Thursday, May 08, 2008 Ng: To merge or not to merge By Wilson Ng Wired Desktop
THIS is my 800th article for Sun.Star since I started writing for it 14 years ago. People always ask me where I get so many things to write about. Actually, it’s simple—the more you read, the more ideas you will have to share.
I make it part of my daily routine to read and scan several articles. I read as many books I can every month.
The technology news is full of reports about Microsoft’s decision not to pursue its bid to buy Yahoo. After three months of negotiation, Microsoft apparently decided that the price was too high. Microsoft offered more than 70 percent premium over the public stock price of Yahoo, but apparently the latter felt that its price was almost double what it was before Microsoft started to court it.
However, days after Microsoft walked away, Yahoo’s price is down by 20 percent, although still much higher than what it had before Microsoft came courting.
Rumors abound that Microsoft will still come back, maybe after a few weeks or months. Another rumor has it that Yahoo’s
chairman has been asked to try to lure Microsoft back to the negotiating table.
Apparently other than Microsoft, there is no other company that is big enough to buy Yahoo and, independently, it does not seem to have a concrete plan on how it will fight off competitors. The only viable plan on the table is to do a partnership with Google in providing ads on their search service. But then, I think it was really Google who undermined Yahoo in the first place, so that is like going from the jaw of one tiger (if that is how they characterize Microsoft) to another.
Yahoo has dominance in the Philippines as well. Almost 90 percent of people I know who do not use company mail uses Yahoo Mail, and almost everybody is into Yahoo Messenger. Flickr, a site for picture sharing, is also a Yahoo offering,Anyhow, I’m sure we will know in the next few months which of the naysayers and crystal ball gazers are right—whether it was right for both companies not to merge.
Speaking about Microsoft, I had a talk with another techie about how Microsoft can fend off open source. Business is all about being able to get the best price.
If you are Mercedes Benz, and people pay good money to buy your products, you cannot lower your price or give it away without making your shareholders, employees or even your customers angry.
For sure, Microsoft is a very successful company. Many companies worldwide would probably never realize in their lifetime what Microsoft earns for a day. So why should it give all that away?
Besides, Microsoft is under anti-trust regulation, and it cannot just start giving things away because the government prohibits it. Remember, they got fined for bundling Internet Explorer or Windows Media Player for free? Being a monopoly, it will destroy companies if it starts giving software for free.
Also open source, or giving stuff away for free, is a very difficult proposition if you consider that the first priority of a company is to make profit.
If you recall, eBay bought Skype, and despite its popularity, eBay admitted that it has not been able to make money on it. It had to write off a huge loss.
Youtube continues to gain popularity, but until now, Google admits that it still has not found a way to really turn it into a profitable division. Recently, Sun made a big deal about open source, but has admitted that, while it earned brownie points for it, it still has not been able to turn this quarter into profits.
