Microsoft's New Math: 2 + 3 = 1

from the merger-mania dept

Recently, rumors surfaced that eBay was exploring partnerships in hoping to fend off a possible threat from Google. Naturally, Yahoo and Microsoft were thrown out as possible allies. Now, Microsoft may be doing the same dance, with some suggesting that the company has explored some sort of tie up with Yahoo. Possibilities include merging MSN with Yahoo, Microsoft taking an equity stake in Yahoo, or even an outright purchase, though that seems unlikely. Like the eBay rumors, which seemed hard to justify, nobody can find a rational explanation of how merging two search laggards will create a stronger product. What's funny is that many of these same rumors were first floated over 6 years ago, when everyone was scrambling to stop the AOL juggernaut. AOL wasn't brought down because someone created a better ISP; they were brought down because there was a better model out there. At this point, Microsoft might do better trying to figure out what will disrupt the search engine, as opposed to just copying the leader. If Microsoft and Yahoo are considering some sort of marriage, they might do well to look back at the merger between HP and Compaq. Simply combining the second and third players in an industry isn't enough to create a new number one. At least in that case, the companies had actual infrastructure, channel partners, and customers to combine -- in this case MSN could probably merge with Yahoo by unplugging their servers, and setting up MSN.com to forward Yahoo.com. Does that count as a synergy?

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