Xbox and Zune are exceptions) while the profits continue to roll in from sales of Offices, SQL and Windows server products. Yahoo’s services and products are mostly geared to consumers and maybe some of that will rub off on Microsoft employees who look about as excited as you’d imagine selling another copy of SQL Server two thousand and whateverthehell version they are on now.

I really doubt it matters much either way. And I agree with something my coworker said today, “Someday someone will buy Microsoft”. 

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