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  • The Night Owl’s Solution to the Microsoft/Yahoo Furor!

    March 13th, 2008

    All right, settle down readers, because our Special Correspondent, David Biedny, has come up with the perfect solution to help Microsoft get out from under its wasteful financial practices.

    Now imagine a scenario where Microsoft President Steve Ballmer and Yahoo CEO Jerry Yang are seated across the table from each other, trying to hash out their differences. When Yang balks at Microsoft’s latest offer, Ballmer stomps on over to him, slaps him in the head, and says: “Hey, bud, we’re paying you a bundle of cash for — a Web site. It’s just a Web site. It’s just a bunch of servers, that’s all. What kind of money did you expect?”

    Of course, to be serious for a second (don’t worry it won’t last), Yahoo is more than just a Web site. There is a whole lot of intellectual property involved, and endless hours to program the code that creates this hugely popular online portal. But at the end of the day, Yahoo doesn’t actually build anything that you can buy in a store. You just go to their site and do your thing, or subscribe, say, to their Web hosting service and have their site run your site.

    For all that, they expect billions and billions of dollars. But if Microsoft somehow believes that they’re worth it, I suppose they are. However, being willing to shell out $46 billion or some such figure for something they’ve tried to develop on their own for years without success surely shows that Microsoft has some serious problems. After all, how much money should it cost for them to hire the best developers on the planet — maybe dangle large checks and steal some key players from Google and Yahoo — and build the damn thing by themselves?

    Of course, that’s the problem. Microsoft has done fine with its core products, such as Windows and Office, but most everything they do that strays from the source of their success doesn’t do so well. In fact, after pouring billions and billions of dollars into various and sundry ventures, what have they to show for it?

    Well, consider the attempt to compete with the iPod. Now I don’t pretend to know how much Apple has spent on the product — and the iPhone for that matter — since Day One. But I’m willing to bet their entire R&D budget was less than a billion dollars, total, for all these gadgets.

    Microsoft has thrown away tons of cash, first on a Windows-only substitute for iTunes, and then on their own music player, the doomed Zune. I am willing to suggest the total investment was more than Apple spent, but Microsoft doesn’t seem to understand how to do anything but build a mediocre imitation of a two-year-old iPod.

    On the other hand, it’s fair to say that Microsoft squandered billions and billions of dollars to build Windows Vista, and look what that brought them? So maybe they’ve lost track of their core competency too. All they did was leverage something from existing products. In contrast, Apple took the original NeXT operating system, and has built six major releases of Mac OS X since 2001. By any gauge, it’s been a huge success, but their combined investment was a fraction of what Microsoft paid for failure.

    So it’s fair to say that Microsoft’s mindset is such that they believe that if you throw enough money at something, you’ll buy success. But how many failures does it take before they realize they need a new strategy, and when, in fact, will the stockholders start demanding action?

    Now David has another idea, and you shouldn’t take it seriously. But certainly it stands a greater chance of success than anything Microsoft has tried thus far. During “The David Biedny Zone” segment on the latest episode of The Tech Night Owl LIVE, he suggested that Microsoft send us a check, consisting of half a billion dollars for David and half a billion dollars for, of course, me.

    Give us two years, and we’ll build the successful Web portal that Microsoft cannot buy. In fact, we’re willing to spend a total of $80 million, half from each of our shares, to hire some great talent to help us create the ultimate Yahoo killer.

    Even better, if we don’t succeed, Microsoft can just write off that investment. Sound wasteful? Not when you consider how much they’re willing to dump for Yahoo, or the billions they’ve wasted on other projects that had, at best, middling success.

    So what say you Steve Ballmer? Want to bet on another sure thing?



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