Yhoo + msft = ?

here are a few scrambles…

smoothfy?
of my hots?
my hoof sy?
shoot my f?
of my shot
my foot sh?

so is it microhoo or yahoosoft?? having worked at Yahoo! for six years before coming to B-School here is my take on the possible acquisition.

opportunities:

– the possibility of better r&d and product development. given that the 2 companies can combine their talent there is a good chance that products will be positively impacted. especially since engineers from different disciplines will be able to interact (platform + online, entertainment devices + mobile + online )

– scale due to the aggregation of audiences, data, reach and advertiser relationships. this applies for domestic and international businesses operations.
msft has 24×7 and aQuantive and Yahoo! has ypn and right media and this can build a slightly longer tail.

– bringing focus to online. I have always believed that msft has not paid enough attention to its MSN division and this lack of attention has led to poor execution. this is one area which might be addressed. If Yahoo! is merged into the company as kept as a separate division (6th division?)this will drive focus, attention, resources and enthusiasm towards its cause. no more step motherly treatment for online at msft.

– operational efficiencies leading to cost savings.

– more discipline to the Yahoo! culture, more fun at the Msft culture. A strong presence in the bay area. This is an important psychological requirement.

challenges:

– cultural clash. the 2 companies have different cultures and this will lead to talent attrition at Yahoo! this might create an opportunity for the talent hungry google to infuse more engineers into its fold.

– to succeed product development needs to leverage its synergies across the 2 orgs. the online market is unforgiving and 2nd best, however close to the no1 product is just not good enough. this is going to be the main success factor and the proof lies in the execution.

– anti-trust issues. although Msft + yhoo combined will still be smaller than Goog this may still be an area which needs to be addressed. there are a lot of international markets where the 2 combined will be a major force and anti-trust regulation needs to be addressed.

– preserving the Yahoo! brand. The danger of being brought into the fold of Microsoft will alienate loyal users of Yahoo! and so attention needs to be paid as to how the unified entity communicates itself to its users. my POV is to preserve the Yahoo! brand intact in most areas and take down MSN. the integration of yahoo and live will need to be thought out more..

– both Yahoo! and Msft are large companies and joining their work forces wont be easy. the combined entity with their existing work forces would be 79,000 + 13,000 = 92,000. Ofcourse there will be a whole lot of restructuring and the final entity might be more in the size of 85,000 people (by way of shaving the sales force, redundant divisions and business teams). so quoting an old saying “the larger they are the harder they fall” could be a reality.

So do I think its going to happen? Yes, I think the likelihood is greater than ever but the success will come down to how it is executed. It is going to be interesting to see how this unfolds over the coming weeks and months.

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