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Microhoo versus Google
I decided to wait a while before posting on this topic as there is so much noise on the topic. And I waited long enough that Yahoo turned down the first effort, but I thought a post was still appropriate as Microsoft seems to be undeterred in it's pursuit. Especially as this is the first in potentially multiple consolidations in the space.
I believe this is the logical transition of Microsoft from a "product" company into a services company. While Microsoft has continued to lead in the "product" space, it has not gained significant share in the "services" side of the business. As we all know, technologies and products tend to move down in value over time, so to maintain position, companies (and individuals) need to move up to new values. Obviously, this market has matured to a point where Microsoft felt it had to move inorganically.
It will be interesting to see how the market moves forward in search and other services. I am especially interested to understand how users will distribute their loyalties between a" Microhoo" and a Google. Will there be a transition to some form of open usage model (ala television) where the underlying service structure is defined by lead content, or will it be based on loyalty services (email, storage, communications management, etc.). On the surface it would appear that many of the "services" that involve control (rather than media/bearer) are likely candidates for movement to this new competitive service world. In this, Microhoo may have a lead in it's UC business model that can extend from the enterprise into the personal space.
In the end this merger may impact a potential trend; many so-called products/services can be delivered economically enough to enable their use as loyalty tools for revenue models based on "marketing" models, while bandwidth is a value that end users will truly pay for. For example, neither of my children pay for any of these services (they use "free" email accounts, IM and others), but bandwidth is a critical component of their experience. Just try using YouTube on dial-up or a slow connection and you will see that this is true. If SIP UC services (from a control perspective) are no more expensive to deliver than email (in terms of processing MIPS, memory bytes, storage bytes, and Internet Access bits), will this become just another "free" service for consumers. One thing is for sure, the coming competition between Microhoo and Google that may emerge if this merger happens will drive demand for bandwidth in dramatic new ways. I sure hope either my telco or cable providers get with the program and gets me my 100 Mbps connection soon, I sure think I am going to need it. Also, this new era may really drive demand that will expose the current limitations in the core infrastructure; does the use of 40 Gig Optical and PBT Ethernet metro services come out of the increased demand curve created. The general drivers of bandwidth (Moore and Metcalf) are often out-stripped over a short period of time (see this post on Bandwidth Growth). Is this merger and renewed competition about to create a maelstrom of new services that will explode the bandwidth users will demand?
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February 13th, 2008 at 2:18 pm from Microhoo versus Google