Forum: Yahoo raid 'refocusing' move by Microsoft

Whatever happens with Telecom's or ACP's portals is a tiny unimportant footnote in what is, in essence, a sea-change in the way people use ICT

Last weekend, with the news of Microsoft’s bid for Yahoo just breaking, this journalist set out to write a quick opinion piece about the local impact of such a deal.

Naturally, I focused on the two companies’ local alliances, Telecom’s with Yahoo, and publisher ACP’s with Microsoft’s MSN. That was, if you like, the business angle.

But, really, such stories just scratch the surface of what’s going on. Every day thousands of Kiwis use online services, from Microsoft, Yahoo and Google, among others. Many people don’t even realise they are doing so, as these companies have acquired numerous online start-ups and kept the latter’s branding intact. These services include Picasa, Flickr and Delicious, for example.

The impact of a successful Microsoft/Yahoo deal, or anything Google may do in response, is, therefore, going to be felt by all those users.

Coincidentally, or otherwise, I received my first Google press release here at Computerworld last week. That might strike you as odd. Surely, Google sends out media releases all the time? Well, not really. Like a lot of online companies, it tends to keep things pretty tight. Journalists have to chase it, rather than the other way around.

The press release announced several new services that constitute Google’s attack on the application space. These are the kinds of moves that are making the company such a threat to Microsoft. But with its latest announcements, the company has probably bought itself a few more rivals, too.

The latest Google apps include email security, services covering filtering, encryption and archiving. Google says the services will work with any email system, and plans to charge a whopping US$3 (NZ$3.75) per user, per year for filtering; US$12 for filtering plus message-security services; and US$25 for filtering, security and discovery or archiving services.

Such hosted services will appeal to many small businesses. They are a way to get rid of a lot of headaches, such as application support and updates as well as upgrades. This, therefore, makes them a major emerging threat to established vendors selling packaged products and outsourced services alike.

Google, and increasingly Microsoft and Yahoo, are re-drawing the way IT is delivered. But make no mistake, Google is the driving force here. It has no legacy business in applications to protect. Despite its massive scale, it remains a challenger.

In that regard, whatever happens with Telecom’s or ACP’s portals is a tiny, unimportant footnote in what is, in essence, a sea-change in the way people use ICT.

Microsoft isn’t a footnote and isn’t about to become one any time soon. But it does need to refocus on its core business. For the last few years, it has been thrashing around looking for new places to grow, with Zunes and other initiatives. Its move on Yahoo, a raid that is entirely uncharacteristic of the company, is a sign that it is already changing.

While a lot of comment has centred on Microsoft’s desire to become a player in the media world (and its failure to do so), the Yahoo raid isn’t really about this, in my view.

It’s really about Microsoft finding a platform for the delivery of online applications. Paradoxically perhaps, the Yahoo bid is a sign Microsoft is starting to focus on its core business again.

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