Linked by David Adams on Fri 4th Dec 2009 17:16 UTC
In the News This 24/7 Wall Street article displays three common media ailments: hyperbole, a love for top ten lists, and an obsession with December predictions for the coming year (which off course OSNews is obviously also falling victim to), and there are some predictable losers on this list (Blockbuster Video, anyone?). I thought it would be an interesting topic for OSNews because three of the companies/brands are quite familiar to us: Palm, Motorola, and Sun Microsystems.
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What I see happening...
by JonathanBThompson on Fri 4th Dec 2009 19:10 UTC
JonathanBThompson
Member since:
2006-05-26

Maybe not in 2010, maybe not for a few years, but, if things don't work out well between Microsoft and Yahoo! I think there will be far more layoffs at Yahoo! as Google eats their lunch.

Even if the Microsoft-Yahoo! deal works out in terms of the legal hurdles, the whole deal removes a lot of what made Yahoo! the company they were: search. While they have lots of great content, is that enough by itself to remain truly profitable long-term, keeping in mind that they're ad-driven for revenue? Is Yahoo! turning into a pure content company? At this time, things are still up in the air: it's not clear what Yahoo!'s focus is, and that's the biggest problem for survival. The problem with Yahoo! and their product is that customers aren't locked in by needing to run their product to run other products: Microsoft may not be doing as well as they'd think they should, but it's really hard to fight the inertia of having 90% OS market share for consumer-level computers, when you consider the very large application market for apps that require Windows, that aren't that easily moved over to other platforms, because that's a costly proposition, especially when you compare potential market for other OSes. Cost of moving from Microsoft Windows to another OS: relearn various applications and their equivalents (if they exist) on the other platforms, as well as acquiring them: while some are free, there are likely far more proprietary applications that aren't on the open general market that are used and valued, and then there's the inertia of learning anything new. While for switching from one search engine/site to another, it all comes down to clicking different links, or typing them in the address bar: unless you're a social networking fool and connected via specific services to lots of your friends, it doesn't have an awful lot of stickiness to it!

There's an important lesson here: regardless of how good technology a company puts out, regardless of how great the company is, if people choose something else because they've got it on their mind, it's still failure for all practical intents and purposes. History has shown that it's not always the superior solution that sells: it's just what people adopt, good, bad or ugly, and where things are easily switched from, sooner or later, they are, en masse by the public, on a whim. Ask yourself: if a particular web-based company disappeared off the web, how much would it disrupt your life in work and home use? Even Microsoft, for all their money they can throw at problems, can't make you use their web-based stuff and be profitable at it, regardless of their claims (provable or not) of having superior web search/analytics technology: quite simply, Google has out-marketed Yahoo! and Microsoft, and by leveraging network effects for economies of scale and value of data, they've got the lion's share of network traffic for search, which only gets more valuable at a non-linear rate based on number of users. However, Google may collapse under their own weight of data: how many times have you tried to find something, only to get so many results from Google that you'd need to be immortal to get through them to separate the wheat from the chaff? Perhaps there's a natural maximum size for them they can grow to before they reach a point of diminishing/stable returns, but Microsoft, Yahoo! and any others need to have that happen soon to remain profitable (Yahoo! in general over the years has been profitable online, just not as wildly profitable as Google: Microsoft has, in general, only lost money online) or even relevant. The other big factor that may stop Google from becoming the Web Borg indefinitely: people's distrust of any single entity having too much power over their data and privacy. This may be the salt to the sugar fuel to the bread dough-like growth of Google, that causes things to stop growing at a certain point...

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