Microsoft & Yahoo!

Post ImageEveryone is buzzing about the New York Post story that Microsoft is very seriously trying to hook up with Yahoo!. You can read lots of opinion over at TechMeme. The idea is not new – rumors surfaced back in January 2006, and probably existed before that too.

I am excited about the possibility of a combined Microsoft-Yahoo! organization. However, it seems the reason behind such a deal would be to better compete with Google. I don’t think that’s a good enough reason for MSFT and YHOO to tie the knot. Why not? For the same reason this person thinks Google should buy Starbucks (what a stupid idea):

Google was listed as the 17th largest US company in market value, $143 billion at the time of publication in the Forbes 500. Google sprang to that size faster than any company in history. It remains the only company that is not diversified, at that scale or anywhere close to that scale. And when you check on its standing according to revenue (10.6B), it drops from #17 to #241.

Google has one source of revenue: AdSense. What if something happened to AdSense? Nothing is bulletproof. Without AdSense, Google would die. Period. I’m not saying that Microsoft and/or Yahoo! should try to disrupt the AdSense machine. All I am saying is that it’s far easier for Google to make a mistake and pay the price than it is for Microsoft or Yahoo!.

Do it like they do in F1
In Formula 1 racing, one strategy for passing a competitor who is in front of you is to wait, especially if there are a lot of laps left in the race. The reason behind this is simple. If you get too impatient and a take a big risk to go for it, you could very well crash. In general, you’re far better off staying close behind your competitor, putting immense pressure on them. Most of the time, they’ll make a mistake, and you’ll have a chance to capitalize on it with a clean pass. Michael Schumacher was incredibly good at this.

Perhaps Microsoft should take a page out of Schumacher’s playbook? Microsoft can afford to be patient, and the race is far from over.

If Microsoft and Yahoo! want to join up to share technology and build better products, that’s one thing. If it’s just about beating Google, there’s better ways of doing it.

Read: TechMeme

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