I’ve been refraining from adding my own two-cents to the crazyness around the Microsoft-Yahoo bid, but after reading Robert Scoble’s post today on why Google gains from slowing down the deal with their needless rants and why the underestimated future of the companies is in mobile as opposed to IM/e-mail where the spotlight is being shed, I think there’s a lot in my mind that has to be said.
What a lot of people aren’t getting is that the deal means only one thing to Microsoft: advertising. Where Steve Ballmer projects 80% of Microsoft’s future revenues lie, where Google makes its $16.6 billion annual income (and add a few billion to that for 2008 with the DoubleClick acquisition), where the money comes from the pockets of rich, million/billion dollar entities as opposed to that college student with a $20 note to feed him for the next week.
Sure, Scoble is dead right by saying nobody cares about IM/e-mail, and the mobile platform/advertising in general is going to be huge in the next few years. It is — it really is — infact, it’s projected to grow 500% by 2012 to a $5 billion market. But that’s not where this stops. In the big picture, the mobile platform Google is building is only a small, small slice of the pie that’s going to get bigger and bigger over the next decade. And Microsoft is buying into that picture with Yahoo!. And Google knows their little steps aren’t going to be enough to fend off the huge advertising giant we’ll be looking at in 2012.
If you look at it this way, Microsoft is a technology company. They build software. Yahoo! is a media company. They own advertising on the Internet. Microsoft’s been trying and trying and failing to get into Yahoo!’s business, which is where they project a lot of their future revenues. Yahoo!, in what many say is the wrong path for a company to take in the land of Web 2.0, has been getting deeper and deeper into this path, which Terry Semel is largely responsible — or credited — for. And Google, in all this, is the joker with the identity crisis. They say they’re a technology company, but deep down they know they’re a media company (if the $6 billion DoubleClick acquisition is of any indication.) Microsoft wants to be the Yahoo! in 2012, and Google is becoming the Yahoo!. So basically, n 2012, we’ll have two huge advertising giants.
Now if you look at it from the perspectives of the three companies, they all know advertising is where the future and the money is. As much as we’d like to think it, it’s not users, it’s not Gmail, or Yahoo! Messenger, or Microsoft Office, or Google Android (who wants to click on an ad while urgently searching for “how to give CPR”?). It’s advertising. Online advertising. Search advertising. Banner advertising. Microsoft is buying — rather than building — an online advertising giant. They’re doing it by combining MSN Search, and Yahoo! Search, and Microsoft adCenter, and Yahoo! Publisher Network, and building another online ad giant, another Google. And as much as they aren’t showing it, Google is worried. Not about Gmail, not about Google Talk, but about the core Google — search and ads — and their 2012 revenues.
(Image Credit: Flickr user mosippy)