Maybe Microsoft should buy Amazon instead

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?

amazonawsSuch 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’s global websites combined.

ReadWriteWeb has a good discussion of what this means.

Obviously Microsoft isn’t a retailer, and owning 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.

Facebook continues to strengthen The Platform

Back in July I wrote about Microsoft’s so-called Cloud OS. There hasn’t been any Microsoft-specific news since then (that I’ve come across anyway) but more and more companies seem to be gearing up to offer cloud infrastructure services. Take Nirvanix for instance, an Amazon S3 competitor that launched earlier this month with some impressive features.

And today, the blogosphere is buzzing about Facebook potentially getting into the cloud services game (some might argue that they already are). Rev2 reports that Facebook is preparing to offer data storage services:

At this stage it seems unclear as to what the precise data storage offering from Facebook is going to be. The Developer wiki indicates that the new service is in Beta, however, there are no indications around more specific details such as space limitations. Costs are also not revealed so one could assume that the data storage offered may be free for a while whilst the service is still in Beta.

AllFacebook has some interesting discussion on the topic, and Read/WriteWeb notes that the service is somewhat in line with Facebook’s earlier acquisition of Parakey.

This is pretty intriguing news on it’s own, but it gets better. At the TechCrunch40 conference today, Facebook CEO Mark Zuckerberg announced that the company is launching a venture fund called fbFund:

The size of the fund will be $10 million with anywhere between $25 to $250 thousand in grants available for each selected startup dedicated to developing Facebook applications. Founders Fund and Accel will get the right of first refusal for the first round of financing of any company in the fund.

Facebook created The Platform, and everyone went crazy. Anyone could develop an application that would run on The Platform, as long as they invested their own infrastructure, time, and money. Today Facebook took steps to eliminate two of those hurdles. Pretty soon, all you’ll need to invest is time.

I don’t think it’s wise to base your entire business around a Facebook application, but people will do it, and quite a few people will probably make money from it. The really good applications may even be able to transcend Facebook’s walled garden.

Looks like The Platform is just getting started.

Read: Rev2

Facebook is the web application Microsoft should have built

Post ImageYesterday at an event called f8, Facebook launched their new “platform” which enables third party companies to integrate applications right inside of Facebook. Mashable has a pretty good overview of thirty such applications. Everything about the Facebook Platform seems fairly ballsy, but you can’t argue with statistics like these:

  • Facebook is growing 3% per week, which is 100,000 new users per day.
  • 50% of registered users come back to the site every day.
  • Facebook is generating more than 40 billion page views per month. That’s 50 pages per user every day.
  • 6th most trafficked site in the U.S. More page views than eBay. Says they are targeting Google next.

In short, there’s no better place for such a platform to be built than on Facebook.

The last point above, as reported by Michael Arrington, is particularly interesting. I suspect there are millions of people around the world right now who think that Google is the Internet. Increasingly though, you might say the same thing about Facebook. If their user growth continues, and the Platform takes off, Facebook might become the new on-ramp to the web. No need to go anywhere else when all your friends (and family, colleagues, etc) and apps (webmail, shopping, stocks, etc) are in one place.

Not only is the name “Facebook Platform” incredibly obvious, it’s also very astute. Facebook is no longer just a social networking site. It really is becoming a social operating system, as some have called it.

What does this have to do with Microsoft?

Microsoft is a platform company, plain and simple. Think of a Microsoft product – chances are it’ll be a platform product. Windows, Office, SharePoint, .NET, Xbox, etc. Microsoft is pretty good at laying the foundation and helping others build on top (which only serves to make their platform all the more important).

The Facebook Platform sounds very much like something Microsoft would build. To see what I mean, read this sentence:

Facebook is a platform that provides a common abstraction of the infrastructure and guts of a system, allowing third parties to build interesting and useful applications on top.

Now replace Facebook with Windows. Or Office. Or .NET. See what I mean? It still makes sense. Facebook is very much taking a page from the Microsoft playbook with Platform. I think it’s brilliant. And I think Microsoft should have done it a long time ago.

But they didn’t. I think they are moving in the right direction with Windows Live, but it sure is taking a while. Perhaps Colin is right…maybe Microsoft should just buy Facebook. I don’t think it’ll happen though.

At least Microsoft isn’t totally out to lunch on this – they are partnering with Facebook to integrate Popfly.