Yahoo & Microsoft – The Search (for the best alliance ??) is over??

Jul 30th, 2009 | By | Category: Uncategorized

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It is amazing that within a few hours of my talking about the unwieldiness of big companies, there was an announcement made followed by widespread market reaction, which served to illustrate one of the points I was making in that post. I am alluding to the Yahoo! – Microsoft merger and the reactions that it triggered in the tech and financial communities.

The market – and several bloggers – seem to think that Yahoo! has committed seppuku. Now I am not familiar with this word and at first sight it seemed to be some dish that I have not partaken of as yet. But Wikipedia , that ancient sage, put me wise to it real quick. I quickly perused through the definition there and am still recovering from that wild churning of my bowels that it induced.

A few of the bloggers rallied to Yahoo!’s rescue. I would not add to their multitude since I also have some reservations about this deal.

But why is it not necessarily as bad as people are making it out to be? My strong conviction is that a company must define its specialization in a distinct manner. If “search” is not your forte, I don’t understand why you should take it upon yourself to innovate in search even if you have to do it half-heartedly. Why can’t you just say that you would leverage someone else’s established prowess and move on. And yes I understand that “Yahoo! is #2 in search” argument. But I never thought so highly of Yahoo! search. I have always suspected that Yahoo! is #2 because people are too lazy to type “google.com” in their browser after they are done with checking their Yahoo! mail.

The internet is agog with interesting stuff – search being just one of them. Yahoo! has some cool products and can stay adrift without investing on a technology that will require a few hundred thousand servers to run and even more to analyze. A good gambler knows “when to hold them and when to fold them”. Folding up a group is not necessarily a bad thing.

Having said that, here are my own reservations. Yahoo! has already made substantial investments on search. To tear them all down and direct them towards integration with Bing is a tall order. Microsoft and Yahoo! don’t speak the same language. Both their organizations are unwieldy and suffer from all the symptoms that I mentioned in the other post. So making the deal happen in a physical sense is indeed a substantial thing.

Besides, market is such a capricious master. It expects the companies to behave as it dictates or else pay a heavy price. A few paranoid investors trusting their even more short sighted tech advisors can ruin the biggest of companies. It is exciting to see the future as it unfolds right in front of you. For now I just hope that both the companies benefit from this mutual walk along the edge of the precipice.

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 Raja has been blogging in this forum since 2006. He loves a technical discussion any day. He finds life incomplete without a handy whiteboard and a marker.


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