Tuesday, February 26, 2008

Do you really know what you are really recommending?

The New York Times has an article recommending that Microsoft should buy SAP instead of Yahoo. Lets see what the article really suggests:
Microsoft has managed to overlook a plain-vanilla strategy, the oldest one in the book: build on its own strengths. What it does best is to sell software to corporations, for all sorts of applications, visible and not so visible, at a handsome profit.
True, but I wonder if Microsoft is really a company that "best" sells software to corporations. As its struggles with Netscape over the browsers, Sony over XBox and Google over ads suggests, its primary target is a normal consumer, not a Fortune 500. If it was a Fortune 500 it was worried about, it would have not even looked at Yahoo in the first place. The article does go on to quote that half of Microsoft's revenue comes from business software ("e-mail infrastructure, database systems, developer tools, Office productivity applications and other mainstays") I can very well argue that half of the revenue comes from the normal, single PC/laptop owners. The glass can be half empty or half full the way you look at it.
Professor Cusumano has a suggestion: Rather than acquire Yahoo, Microsoft should pursue SAP.
Interesting. Instead of taking Google head on, it should try to consolidate the business software space and let Google become such a Goliath that its unbeatable. Even if MS buys SAP, how will it get its act together and challenge Google later on when Google is richer, more powerful and stronger?
Suppose that Lawrence J. Ellison, the chief executive of Oracle, were the head of Microsoft and was doing the shopping. Which deal would he choose? Past experience suggests that it would not be Yahoo.
This makes me smile. Can anyone predict today which is the company Oracle will acquire next? Remeber they have already, with "impressive regularity — (done) 13 strategic acquisitions in 2005, another 13 in 2006 and 11 in 2007 — Oracle has picked up key products and customers". I am sure the field is pretty barren after all this M&A and this prediction will be a cakewalk. Bonus Question: Predict Larry's next strategic move.
A few dozen well-paying Fortune 500 customers may actually be more valuable than tens of millions of Web e-mail “customers” who pay nothing for the service and whose attention is not highly valued by online advertisers.
Well sadly this battle is not for Enterprise customers. This for the John and Jane Does who are merrily surfing the web, checking emails, using social networking and clicking on ads.

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