Microsoft should abandon Yahoo, Facebook deals
- TAGS:Facebook, Google, Microsoft, Yahoo
- IT TOPICS:Applications, Desktop Apps, Enterprise Apps, Internet, Networking, Operating Systems, Windows
Microsoft appears ready to spend like a drunken sailor on deals for Yahoo and Facebook. But deal-making with such disparate sites is just one more example of Microsoft's incoherent online strategy, and is a clear sign of the company's desperation. It's time for Microsoft to change its online strategy, not throw money at a problem and hope that it works.
Today's news, that Microsoft may buy Yahoo's search unit and take a stake in Yahoo overall, comes after another report that Microsoft is continuing its pursuit of buying Facebook.
The deals have one thing in common: Pump up Microsoft's page views, and get more revenue from them. That's a short-term solution to a long-range problem, and one that won't work. Buying one or both sites won't help Microsoft fend off Google.
What does Facebook have to do with Microsoft's core mission?
In a word, nothing. All Microsoft will get out of the deal are more page views, and the company will pay a premium for them, because right now Facebook is at the height of its hype-driven market value. Some other technology will replace social networking as the Next Big Thing soon.
As for the Yahoo ad deal sale, Microsoft should face the fact that it's not going to overtake Google in ad sales. Google won that war some time ago.
Instead, Microsoft should build its business around providing Outlook, Office, and other services and software as a service over the Web. Microsoft has already said that it expects that a full half of its revenue from Outlook will be gotten that way several years from now. It should accelerate that process for Office and develop other services.
That's one area where it has a clear lead over Google. By trying to chase Google in ad sales, it's ignoring its strength. Google continues to develop delivering applications over the Web. In time, if Microsoft ignores that threat, Google could beat it there as well.
And then all the social networking and ad sales won't help Microsoft a bit.
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