smile & enjoy

tech, culture and trends. please, enjoy.

The Giant, The Giant and…The Giant

A few months ago online search giant Google put in a bid to purchase competitor and also search giant yahoo.  Google and Yahoo ostensibly are rivals as they both own an array of user-based internet applications which give them fantastic opportunities to help their clients advertise to specific demographics based on algorithms which try and predict what users will be interested in.

Helping people find what they want, Great.  Saving them time by clearing the clutter, great.  Making money as they connect companies with their targeted markets, great.  So, what’s the problem?  The amazing thing about the internet was it was an egalitarian voice for the world to share, ideas you want to share, people you want to meet, places you want to see it’s all there, for now.

As owners of web space lessened in their altruism and in support of their bank accounts the internet went from being less based on a meeting of the minds and more of a meeting of the ad spaces.  This is all well and good as this ad space allows more and more people to access the internet with countless free applications (many provided by google which for now can be seen as altruism).  However, if you look at the statistics which represent the search market share held by google and yahoo the two would share over 80% of today’s internet searches.  What does this mean?  As they increase their market share they will be able to dictate prices more aggressively than they had as a Google-Yahoo partnership would represent a very predictable gateway to accessing the internet.  

To clarify, I think google is great.  They have all sorts of great free products like gmail and search, they make my life easier in ways I probably don’t even realized and they do it all on someone else’s dime, too cool.  So, why I am kvetching, why am I virtually biting the hand which feeds me, I’m not.  I think that at the end of the day what ever happens is merely an event which will lead to another and another, no apocalyptic tale here.  

It used to be the case that the commercial computing world was dedicated to Microsoft, and in many people’s minds it very much still is.  Google found a way to swoop in and steal MSN search by providing a simpler format which was very effective for slow browsers.  While MSN was sponsoring many great articles Google realized that consumers didn’t want to know the 8 best ways to reduce stress but rather were going to MSN.com to find a specific goal.  

While I really appreciate all that Microsoft does, and think that their inter-connective concept will likely usher in a world I only have in my dreams, Google represented a new approach to the world.  Rather than charging fees for all products, allow most to be free and have the products which are highly in demand, customers, be charged a premium.  It’s great it’s simple it doesn’t hurt.

My point is that while Google and Yahoo exist in the same domain they are really more partners with a common voice and that is of an anti-Microsoft variety.  Despite the majority of computers being sold in the world come with pre-loaded Internet Explorer, they revert to FireFox.  Time and time again they show aggression toward Microsoft with the apparent benefit of being… against Microsoft.  

Today it seems that Microsoft and Google are now in a bid war for Yahoo.  Some people may wonder why yahoo is so valuable, it’s the same reason Google is so valuable.  Maybe not all of the features between them are intensely dynamic but the internet applications Yahoo! owns represents  very loyal customers who have emotional investment, time and energy in these applications which they have used to organize their life or scour for new things to learn about.

When buying a tooth brush, if I really distain what Oral-B does, I can switch to Crest, but with the internet world you’re not going to find such a benefit until the Data Portability standard is a reality, and even competitive applications will have nuances which will make one more applicable to certain customers than others.  

Between their two bids Microsoft has offered an enormous sum and is threatening Google execs that they will go to share holders if their offer isn’t taken seriously.  It seems like the real problem with all of this is that valuation is near impossible.  Good Faith can only be valued so heavily and the market projects are so erratic as the market is driven by an Adam Smith’s idea of an ‘invisible hand’.  

I really love all three companies, and I think it’s only a matter of time before apple gets into the mix as they are a self-proclaimed software company.  No matter what happens Google will win, as they have a continuously increasing share of the internet market.  Microsoft, however, only stands to break even on their overvalued offer as they have been chasing Microsoft for a while in the internet market.  Perhaps they need to learn a lesson from Brandenburger’s Co-Opetiton and Chasing Cool and learn that they are a great compnay who does certain things very well, but other things quit poorly.

It seems a thought Google has much less gain than their offer would suggest, hinting at perhaps a passive move at getting Microsoft who runs at Google’s coat tails to pay too much for a product which is expensive even to them.  Perhaps if Yahoo wants to do Google a huge favor they’ll accept the Microsoft offer and add to the poor investment strategies in Microsoft’s approaches to online apps.

Advertisements

Written by Joe

8 April at 4 pm

Posted in learn, muse, tech

%d bloggers like this: