Microsoft needs Yahoo.
The software business is not what it used to be now that the Internet and mobile spaces have made computing non-essential for an increasing number of consumers. Cell phones and mobile devices are essential, computers less so. Microsoft has not exactly had the Midas touch in growing beyond software and, in my opinion, has been late to the Internet race.
Yahoo was a pioneer but it is being bested by Google -- America's latest out of control conglomerate. Google more than any other company owns the Internet space. These are smart people (okay, the jury's out on the $1.6 billion YouTube purchase) and they are in a Clear Channel kind of mood (not the wimpy Clear Channel of today, the brazen and brash "Evil Empire" of six or eight years ago).
Microsoft is hungry for acquisitions and therefore can be expected to expend its plentiful cash reserves on buying its way into the Internet space.
That's what big companies do -- acquire other companies -- and more often than not the acquired company is better off not the buyer. That never stops them, however.
Even Google knows what I mean.
It could have never invented YouTube. Only a group of college kids screwing around in a garage could have had the brass to put together a business that pushes the fine line between stealing and right to carry based on the Millennium Copyright Act. Even if the Google skunk works had developed the YouTube concept, you've got to believe that their attorneys would have scotched the idea from the start.
Why do you think they spent the $1.6 billion.
Microsoft was a pioneer in software and then it became the establishment. Establishment businesses don't do innovation very well.
Yahoo lost its edge and got outmaneuvered by Google and Yahoo is a new age company so to speak. So it doesn't matter whether a huge company is traditional or new, it's size that matters.
We see this in radio and television as well. Consolidation did in radio because the company that owned all the radio stations was in it for a pay day on Wall Street (they are all assembled at Lowry Mays' house right now praying that the latest two week delay announced yesterday on the shareholders vote to go private passes -- stay on your knees).
That's what big companies do -- they live, thrive, hurt their sectors and eventually die -- by their sheer bigness and greed.
Google is next.
Google is just not ready to become the next Clear Channel -- yet. But we see the signs. They get bigger. Get a larger appetite for everyone elses business. Use their ample cash to stay a player in all the subsets that they want to play in.
The little guy is the innovator.
Internet radio is an industry filled with little guys. They are not well organized and they are not very powerful.
Great.
That's what makes them have to be very smart, daring and innovative.
Someday, too, Internet radio will grow, thrive, hurt its own sector and eventually consolidate.
That's the American way.
But its the wrong way. We're not a nation of innovators and operators. We're either an innovator or operator, but rarely both.
Unless and until that ever changes, you can predict the life cycle of every big media company out of necessity.
The innovators need the operators and the operators become the consolidators when they find out they can't operate. Think Clear Channel here.
Those rare companies that can be innovative and relatively large are the few, the proud and the mean media machines.
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