Real World Computing
Ship of fools
I've decided I must be really stupid, blind, blinkered and probably a bit mad. This won't come as much of a shock to long-term readers of this column, but the realisation hit me personally like a brick last week. The gap between what is my understanding of good business practice and what is currently happening in the world reached a breaking point, and then I'm afraid it snapped. So here I am, nursing a particularly large - and medicinal - gin and tonic, with the obligatory slice of lime and squeeze of the rest of the whole lime to freshen it up a little, and murmuring "la la la" to myself until the men in white coats, who must be on their way, arrive.
What triggered this final collapse of reason was trying to understand the business logic behind Microsoft's bid for Yahoo - in which I failed so completely that my head exploded and now I'm seeing pink sky and purple grass. And that makes about as much sense as this move appears to make.
I've tried to console myself with the thought that perhaps Mr Ballmer and the Microsoft team know some Big Dark Secret to which none of us are privy and which makes the whole deal an absolute steal. Maybe there's a pot of gold at the end of the rainbow, and it just needs someone with Ballmer's business acumen and leadership skills to set the sails on The Good Ship Microsoft for a new and exciting journey of discovery. But even when I try to dress it up in that sort of narrative, it still doesn't work - my head starts to thump and it's time for another G&T.
It isn't as if Microsoft doesn't already sail the same application ocean as Yahoo. Let's compare cargoes of both firms. Search engine? Check. Online email service? Check. Chat services? Check. Hosted online services? Check. Advertising engines? Check. Development platform for new style Web 2.0 applications? Check. Clearly, I've missed something, something so huge that it's also managed to elude just about every other commentator out there, too.
I turned to the blog of a good friend and Microsoft employee: "Wow, that's smart. Microsoft is offering $44.6 billion for Yahoo. What great news. Yahoo is just brilliant and its social networking and search offerings complement our existing search and social software proposal." Hmmm, sorry, I still don't get it. The reality is that Microsoft's share price is sliding, but Yahoo's is sliding faster (or was before the proposed merger), and it's clear to Yahoo shareholders that time is running out for the company. It's entered that terminal numbness where it isn't fighting for life any more, and it needs an injection of serious fizz and sparkle to stop the company dying of boredom. Then there's the money side of the equation. Microsoft makes an offer of $44 billion, half of it in cash and half in Microsoft shares, which basically wipes out the colossal Microsoft war chest in one big splurge. For Yahoo?
Can we predict how this affair will go? Yahoo has already said it doesn't like Microsoft's offer and wants more - well you would, wouldn't you? Let's assume this squabble dies down and that Microsoft actually buys Yahoo. The first thing that will happen is that a whole tier of the best people inside Microsoft and Yahoo will jump ship. This deal will provide the impetus they needed to get out and join a smaller, more agile firm in the Web 2.0 space. Then we need to see just how good Microsoft is at integrating strong external brands into its family.
Well, now we've hit a roadblock because Microsoft doesn't do partnership, it only does total ownership. It eats up companies and their talent, then spreads their partially digested remains around internally to nourish its own projects. And it buys companies mostly to make sure its competitors don't get them, rather than because it actually needs them.
