$44B For Yahoo?

Whenever I contemplate a significant purchase I think about alternatives.  Example, you could buy a $50K luxury sedan, or you could by a more modest normal-guy sedan for $25K and use the remaining money to take your family on a 3 week vacation to virtually anywhere on the planet.  Or, if you were more altruistic, you could change a struggling family’s trajectory possibly forever by giving them the extra money.

So when I hear about Microsoft’s potential purchase of Yahoo for $44B, my mind naturally goes to alternatives.  What could you do with $44B?

To set the stage, one has to of course acknowledge the fact that the spaces that Google and to a lesser degree Yahoo dominate are of course critically important.  The connected world is rapidly moving towards cloud computing where advertising pays to play.  It’s like broadcast TV back in the days before cable TV.  You “paid” for your entertainment by watching commercials.  In the future, a portion of your computing utility will likely be paid for by being served ads that matter, and are possibly useful, to you.

So, Microsoft needs to do something to play in this space.  The office cash cow will be affected.

I believe that fundamentally the reason Google is successful is they build great products.  Their search, maps, calendar, earth, and mail applications are all terrific.  People love them and use them gladly.  Even their advertising is useful (do you click in the right hand column?  If so, you’re voting useful).

So, back to alternatives.

Microsoft is a complex place, with a dizzying array of offerings, so at the risk of being sophomoric, I’d offer up a couple of alternatives from the technology Mecca of Central Ohio.  Microsoft should fund two projects.

• MicrosoftWorld – a portal site, paid for by advertising, that included terrific online versions of the office apps, email, maps, etc. all build from a clean sheet of paper with no compatibility baggage using the latest and greatest technologies Microsoft has to offer (they have plenty).
• AppleSmasher – create a partnership with hardware vendors to build a beautiful machine, better than anything Apple has to offer.  Include a brand new, no backwards compatibility OS that is technically and visually stunning.  Engineer the combo to be more open than Apple’s infrastructure, but not so open that anybody can build hardware and software to muck it all up.

How well could $44B fund these two projects?  Fund each project with $22B.  Put $5B in the bank to handle everything other than personnel costs (a nice war chest) leaving you $17B to buy people.  By my calculations you could fund a team of 5,700 at an average annual salary of  $150K (I’m in Ohio remember) for 20 years.  Although the project is complicated, one could argue that this is plenty of runway for a large group of smart people to accomplish their objective.

By now, many of you are saying easier said than done, and it would take to much time to get the work done.  Point well taken.  But I would counter with what’s the risk of pulling off a major acquisition of a company like Yahoo who, in it’s DNA, are probably not a big group of Microsoft rah-rah people?  Does anyone remember AOL / Time Warner?  Or how about Daimler / Chrysler?  Acquisitions are hard, and mega acquisitions are much harder.

And remember my initial premise.  People will use stuff the love.  Why not set a well-funded team free to really change the landscape?  After all, that’s what Google did.

I welcome your comments.
Mike Brannan