Home > Business, English, Internet > RE: A Modest Proposal To YHOO and MSFT: Spin Out A Search Company

RE: A Modest Proposal To YHOO and MSFT: Spin Out A Search Company

This is a response to John Battelle’s post suggesting a MS/Yahoo collaboration/spin off.

To summarize what was proposed, John believes that both Microsoft and Yahoo should form a search company owned 50/50 and spun out to public. The company would have a minimum of 10 year commitment from MS and Y! and it’d be established in the valley to increase their chance of recruiting.

To this, I say such solution would be detrimental to both companies and this isn’t the battle Microsoft and Yahoo want to go into. First, we need to define what is being conquered. Initially, we might think it’s Search being conquered. However, it isn’t Search, what Google, Yahoo! and Microsoft are after. Rather, all of these companies are after internet users and getting them to spend as much time as they can in their virtual properties. Because this is the most important goal, it isn’t Google who’s number one. Microsoft is in a much better position, and they can increase their dominance in the Internet space by bringing Google closer to Microsoft’s home territory – the OS. Google has been making attempts to invade that space, but they have yet to conquer it. In this battle, Microsoft will have home court advantage.

Users still see Windows when they boot up, and this is Microsoft’s strongest advantage. Microsoft can play that card for more than a decade and still guarantee dominance in the Internet field. I don’t propose setting a new company and sinking more cash into Search. Nor should they be going out and building properties to become the next Yahoo! or the next Condé Nast. That would be a divide and conquer strategy won for Google. Google has their own problems with Search right now, and thousands of competitors looking to bring them down in that area. Search could even become passé as new technologies disrupt the process. Google is being smart by diversifying, but that can also hurt them if they diversify into areas that don’t support the goal of attracting users to their internet properties. Thus, while Microsoft already owns the users when they sit down in front of a computer, Google still doesn’t have a strong position in this core advantage. At the moment they are trying with Google Desktop which is something they should continue to build on, YouTube by attacking the Television front (a front being attacked by MS through Xbox and Media Center), and DodgeBall in order to get inside of the other computer – the cellphone.

Microsoft can use their OS advantage to make a transparent transition to the new Internet – an Internet of Web Services. By subtly modifying their OS to integrate more into the web, by converting more of their applications into web applications, and by adding more interactivity through web technologies in a user’s desktop, Microsoft will be able to encapsulate their users into a Windows Web. For example, the popular MS Word can open up from a user’s desktop, but synchronize its files with an Internet hard drive. Storage is cheap. A MS Office license can get you an Internet hard drive that is synced with your local hard drive, you can mark the documents you want to share and have instant collaboration with your contacts. The user never found out anything about a web browser. Another application could be a social network, like face book, but built into the OS, integrated with MSN Messenger. This can all be done connected through the web, without going to a web browser. And if a user doesn’t go into a web browser, Google starts to hurt (Adobe’s Apollo). If a user finds everything they need, then they don’t have to search for anything (huh? 🙂 or search much less.

If Microsoft devices a way to make the web easier through a Windows Web, the user will stay locked in their own comfortable place (Rafa to MS: sink more money to your OS conversion to Web). Think about AOL’s success in the 90’s. Why did people prefer AOL? AOL was a comfortable place for people that weren’t too tech savvy. As the web continues to evolve, people will not move as fast as the Internet technology. Us techies like to think technology adaptation is instant, but the general population has a slow adaptation rate. You can understand this better by reading Crossing the Chasm by Geoffrey A. Moore. He talks about how most people in the normal curve are hesitant to try new things and dives into the process of adaptation for all major types of people. Microsoft is in the best position to hold on to the majority of the population. A new Search company by Microsoft and Yahoo! would have to start from the very left tip of the curve, and this is something rough, costly and unpredictable. MS already crossed the chasms. MS doesn’t need search dominance, or spin off a Search company; they need to make their OS be the hottest Web OS.

Categories: Business, English, Internet
  1. March 22, 2007 at 2:28 pm

    So true Rafael,
    The general population has a slow adaptation rate, and has much difficulty even using a simple web-application interface. I know I watch my parents, if the buttons moved to place other than they are used to in Microsoft word, then they get confused. Microsoft does have an opportunity to integrate more fully into the web, and thus make convenience an entrance barrier for their future business activities.
    However, partnering with Yahoo can bring many capabilities to the business namely the web programming capabilities of yahoo and the increase in speed might be needed. However, the biggest problem I see it the company culture differences which might impeded development of technologies internally.
    Interesting thought Rafael
    Brian Glassman
    http://www.techrd.com

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