The Microsoft-Yahoo deal continues to be the hot topic in the blogosphere right now, with Techmeme still dominated by related discussion. The latest news is that Google has posted an official response to the proposed takeover. In general, discussion has moved from “can you believe what just happened” to “this deal with fail/succeed because…” If you read only two posts on the topic, read this one from Fake Steve Jobs and this one from Henry Blodget.
I really have no idea how this is going to play out. Based on what I’ve read, it seems pretty likely that Microsoft will successfully acquire Yahoo. Many think the deal is as good as done. Far less certain, however, is whether they can make the acquisition a success. It could go either way.
I think what’s clear is that this is a strategy change for Microsoft. A bold recognition that they need to succeed on the web. They trail Google in both search and advertising, and it makes a certain amount of sense that combining with Yahoo will create a stronger competitor.
Microsoft is a platform company. Their cash cow is Windows, the most widely used technology platform in history. They are good at platforms. If the strategy shift is to the web, shouldn’t it be slanted towards a great platform?
Such as Amazon’s Web Services platform. On Wednesday Amazon announced their fourth quarter earnings, and shared this tidbit about Amazon Web Services (AWS):
Adoption of Amazon Elastic Compute Cloud (EC2) and Amazon Simple Storage Service (S3) continues to grow. As an indicator of adoption, bandwidth utilized by these services in fourth quarter 2007 was even greater than bandwidth utilized in the same period by all of Amazon.com’s global websites combined.
ReadWriteWeb has a good discussion of what this means.
Obviously Microsoft isn’t a retailer, and owning Amazon.com itself probably isn’t in the company’s best interests. It could acquire the company for AWS and spin off the rest, however. I suppose Microsoft could just try to duplicate what Amazon has already accomplished with AWS, but why bother? Grab the early market leader and take it to the next level.
I think AWS is an indication of what the platform of the future will look like. Microsoft would be wise to pay attention.