The Tech Attorney Blog by Adam S. Feinsilver, Esquire

Where Techies, Business & the Law Converge…Or Clash

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Once again, the scanners are detecting more trouble sector nine. No doubt, it’s the work of that nefarious company, the sworn enemy of the Planet Apple; the evil overlord Microsoft! Does the news of Microsoft’s bid to take over Yahoo! have the Internet in a tizzy? Ayee, maytee, of this ye can be sure. However, we can’t be so certain that the whole of the two companies will be worth the sum of the parts.

If it’s true that success takes risk and embracing your failures, Microsoft certainly has a lot to work with. WinCE, MSN TV (WebTV), Windows 98, WMA, Passport and V-I-S-T-A are among a laundry list of Microsoft initiatives that didn’t impress the marketplace (is that subtle enough?). How many of your friends are using MSN Messenger for IM? Have you bought any new tracks for your Zune lately? Oh, you don’t have one? When was the last time you ran to MSN.com to “google” something or get the latest news? How about LiveSearch? Well, that’s where Yahoo! comes into the picture.

How Did We Get Here?
When those of us old enough to remember the dawn of the Internet all the way back in the early 90s began dialing in, Yahoo! was the holy grail of websites. It was the clear leader in search engine popularity. Only the geekiest of us used the oddball, Google, for its superior search algorithm. Back then, we were also using Netscape, the king of browsers, to get to Yahoo!. From there we could find all of the sites with the latest gossip about Beverly Hills 90210 and Melrose Place. Well, unlike Netscape, Yahoo! didn’t get worse. It actually improved….a lot.

Today, Yahoo! has some big talent and some very good tools. The layout and usability are excellent. Yahoo!’s Finance and Flickr are recognized as two of its greatest assets. So, what went wrong?

To start, Google just happened to have the better plan. Google Earth, Google Maps, Gmail, YouTube, and Desktop Search integrated to any major browser have that “cool factor” that sets Google above the fray so that gets it noticed. Google’s innovation and implementation does what few tech companies can. It impresses the tech and pop culture communities.

Is Number Two Good for You?
So, now we’ve got Microsoft in a situation where it can’t gain any ground against Google. Outside of mice, Windows Office, and the not-so-profitable XBox, Microsoft seems to be struggling with its products lately. It seems to have that “I just got out of the pool” syndrome. It’s coming up very short on impressive products and services.

Yahoo!, on the other hand…let’s call it as it is. Yahoo! just hasn’t been able to get its act together. Back in December, 2006, Yahoo! announced that it was reorganizing the company’s structure and management to focus on its key customers and foreseeable Internet growth opportunities. (I know, it sounds like a bunch of rhetoric.) Yahoo! decided not to open the door when Microsoft was knocking last February. Well, as Steve Ballmer pointed out in his letter yesterday to Yahoo’s Board of Directors, a “year has gone by, and the competitive situation has not improved.” The management has been unable to pull Yahoo! out of the hole. It’s an unfortunate situation. We’ve seen great tech come and go because of management and marketing problems (any Commodore fans out there?).

Can Microsoft Handle Yahoo!?
Microsoft is certainly right about one thing. It needs Yahoo! to compete with Google. I just hope that Yahoo! doesn’t get leveled in the process.

Unfortunately, Microsoft has a history of trying to do more than it can. The most recent example is Vista. Here’s a tip. It’s bad when a CEO says “[w]e tried to incubate too many new innovations and integrate them simultaneously,” particularly when you’re talking about your companies most hyped and anticipated product! That was way back in mid-2006. Vista’s out now. It’s a huge success in the alternate reality where people bashing your product is a positive. Microsoft is known for focusing on too many products at the same time, with none of them being outstanding.

Moving back, the Zune was supposed to be the unit that brought down the iPod. The new software update made a step forward. Unfortunately, releasing a product that looks ten years outdated doesn’t work well when you’re not shooting for “retro.” LiveSearch was pretty much D.O.A.. WMA is DRM done worse. Windows 98 (well, that’s a statement in itself).

Steve Ballmer seems to feel that combining Microsoft and Yahoo!’s engineering talent (which they both have) on R&D priorities (which are questionable) will result, among other things, in “new levels of innovation, enhanced user experiences, breakthroughs in search, and new advertising platform capabilities.” Oh, that “among other things” that I slipped in. Yes, that would clearly include “competition for Google” at the top of the list.

Both Yahoo! and Microsoft were supposedly going to focus on their core strengths. Were the plans scrapped? Microsoft’s huge staff of engineers and developers team couldn’t get the Xbox 360’s ring of death under control; deliver Vista on time (or with the features originally promised); get a decent media player out of the door; or get a competitive search engine in place. Somehow, Microsoft feels that it can afford to share its talent to improve on Yahoo!? The latest news from Microsoft tells us that it will take 3 years to get Windows 7 out the door? Maybe they should outsource it to Apple. It wasn’t so long ago that Microsoft told us that its decision on Vista original concept was “incredibly strategic and brilliant and wise — and was not implementable. . .”

Bottom Line
I’d like to see the combo work. Consumers want it to work (well, those who aren’t waiting in line for the lackluster MacBook Air) at the very least to keep Google in check. We don’t like monopolies on this side of the pond (they make us nervous). Competition in the tech sector fuels growth and innovation. More importantly, it gets us more cool gadgets.

It could be a great benefit to consumers if Microsoft and Yahoo! could make one plus one equal more than two. Microsoft’s history tells us that’s not what will happen. Judging from some early Net rumblings, the techie universe doesn’t see anything good in the cards for this likely merger. I agree. I hope that when Yahoo! comes out of its hole next Groundhog’s Day, its shadow won’t be even smaller. We like Yahoo! and don’t want to see what it does have get whittled away. Even Google would benefit if had someone in the rear view mirror to think about.

Filed under: Tech Tips