Microsoft will have to face its own demons

I enjoyed Rafe Needleman’s post on Microsoft vs Yahoo. He runs down today’s key web offerings from Microsoft and Yahoo, and tries to guess which one would survive and which would be killed after an acquisition.

It’s fun speculation, but also shows how painful it would be to push this lot together. Must be a difficult time for all those product teams, facing the possibility of scrapped projects.

Another thought is what this offer says about Microsoft’s existing web efforts. It’s as if Microsoft is saying to all those Live teams, “Sorry  guys, it’s not working. We have to do something drastic.” If the bid fails, and we get the announcement that “Microsoft is excited to focus on continuing to build its Live platform” or something like it, it will still leave that awkward question hanging:

What can Microsoft do with Yahoo that it cannot do without it?

Microsoft’s ambivalence towards cloud services

The irony here is that Microsoft’s Live efforts have likely been held back by its own unwillingness to cannibalise the sales of its desktop products. Actually, not only its desktop products, but also its server products. I wrote two years ago about Office live vs Small Business Server, then noted how various limitations made it impossible to replace SBS with Office Live. It is also often noted how careful Microsoft is to ensure that, however rich the Office Live web components become, you still need Microsoft Office on the desktop.

I was asked the other day about how to set up a Nokia mobile with Office Live email. Yes, you can use its tiny web browser, but what about the proper email client, which in this case supports both POP3 and IMAP? Answer: can’t be done, without a third-party web-scraper service like IzyMail. Further, you cannot set up forwarding from Office Live to external email addresses. Hotmail shares these limitations, unless you upgrade to a paid-for Hotmail Plus account. All this is aggravating, and drives users to Gmail or indeed Yahoo, which both offer these features (actually, I don’t think Yahoo does IMAP except in a limited manner for the iPhone, but it does POP3).

Why has Microsoft struggled to support basic internet standards like POP3 and IMAP? Isn’t it do to with the fact that Microsoft’s real email server product is called Exchange? Yes, there is also the matter of trying to keep non-paying users on your web site, where they can see ads, rather than using offline clients, but Google has figured that it is better to keep your customers happy, than have them use rival services.

Why would buying Yahoo fix Microsoft’s internal (and understandable) ambivalence towards cloud services? Personally I don’t think it would. Rather, it’s Microsoft that needs to take the bold step of making its Live services as good as possible, rather than as good as they can be without damaging Windows and Office.

What money can’t buy

I realise that what Microsoft thinks it is buying, to judge from its conference call, is market share in online advertising and search. Still, I can’t shake off the suspicion that adding Microsoft to Yahoo might form something rather less than the sum of its parts. I also can’t help thinking that what Microsoft envies at Yahoo is its freedom from a LAN and desktop legacy that saps energy from internet-based initiatives. Look at what Ballmer said in the conference call:

It really represents a transformation of our business. The Windows user wants to be live. The Windows experience needs to increasingly embrace the Internet. There will be a Windows Live office. There will be an Office Live as we continue to bring out innovations in which Office transforms and is transformed by the Internet.

Unfortunately that freedom is something that cannot be bought. Microsoft will have to face its own demons.

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