Submitted by With the proposed Microsoft takeover of Yahoo, a BBC editorial asks whether this isn’t just the case of one doomed company, the one “which failed to spot Web 1.0” trying to buy another which has succeeded in “never coming to terms with Web 2.0.” Should we fear a new onslaught of monopolistic weight-throwing, or is this just a punctuation mark on what will be a long decline?
Or more… this bit of text stood out for me:
“Microsoft is so huge it can just hire a couple of thousand engineers at the click of its fingers and put them to work on any problem.†(Said by someone from Google)
In theory, they can: but enough people that aren’t turned away in the interview process first need to interview there (wherever) first. In the Microsoft interview process, it tends to have at least 4 people, and if even one of them votes that they don’t like them, that candidate is rejected. The interviews are very time-consuming and they do definitely test you, no question there (so does amazon.com, as well as the interview I had at Yahoo! in the Bellevue, WA office) and they’d rather take the risk of rejecting good applicants that didn’t do well that day over accepting someone they were less than happy with their performance. It’s known through the industry that people that interview at Microsoft can expect to go through several interviews without success before finally (if ever) securing a job there.
When you consider that Microsoft hasn’t had stock options worth anything meaningful in awhile (no stock price growth for too long) it’s much harder to entice workers, besides all their goodwill (or lack thereof, depending on your point of view) not working enough in their favor. Also, at least in the Redmond area and surrounding area, it’s quite common for employers to offer noticeably more than Microsoft will for the same job requirements. However, I understand that the Microsoft benefits package otherwise is very good…
Even if Microsoft tried to hire a couple thousand people for some particular task in a short time (less than a year at the Redmond campus alone, if they were all working there: Microsoft has many offices outside of Redmond), the logistical nightmare would result in things likely progressing slower while they integrated them into the machine than if they just repurposed existing workers, because there’s the training of the employees in their expectations of what Microsoft wants, getting them involved in a project (likely with a bunch of other new hires) and all that goes with it, trying to get up to speed, and likely new products from scratch.
No, Microsoft simply can’t hire a couple of thousand new engineers and expect it to work out: it makes far more business sense to buy a company that contains all the relevant experience in engineers that are already working on that, and integrated with each other as teams. The big problem they’ll have to worry about there is the quite reasonable concern about how many of the engineers at the company they buy out will want to remain employed under Microsoft’s terms, and I find myself wondering how much Microsoft is willing to pay to keep current workers at Yahoo! (and I’m right on the front lines myself at this time, and… they hosed my stock option pricing with their timing) as at least one online article hinted or said they’d do…
However, I can’t help but think that a lot of people that really don’t want to be working for Microsoft will still decide to leave as soon as they can.
I think you’ve touched on a very good point. It’s not as though you can just pluck good engineers out of thin air. It’s very difficult to pick the good from the bad. Lets face it, a lot of people lie in the interview process.
They may be brilliant engineers that think outside of the square, innovate and are creative, but if they lack passion, drive and dedication and do not align with the corporate culture, they’re less valuable to me than someone who isn’t as good, has potential and aligns well with the culture of the organisation and people.
For instance we’ve recently hired a new guy. It took us six months, lots of interviews with liers and increased workload on the other team members, but in the end we got a very good candidate that fits the team well, knows his stuff and in simple terms is a nice guy.
It was well worth the wait, and I suspect this might be a strategy of Microsoft.
To have finally realized that may be one day, Microsoft will be no more! That google too, will one day be no more! That every other company in the world, might one day, be no more! The horror! The reality! Aaahhh I’m going crazy!
People, everything comes to an end. Everything, except stupidity.
hmmm, let me think….
In a word, No
They might have one or two products that make the company look doomed, but, they are diversifying, I do not understand when someone in the media sees a company, or a person go off from their normal tack in a tangent, they assume something is wrong.
Microsoft will be around for a long time to come.
If Microsoft buys Yahoo! right now – they are putting the company at a BIG risk, especially b/c if they lose OOXML, they lose Office. And if they lose Office, they lose Windows. (They may keep some market share in both, but it would be a big enough lose to lose the profitability of those two products.) If they lose Office OR Windows, they lose the company. Why? Most of the rest of Microsoft depends on the income from Office AND Windows combined.
Now add in Bill Gates retiring – which aside from the OOXML issue is a big challenge for the company – and the issue becomes that much more of an issue.
If Microsoft can’t successfully replace Bill Gates, the company becomes a second or third tier in the long run (assuming it survives!). If it doesn’t win OOXML proval by ISO – it’s a second or third tier – if even that. If it buys Yahoo!, then it’s put the company at huge financial risk – where it could be taken over if either of the other two issues do not resolve well.
So yes, the various authors are right to make the calls they are making. And yes, we’ll see in the next few months (as they are the most critical) but it is very, very possible that Microsoft may not be around in 10 years based on the events we are seeing right now – let alone what they might try to do tomorrow or the day after that.
I will agree with you on that. It’s very difficult to absorb a large company and make it work. Most of the time, it doesn’t work out that well. Look at the AOL-Time Warner fiasco, for example. Usually, A + B = A + B – N; where N is a loss of employees, efficiency, nimbleness, and a ton of other intangible factors. If N gets too large, then MS would be paying a premium for a loss in capability. Considering that it’s a $40B acquisition, it could have rather serious financial consequences for MS, if it doesn’t work out. I think that MS is counting on the online advertising market to keep growing and eventually subsume the cost of the acquisition; but that is by no means certain. Very risky, in my opinion, but I don’t have transparency to the factors which motivated Ballmer’s decision. Still, common sense says that it’s risky.
That’s nonsense. First, OOXML is going to be approved — it just may take more time than the fast track process allows. Second, even if OOXML weren’t adopted as a standard, the fact that it is among the default document save formats in the widest deployed Office suite in the world gives it significantly more market power than you think. The proprietary formats (.DOC, .PPT, .XLS, etc) are still the widest-deployed formats in use today — despite the fact that they aren’t “standards”. Be careful how much you read into what standards body do. There are plenty of ISO/ECMA standards that nobody uses. OOXML is deployed NOW. Standard-body approval will not be the straw that breaks Office’s back. Significant competition is the only thing that can eliminate Office.
Nah, not true. There are lots of companies who are running LOB apps on Windows that have too much of a dependency on Windows to ditch the platform. The cost of migration would be too great.
Again, I disagree. It’s not an all-or-nothing proposition. Microsoft could lose significant portions of its business, and shrink in size to meet the changing market. That happened to IBM back in the 90s when it laid off 100,000 workers. The biggest threat to MS is if its cash reserves are depleted, and it is unable to invest sufficiently in product development. THAT is its biggest risk.
Just a small point. It’s worth mentioning that OOXML is *not* a document save format in the widest deployed Office suite in the world.
The widest deployed office suite probably lies somewhere between MS Office XP and MS Office 2003. MS Office 2007 is most definitely *not* the most widely deployed suite. It’s likely it will be, but it isn’t yet.
“Replace Bill Gates” means a radical change of business policy. Microsoft’s entire business is built around a very simple strategy: controlling essential technologies completely. If you can do that, you can dictate the terms and rake in the cash. Doing it, however, requires certain conditions. You need to lock in users and competing technologies that would allow them to escape.
It’s not something you can sustain over a long period of time. It worked for a decade or two but it’s coming to an end. In itself, the strategy can be applied anywhere, anytime. But the things that Microsoft has applied it to are growing thin.
One of them was the Web itself, and they tried to control it with the Internet Explorer + Windows combo, plus a stack of technologies that would only work on this combo. That doesn’t work anymore. There are 3 other major Web browser engines out there. But that’s not even the big problem. The big problem is the so called Web 2.0, which is based on open protocols and formats, on interoperability, on delivering software for free and making money out of services.
They completely missed that train and have been trying for years to get back on. They got a search engine, the unified MSN, they’re buiyng Yahoo. It won’t work. Because they just don’t get it. You simply can’t own IT technologies anymore. Everybody wants openness and interoperability. As long as they persist in believing they can grab something and say “this is mine, you want it, pay up”, they fail. It’s a Neanderthal way of doing things.
So there’s no future there. The only things that keep them going are the huge piles of cash they’ve made so far and the ubiquity of Windows, Office and Internet Explorer 6 on the desktop. But that’s just a state of fact, inherited from better days, not something they actively do. And all these 3 things are slowly eroding. I look at all kinds of website statistics and I see Explorer 7 and Vista like only tiny blips. They still survive on XP and Explorer 6. And on Office, but Office is not doing so good lately since openness started biting its ankles.
As for the cash… it can only be spent. They’re not multiplying it right now. They need to be very careful what they do with it. Buying Yahoo IMHO is NOT a good idea. They should plan for some hard times ahead, not spend like crazy.
Edited 2008-02-07 20:42 UTC
Actually , Microsoft is doomed , they will loose there dominance on the OS and Software market in the near future. Thats why it’s reinventing itself as a service and ads company and diversifying.
This article says more about the press than anything else. They’re hoping for a messy, bitter, expensive and “sensational” (in journalistic terms) takeover battle. Whether or not they’ll get one is another matter.
If Microsoft does win, then believe it or not the world will continue much as before. The sun will still rise and set and you will still eat breakfast, lunch and supper. In any case, the key here is culture. Does either Microsoft or Yahoo have the corporate culture that allows them to take full advantage of every internet opportunity that comes along? The general answer seems to be “er, not really” which suggests this deal won’t make all that much difference. I suspect that for a lot of folks, the net means Google. It does not mean Microsoft and they do not want it to mean Microsoft.
Besides, a “doomed dinosaur” is a rather clumsy tautology, surely. All dinosaurs are doomed: the world changed, but they didn’t or couldn’t and small mammals took over. RIP. If you want to continue the evolutionary metaphor then you’d have to ask whether Microsoft is capable of changing from a dinosaur to a rat with attitude.
There’s more to life than eating 3 meals a day and watching the sun go by. That’s why people take an interest in what Microsoft does.
Is Microsoft a Doomed Dinosaur? Yes – In the long run, but as Keynes pointed out “in the long run we are all dead”.
… then Microsoft and all the other aging old dinosaurs out there (*nix, Google, etc.) are still doing a pretty good job of stomping flat all these more agile little mice (all the companies trying to do something new).
I guess that metaphor suggests that we need someone to code up a metaphorical meteor…
The problem with MS is that they don’t care enough about their OS than they care about productivity applications.
Apple discovered that their OS is aging and that they need a very good OS for the future, so they decided to go ahead with OSX, they made it and it was very slow in the beginning lets assume like vista on current hardware; but then by time they improved OS speed and features by v 10.1, 10.2, 10.3. Now that happened in years lets say about 3 years and OSX became an excellent OS (features and performance) which didn’t let mac users miss os9 anymore. This 3 years long that Apple took was long because Apple was a small company in resources (comparatively to MS), and this shows that Apple Team Priorities are correct (OSX fix, iLive, iwork, iwhatever, and then ipod, ithat).
On contrary, MS with its huge resources aren’t taken to produce a good lite weight OS optimized for the current hardware in the market ( we need alien computers to run vista smoothly now). 5 years wasted to develop and 1 year+ and now SP1 not a savior yet.
WHILE, they produce the best Office Suites not only for Windows platform but for other platforms like Mac!!! (a month ago office 2008 for mac introduced).
So if MS do not prioritize their efforts on the OS first they will sink one time for sure. People will shift to use other platforms while use MS products on that platform and once that platform produces as good alternatives to their suites then kiss goodbye MS productivity suites (watch now for Apple’s effort with iwork and what growth potential it has)
I think it’s actually more healthy for Microsoft to lose some market share to Apple and Linux, than to limp along, doing nothing and leveraging its monopoly position ad nauseum. Fear is a great motivator. MS needs to truly fear its competitors to thrive — and, by fear, I mean healthy paranoia, not incapacitated, deer-in-the-head-lights shock. Time has shown again and again that, when faced with fear, MS does a fairly good job tackling the competition (ie. Excel vs Lotus 123, Windows vs OS/2, IE4 vs Netscape Communicator, etc). Granted, the competition (Apple, Google, open source, etc) is perhaps more nimble and organic and shapeless and plentiful than in previous years, but the linchpin to Microsoft’s success is its attention to Windows. I think that they learned their lesson with Vista’s drawn-out schedule that they can’t get away with that kind of nonsense anymore.
Edited 2008-02-07 18:51 UTC
In all fairness, Apple’s big break is called Steve Jobs. If I were to compare him to Bill Gates, it would come out that they both have keen business sense, but Bill Gates more so, whereas Jobs is more of a technological visionary. There’s a limit to what a business genius can do in given market conditions, but there’s teoretically no limit to what an innovator can do. Because the former works within the market, while the latter can change the market itself. Gates foresaw a golden opportunity on a given emergin market and squized the crap out of it.
But now the market is radically changing and Apple is adapting but Microsoft isn’t. As long as they don’t, there’s no future for them in this new market. It’s a sad dilema, really, because in order to adapt they’d have to give up their former way of doing things. But in doing so they’d risk everything betting they can adapt successfully.