Microsoft's unrealized online dreams

Ian Lamont — Sun, 03 Feb 2008 23:55:05 -0500

With its $44.6 billion bid for Yahoo, is Microsoft setting itself up for yet another Web misfire?

If one believes Steve Ballmer, the answer is a definite "no." It's a perfect match, he says. Advantages include bringing together Microsoft's significant software expertise with Yahoo's massive customer reach and page-view inventory. There will potentially be major savings -- totaling "at least" $1 billion per year -- after the two corporations combine search and advertising operations and unify their R&D efforts. Huge profits are to be made in online advertising: Kevin Johnson, Microsoft's president for Platform and Services, claimed in a conference call with analysts last Friday that the online advertising industry will grow to nearly $80 billion in the next three years. In the same session, he and other Microsoft executives uttered "synergy" and "opportunity" nearly 30 times -- clearly, Microsoft is very optimistic about the deal.

But haven't we seen this all before -- Microsoft spending huge chunks of cash to acquire online services or develop them on their own, only to see the synergy turn into mediocrity, and grand visions result in feeble efforts that ultimately fizzle? Remember all the initial buzz about the Hotmail acquisition? What about Passport and Microsoft's other "megaservices"? When is the last time you heard someone say how much they love using Internet Explorer? In all of these examples, big words, big plans, and big bucks did not translate into online success. When it comes to making its mark on the Web, Microsoft still seems to be engaged in a game of catch-up with rivals like Google and a host of nimble upstarts.

It must be noted that the Web was never a part of Microsoft's DNA. Microsoft grew from a startup to the world's largest software company thanks to its core businesses -- operating systems, PC software, and enterprise applications. Online came much later. Despite nearly 15 years of trying, Microsoft still hasn't yet figured out a model for Web success. Even if the Yahoo deal goes through, there's no guarantee it ever will.

Ian Lamont is the author of The Social Enterprise blog on TheStandard.com. Comment below, or email Ian at ian@thestandard.com. Follow Ian's updates on Twitter at http://twitter.com/ilamont, or visit his personal blog. Ian's bio and disclosures are located here.

Microsoft's unrealized online dreams

Ian Lamont — Sun, 03 Feb 2008 23:55:05 -0500

With its $44.6 billion bid for Yahoo, is Microsoft setting itself up for yet another Web misfire?

Microsoft's unrealized online dreams

Ian Lamont — Sun, 03 Feb 2008 23:55:05 -0500

With its $44.6 billion bid for Yahoo, is Microsoft setting itself up for yet another Web misfire?

Microsoft's unrealized online dreams

Ian Lamont — Sun, 03 Feb 2008 23:55:05 -0500

With its $44.6 billion bid for Yahoo, is Microsoft setting itself up for yet another Web misfire?

Microsoft's unrealized online dreams

Ian Lamont — Sun, 03 Feb 2008 23:55:05 -0500

With its $44.6 billion bid for Yahoo, is Microsoft setting itself up for yet another Web misfire?

Microsoft's unrealized online dreams

Ian Lamont — Sun, 03 Feb 2008 23:55:05 -0500

With its $44.6 billion bid for Yahoo, is Microsoft setting itself up for yet another Web misfire?