On Microsoft, Yahoo, Google and Competition

I think right now every analysis I've seen tends to underestimate Microsoft, overestimate Google, and forget the lessons we should have learned from Yahoo. First of all, the obvious key here is not search or services, it's ads. Microsoft + Yahoo yields nearly as much advertising revenue as Google and a good deal more clout in attracting ad buys. It's obviously the big reason for the bid, with the other big reason being Google's multiple bids for Yahoo at this point. Here's the funny thing: Microsoft doesn't need the ad revenue. Microsoft has products and productized services that continue to make money and will so for the conceivable future. Yahoo needs the ad revenue, and always has. Yahoo is dependent upon that. It's quite likely that Yahoo would benefit from a Microsoft merger/takeover than Microsoft would.

I think that Google has a lot to lose if the deal goes through. Right now they are the undisputed kings of ad revenue, but the lesson people should have learned from Yahoo (and the companies that came before it) is that online ad revenue is a fickle, fickle beast. Yahoo used their lucrative leading position in ad revenue to bankroll a certain Stanford venture that eventually came to usurp their throne on the top of the ad revenue pile. Maybe Google is smarter than that and has a better eye for potential rivals than Yahoo, but every company has the potential to make bad business decisions that looked like good ones at the time.

I escaped Yahoo! Mail following the attempts to productize it in the era where their ad revenue was shrinking due to the bubble pop at the end of the .com boom. I have an escape plan should Google start to productize their ...