Another Look at MicrosoftYahoo: With Iraq as the Example Jeff Carter Kings Jersey , Is the Google War Smart? Technology Articles | March 27, 2008 Microsoft's attempt to acquire Yahoo is an interesting study of strategy.? Was this truly evaluated for the opportunity cost?? Or merely a bad analysis of a huge decision?? Read Rob's take on the situation as he compares it to the war in Iraq.
If, before we went to war in Iraq, we listed the resources it would cost against a list of things the U.S. needed to do in the economic, infrastructure, health Tyler Toffoli Kings Jersey , safety and world influence arenas, I doubt any sane decision maker would have made ?war? the top choice.
Yet it was the easiest. It was simple and few looked at the opportunity cost (and almost everyone who did underestimated it).
At the heart of Microsoft's attempt to acquire Yahoo is the premise that it needs to do this to compete with Google. If Microsoft were to list the cost of the war against Google, including the acquisition of Yahoo, against its problems, I doubt it would acquire Yahoo.
It?s not evaluating the "opportunity cost," or the cost of not being able to do something else Tanner Pearson Kings Jersey , and I?ll bet none of you do this very often either (I include myself), so feeling smug isn?t an option here.
I?m aware that using Iraq as an example of anything is risky because it is a real war with real lives lost. But, it is also the best, and most topical, example of a decision where opportunity cost was not really discussed at the front end ? and it?s also the most powerful recent example of why it should be. So, if I offend anyone by using it Nate Thompson Kings Jersey , let me apologize up front and say that offending anyone on Iraq is not my intent.
Incomplete Analysis Leads to Bad Decisions: Is Acquiring Yahoo a Bad Decision?
This isn?t an easy question, but sometimes goes to the tactical drivers (executives live quarter to quarter) for executive decisions, which have them jumping to a conclusion based on incomplete information. If wrong, Microsoft would be in good company; most of its erstwhile competitors have gone down a similar path. Sun went after Microsoft and lost leadership in its market. IBM went after Microsoft, and HP is very grateful. (I could point to IBM's efforts to block OOXML and why HP is benefiting, but will leave that to another day.)
Now this all may be moot because clearly Google and Microsoft are at war now Derek Forbort Kings Jersey , and if our measure of success is financial performance, I could argue that Google is likely winning (though not yet in any area focused on Microsoft's core strengths). And, using the Iraq example, if the U.S. after invading had suddenly said, ?oops, our bad Alex Iafallo Kings Jersey , never mind? and tried to leave, I expect the exact thing it was trying to prevent would then happen in retaliation. But, if the goal is to avoid future mistakes, maybe it would be wise to explore this ?Google-Microsoft war? and ask whether it makes sense for either company under the context of the forgotten opportunity cost.
Core of Conflict
Typically, when two countries or two companies go to war, it is over resources. Germany needed living room. Japan needed manufacturing resources. Both Google and Microsoft need to grow their stock price and revenue Ilya Kovalchuk Kings Jersey , often pulling from the same pools.
Wars can also be defensive. Many of the recent U.S. actions seem to be more in the nature of anticipating and eliminating future problems. Because Google wasn't having much impact on Microsoft?s core business yet, it is probably this pre-emptive cause that drives the dispute between these two companies. Microsoft sees Google growing eventually into its market, much like it saw the potential risk of the PlayStation to PCs as a reason to create the Xbox, and moved aggressively to block.
The resource part of this is the visible defection of some high-profile Redmond employees to Google's camp. This gives the basis of the conflict its strong grounding as at least a perceived threat, but is the threat Microsoft?s greatest?
Microsoft?s Exposures
If I, as an observer of Microsoft Adrian Kempe Kings Jersey , were to rank Microsoft?s exposures, I would place Google towards the bottom. Similarly, comparing invading another country (Iraq or Iran) against the other choices in front of the U.S. at the time that decision was made ? for instance, correcting the U.S. oil addiction problem ? the latter would seem more important and likely to result in a similar outcome with more long-term benefits (particularly given what I paid for gas this weekend).
What are the larger exposures? At the top of the list I?d place improving the relationships with customers (OEMs, IT buyers and users) as the current largest problem. Linux is largely a visible representation of market dissatisfaction with Microsoft. I?m actually not aware of any other instance where dissatisfaction with a product choice resulted in the market creating its own competing offering.
Linux is owned and controlled, though this is changing Oscar Fantenberg Kings Jersey , largely by people who would typically be potential customers for a company that specializes in platforms and development tools. It is an attempt at revolt, and not just against Microsoft either, but against every other alternative (otherwise the market would move to that alternative instead as buyers, with some exceptions, typically don?t want to be builders). As Microsoft fought Linux, Linux got stronger; as it is now starting to embrace the core concepts that founded it Jake Muzzin Kings Jersey , Linux weakens, showcasing its function as a reminder to Microsoft and others that no matter how big you are, unsatisfied customers can revolt.