Microsoft’s answer to Google is not Yahoo - it’s Microsoft
by Gil Rosen

“Obi-Wan: The FORCE can have a strong influence on the weak-minded…”

Replace “Force” with “Money” and this sums up Microsoft’s problems. Its not talent, not creativity, not assets, not brand… Just money. Not because money doesn’t enable you to achieve things but because it blinds you of the talent, creativity and assets that exists within.

I read with interest several blogs / articles (1, 2, 3) that rationalized the pros and cons of a possible Yahoo-Microsoft take-over / merger / strategic partnership. Most of them, of course, vote against or think a partnership first makes the best sense.

Personally I say “Forget Yahoo” - Microsoft’s only way out is Microsoft itself!

But not today’s Microsoft. Tomorrow’s. I believe Microsoft can reinvent itself (OK - Vista isn’t a good start) and become a leader in personal and enterprise digital services.

So with a gross cash reserve of $50bn, why not go on a little shopping spree? Why? Because all that is bad in Microsoft, I believe, starts with that. Father Bill and Co-Father Steve should tell their kids the allowance this year just got cut and they better get creative if they want to stay at home.

The big conglomerate needs to do something TOTALLY different. Something COLOSSAL to break the status quo, something that can bring REAL change and not incremental.

Like what? Like become an umbrella to 10,000 start-ups. All using Live, X-Box, MSN etc. as platforms - INSTEAD of letting these platforms becoming THE company. Convergence has cleared the borders between enterprise and consumer applications, mobile and PC, desktop and online. The old fashioned corporate divisions will not be able to sustain progress, spur innovation.

Create robust R&D centers at the core of the corporate, encircle them with brandless, nameless platforms / services (currently Live, MSN, etc.) and let new mini, independent COMPANIES (not business-units) run new products / services on them. Don’t tie them down ‘Microsoft inside’ only policy - create a loose but synergistic relationship that will benefit both sides.

Let natural selection take its effect and like a mega VC select which companies you keep funding, which you cut off, spin off and or continue to nurture. Drop what become legacy structures and regroup to smaller, fitter units. This eco-system is much more likely to create a rival to Google [in its respective field] than Microsoft in its current form. In fact, this way there is no Microsoft that can be ‘attacked’ face on.

The “loose form” corporation will be a much more formidable (yet friendly) adversary then one giant gorilla. With no anti-trust issues to carry like a hump on its back.

The biggest difference between Google and Microsoft at this point is that Google needs to take-over / merge to grow and Microsoft needs to dismantle. This is why merging with Yahoo is a mistake. Its the opposite of what Microsoft needs to focus on.

Reminds me of the famous “Opposite George” episode in Seinfeld when George comes to the realization that in order to succeed in life he need to do the opposite of what he always thought was right “I’ll tell you this, something is happening in my life! I did this opposite thing last night. Up was down! Black was white! Good was… bad [Seinfeld]… day was night [Elaine]”.

Dwelling into the micro analysis of a Microsoft-Yahoo ’something’ is NOT what needs to be discussed. How Microsoft finds its FORCE back WITHIN - is.

Gil Rosen
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