Wednesday, October 5, 2011

Microsoft Considering Buying Yahoo!!

According to Reuters reports; Microsoft is considering buying Yahoo. But the question is whether that acquisition is a meaningfull one from a network perspective.

At one end Microsoft realizes that "MSN is a critical component of helping Bing win." While on the other hand, its portal space is being currently challenged. Facebook is just absorbing more and more minutes of usage. The time shifting toward mobile is another factor weighing on portals like MSN.

So Should Microsoft buy Yahoo?

1 comment:

  1. I found this article interesting as well. A few points from the article I'd like to mention include:
    - paying next to nothing for Yahoo's core business, if Microsoft were to strip Yahoo's assets, including Asian assets worth nearly half of Yahoo's $20B market value
    - increasing Microsoft's share of the U.S. search market to greater than 30% by combining Bing with Yahoo... this would not only increase margins through scale but also help gain credibility with online advertisers by providing a high-traffic network*

    *One New York Times article back from 2008, "Yahoo Offer is Strategy Shift for Microsoft," included analyst estimates of Google collecting 40-100% more revenue per search than Yahoo or Microsoft, due to network effects. As this article mentioned, Google continues to gain share while reaping additional benefits from network effects.

    These may be a few factors in Microsoft's consideration of bidding for Yahoo.