> gdude wrote: > It's not clear how Yahoo will ultimately respond to Microsoft's going > public with the offer of half cash and equity, which carries a 62% > premium to its price of $19.18 in 4 p.m. trading on the Nasdaq Market > Thursday. >
Op in the WSJ: February 1, 2008, 10:09 am Microsoft's Yahoo Bid Is Also About Business Users Posted by Ben Worthen You won't find the G word anywhere in Microsoft's takeover letter to Yahoo's board or the press release announcing the offer. But make no mistake: The move is all about competing with Google, and more broadly, the computing sea change that Google represents. That includes competing with Google for business-technology users. msftAs you no doubt know, Microsoft made an unsolicited bid for Yahoo this morning, offering $31 a share for the Internet company, a 62% premium on Yahoo's January 31 closing price. Rumors of such a deal have been swirling for over a year. But Yahoo's recent struggles its stock is near a four-year low and it announced plans to lay off 1,000 employees earlier this week made the timing right. Plus Microsoft has billions of dollars in cash that it may as well use. yahooThe most obvious explanation for the deal is that it will help Microsoft compete for online advertising dollars. That's a $40 billion market now, but it's expected to grow to nearly $80 billion by 2010. As Microsoft made clear in its press release, letter and call with analysts, this market is increasingly dominated by one company the one that starts with a G that no one seems willing to mention by name. (For those keeping score: The word "Google" came up twice during the analyst call this morning.) weddingBut this deal is about more than search and advertising. It's about the way people and businesses use computers. A decade ago, software was something you installed on your computer, and information was stored in a database a business owned and operated. Microsoft made its fortune selling an operating system that made this process easier. But today, people increasingly access the software they want over the Internet just open a Web browser, type in an address and you can search the Internet, check email, or shop any number of online catalogs. Vast amounts of data are stored online as well. Businesses do some computing this way storing and managing customer leads with Salesforce.com is a good example and over time more and more businesses will embrace this model. Microsoft needs to radically overhaul its business in order to compete in this world. The company's CEO, Steve Ballmer, acknowledged as much at the end of the call with analysts. After fielding a series of questions about online advertising, Ballmer stressed that the deal was ultimately about more that that. "It really represents a transformation of our business," he said. "The Windows experience increasingly needs to embrace the Internet." The problem for Microsoft is that right now no one has a tighter embrace on the Internet than Google. Microsoft would probably have preferred to take its time, spending its billions buying servers the back-office computers that store and process information and building data centers the warehouses where these computers are stored. But it can't afford to, because Google is already able to do much of what Microsoft aspires to. Google has hundreds of thousands, possibly millions, of servers delivering computing services to millions of people over the Internet. And while today those efforts are focused on search, maps, and other consumer-focused activities, Google has a small division that's targeting Microsoft's core business customers, and a handful of products, such as online spreadsheets and word processing, that show Google is serious about targeting businesses. Google has the technical infrastructure to do this. Microsoft and Yahoo don't. But they have a chance to get there by combining resources. In the press release, Microsoft's chief software architect Ray Ozzie said that combining the technical infrastructure from the two companies would allow Microsoft and Yahoo to "deliver a broad range of new experiences to our customers that neither of us would have achieved on our own." It sounds like a platitude. In the context of a computing sea change it means that Microsoft, which has been talking vaguely about making software available online for well over a year now, is finally putting its money where its mouth is. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Adobe® ColdFusion® 8 software 8 is the most important and dramatic release to date Get the Free Trial http://ad.doubleclick.net/clk;160198600;22374440;w Archive: http://www.houseoffusion.com/groups/CF-Community/message.cfm/messageid:252965 Subscription: http://www.houseoffusion.com/groups/CF-Community/subscribe.cfm Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=11502.10531.5
