Microsoft needs to move toward a more robust Web presence and enable a compelling -- and increasingly necessary -- Web-Windows integration offering.
The stop-and-start mating dance between Microsoft and Yahoo! endures, despite steadfast proclamations from Microsoft that it no longer even hears the music. But look at what's happening on the Web, and then look at what's happening with Windows Live. You'll see that Microsoft's eager to cut a rug, and that most of the other girls at the dance either already have partners or aren't Microsoft's type.
Does a Microsoft purchase of Yahoo! risk distracting it from the many developer and enterprise initiatives it has already begun? In the words of a former vice presidential candidate: "You betcha!" But done right, a Yahoo! acquisition propels Microsoft toward a more robust consumer Web presence and enables a compelling -- and increasingly necessary -- Web-Windows integration offering. Without such a deal, Microsoft's Web-based services and initiatives could very well bog down or even backslide against nimble competitors like Google, Facebook and others.
But that race is on the consumer highway. Does this really matter from an enterprise perspective? As a matter of fact, it does. A lot. As the distinction between personal life and work continues to blur and the Web becomes integral to both, we'll see consumer Web experiences have a greater impact on business decisions.
Despite the profound ubiquity of the Web, usability remains a concern. There are several major portals, blogs of every stripe, at least four major social networks and numerous ways to share photos and videos and listen to and acquire music. Even if you filter the list of possibilities down to the leading choice in each category, you're still left with a best-of-breed patchwork. People love choice, but eventually they want an integrated standard, even if that means sacrificing a few favorite features.
This phenomenon is largely responsible for the success of Microsoft Office -- and Windows, for that matter. Integrating disparate tools, even those pioneered by others, is something Microsoft has always done well. Integrating disparate Web tools is something Yahoo! could help Microsoft do better.
As an example, look at the business adoption of sites like LinkedIn and Facebook. Could Microsoft integrate Dynamics CRM, SharePoint, Outlook and Exchange into that type of online social networking? Absolutely. There's already some Web 2.0 integration in SharePoint. Perhaps those features haven't resonated with the market as much as Microsoft would like, but the direction is clear.
And then there are the obvious tie-ins with cloud computing. To the extent that Microsoft achieves success in its consumer-facing Web presence, and uses all or part of the Azure Services Platform to build that presence, that's a big win for .NET. A Yahoo! acquisition would accelerate that consumer-facing success and could seriously enhance prospects for Microsoft in the cloud and the developer platform battle.
For Microsoft to have continued strength in the enterprise, for .NET and the rest of the stack to maintain their prominent, vital positions in the commercial software dev market, Microsoft needs to be more successful in the world of the mainstream Web. Yes, that's a leap of faith, and it may be hard to buy into. But I'd argue that many at Microsoft have only recently bought into the consumer Web-enterprise correlation, and this has hampered the company's success in that realm.
The Microsoft Twist
Even now, this strategy is far from universally accepted in Redmond, but the critical mass is there, due in no small part to Ray Ozzie's leadership and Steve Ballmer's receptiveness to the strategy. Microsoft's heritage involves a climb from consumer grassroots to enterprise competitiveness and even dominance. Ballmer is to be commended for seeing the Web play as a new spin on that successful strategy.
Take a look at Windows Live Wave Three, including both the online properties and the new, related desktop applications (still in beta as of this writing). These have really, finally, broken the MSN mold: external service and feed aggregation -- blog, Twitter, photos, etc. -- is there; instant messaging contacts have now evolved into a true social "graph," or network; photo sharing is part of the mix; and older properties like Hotmail and MSNBC are retained and integrated well. Then there's the Microsoft twist: the Windows franchise is brought to bear through desktop apps that let you extend the Web properties' functionality into offline PC use. Great stuff. Now imagine if Flickr, HotJobs, Yahoo! Mail and Yahoo! Personals were some of the properties Microsoft were extending. That ante would be upped significantly.
Yahoo! would turn Microsoft's conventionally fueled consumer Web engine into a best-selling hybrid. The ad revenue and reach, the seasoned Web industry pros who think about the Web before they think about Windows, the Yahoo! brands and their customer trust and loyalty would together bring what Microsoft needs to rocket ahead on the Web. Software plus Services will only work if Microsoft is a Web leader, and a Yahoo! buy, carefully executed, could bring Microsoft such leadership.
If you're a Microsoft platform developer, this is something you should want. And, despite protestations to the contrary, Microsoft wants this too.
Andrew Brust is Research Director for Big Data and Analytics at Gigaom Research. Andrew is co-author of "Programming Microsoft SQL Server 2012" (Microsoft Press); an advisor to NYTECH, the New York Technology Council; co-moderator of Big On Data - New York's Data Intelligence Meetup; serves as Microsoft Regional Director and MVP; and is conference co-chair of Visual Studio Live!