US$ 47.5 billion software development

yahoo-microsoft-snubExcerpt

Microsoft almost bought Yahoo for US$ 47.5 billion, yet they could just spend US$ 10 billion for building a Yahoo rival. It seem the decision maker is more interested in producing mega-mergers than actual value calculation and creation.

Way back background

Microsoft had been losing the personal IT game.

It’s windows vista is riddled with problem, on the internet front they’re being outclassed by Google and Yahoo, and now Google is out there fighting with Facebook as if Microsoft is irrelevant.

How to survive? classic, buy a major player.

Microsoft can’t buy Google, so they tried Yahoo, with the main goal of tapping Yahoo’s search capability to compete with Google.

They bid Yahoo, the total bill would come at US$ 47.5 billion, for a website (and it’s content, but still, they’re interested in yahoo because it has a brand name that attract user to use e-mail, search, read news, etc at Yahoo)

Background

Luckily for Microsoft, that bid is turned down, this force Microsoft to develop their own search application, no easy task since previous attempts by Microsoft had failed.

But then comes Bing.

I thought Bing was a the name of a cynical Fortune columnist, what is he doing at Microsoft?

Then i found that it’s the name of Microsoft new search application/website (these days the difference can be very narrow)

After couple of weeks, i heard that Bing is actually quite decent.

Now, just now, i read that Bing is bringing honor for Microsoft since it’s viewed as a bonafide contender for Google and Yahoo.

So what?

Figure that, Microsoft almost paid US$ 47.5 billion, for something they could have developed internally.

If i were the engineering team for Bing, i would say that i save Microsoft US$ 47.5 Billion.

So, what’s the so what for us?

Human are fad prone.

I thought only individuals are fad prone, a new gadgets comes out and we buy it at full price despite that the price gonna fall as soon as the fad is over.

But the Microsoft case show that big, Fortune 500 companies can also fallen victim to fad.

Yahoo was a fad for Microsoft, Microsoft said to itself, “it’s either Yahoo or our future, so let’s prepare US$ 47.5 billion”,

Granted, most of this will be paid through share swap, and whatever mechanism that doesn’t involve real cash. But this figure is still in US dollar, one way or another, the Microsoft shareholder need to shelve US$ 47.5 billion.

yet realisticically, if Microsoft poured US$ 10 billion into developing a search engine, it will invariabily comes with a better engine than Yahoo or Google.

No brand recognition? buy

Patents? buy

Engineers? poach

If you have US$ 10 billion in your pocket, there’s a lot of things you can do to make your wish come true.

US$ 47.5 billion for an application

Yet, instead of deciding to pour US$ 10 billion to develop a search engine, Microsoft decide that US$ 47.5 billion is a fair price for Yahoo.
Fuckers, they got there math wrong no?

Microsoft could have copied Yahoo ten times over with US$ 47.5 billion, yet these supposedly smart executives would burn all that cash just to avoid the pain of developing the software.

Microsoft was damn lucky it didn’t get Yahoo.

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