Every once in a while we whiteness huge deals with the equivalent of tectonic movements to shake the industry. The Microsoft/Yahoo deal would've been the biggest financial transaction of the Internet era. This deal would've impacted not only the industry and all Yahoo employees, but also everybody in the Microsoft ecosystem. This ecosystem includes a huge number of partners, ISVs and developers outside of Microsoft. This ecosystem is where I leave, so naturally I asked myself "What is the impact of this deal/no deal on my life as a professional and as a consumer?"
My first reaction is that I feel really relieved that somebody wise stopped the ".Net Bubble 2" from inflating at a higher rate. Let's face it - search and ads are big, but please, somebody has to keep things real and I am glad that Steve Ballmer did not cave in to the sheer racketeering that was going on. When irrational investors make mistakes, they loose their own money; when irrational executives make mistakes, they get the boot, and the way it looks Yahoo's executives will be in the hotspot pretty soon.
True, the giant from Redmond needs Yahoo to buy market share and expand at a faster rate in the search & ad market, but do they need them for their technology? Heck, even Yahoo is bailing out on its own technology and trying to outsource to Google vital services in which they invested billions of dollars. Considering that Microsoft also has a formidable technology stack in search technology, this is probably not a big selling point.
But is this really the way to beat Google? History shows that real winners emerge by opening completely new markets and expanding existing markets, rather than simply trying to conquer market share. The main reason is that market share with no innovation and authenticity to back it up is lost in a jiffy. Think of what happened to Lotus in the hands of IBM a decade ago and you'll see what I mean.
I'd rather see Microsoft taking a slower and agile approach, with smaller acquisitions, leading the way to reshaping their vision of personal computing and letting Yahoo to gradually withdraw in the Internet pantheon next to companies such as Netscape and the like. If this is what Microsoft's withdrawal from the Yahoo bid means, I applaud it!
Let's assume that the Yahoo deal is completely dead. Since Google did not deliver on the promise to create the next wave of Internet based office and personal productivity applications (c'mon how many years of fluffy Google Docs BETA!), it is about time for Microsoft to not only step up to the plate, but also to reshape our perception of personal computing. With so many devices in our hands and information that we need at our fingertips, both business people and consumers need a virtual desktop experience, which includes search of the web, but also of personal data and applications such as Excel and Word in the context of this connected network of devices. With their latest announcement of Live Mesh, Microsoft is doing exactly this. For me personally this is the huge deal. I am really tired of juggling personal and work computers and data on several devices and I can care less about ads. They are not interesting anymore. I learned to ignore them, the same way I fast forward the ads on my DVR. If Live Mesh is the answer of Microsoft to the challenges of the market, I hope they will pull this off, and also figure out a way to open it to the community so that it becomes a truly open platform with support for third party devices and operating systems.
This Deal is dead! Long live innovation and authenticity...