Microsoft will go on its own
Bill Gates came out today to say that Microsoft will develop its own search engine marketing program. Google and Yahoo operate their own, but Microsoft has been falling behind its competitors. Google leads the way, nearly all of its profit is derived from its search engine marketing program. Yahoo has a similar program, still in beta, that produces some revenue but has very little marketshare in the Google monopoly.
This represents a much better deal for Microsoft shareholders and customers. Yahoo wanted a nearly 100% premium over their pre-bid price, far too much to pay for a company slowly losing marketshare. Not to mention that Yahoo’s own search engine program is still years behind Google’s which works with millions of webmasters around the world. (Yahoo’s is restricted to US residents)
It was likely that a Yahoo takeover would cost Microsoft far more than its worth, soon subsidizing its internet purchases with software sales. This direct cost sent to the consumer would likely raise the cost for Microsoft’s software and lower the amount of customers. All in all, the Yahoo takeover was pricey and unlikely to add any real value for Microsoft’s customers and shareholders.
The Facebook bid is still looming. Though Microsoft bought a portion of Facebook that valued it at over $15 Billion, news sources say that Microsoft is looking to buy more. A “feeler” was sent to Facebook to gauge interest in a complete buyout. No news has yet to surface but it seems that Microsoft is trying to add some class to its online divisions that continue to lose money.
Microsoft is just too big and too bulky to be considered for an investment. Nearly everything outside its software has proved to be costly. The first generation Xbox cost the company $1 Billion, and the Xbox 360’s are now failing at a near 33% rate. Microsoft’s attempt to take over the mp3 industry are going moderately well, but the Zune is nowhere near as popular as the iPod. If one message needs to be sent to Microsoft management, make it “keep it simple stupid.”
