Good riddance to that whole Microhoo idea!

Someone asked me recently what I thought of the potential Microsoft-Yahoo (Microhoo) merger that never was. When they asked, I didn’t really have an opinion. It seemed to be part of the general merger madness that is going on across numerous industries. No big deal. As I begun to think about it, however, I decided that there was more and after some thought I say “Good riddance to Microhoo!”

Let’s be honest, while the acquisition would have been great for Yahoo’s investors, it would have been bad for the Yahooligans and it would have been bad for all of the reasons that Microsoft needs Yahoo. Namely…

Microsoft’s largess and arrogance inhibits innovation – Microsoft is successful today because they’re the 800 pound gorilla to beat – not because they offer the best of anything. Here recently they either follow others (e.g. iPod followed by Zune) or acquire what they need (e.g. Avenue A / Razorfish). Little in the way of real innovation has come out of Redmond in the past 10 years and that’s largely because they don’t have to be scrappy. Windows Vista sucks and people still buy it, MS Office is overly bloated and yet we shell out our money to buy each new version as if we need the three new features offered in the latest version. Microsoft sells it and we buy it, so why should they innovate? Don’t believe me. Ask yourself how Windows Mobile is on v6 and still user experience epochs behind the iPhone interface. That unwillingness or inability to innovate is why, if Yahoo wants to sell, they need to find a better partner.

At 20 years old, the Internet is relatively young. Yes, it’s changed the way we communicate quite rapidly and lowered the barriers between us, but at the same time very few companies have figured out how to actually make money off of it. Yahoo has. Microsoft hasn’t. And a lot of that is due to innovation. Yahoo’s problem isn’t that they’re not innovative. Instead, it’s that they can’t figure out what to do with their innovations. I mean ten years later, PageFlakes and other companies are trying to build business models out of the whole My Yahoo concept we all loved back in the late 90s. The thing is that Yahoo still innovates that way, but for reasons unbeknownst to me, sits on things or doesn’t push them the way they could. The time for sitting on one’s hands is over. In this day, innovation is key and it will be crucial to their success.

Here’s the real honest truth for Yahoo – they need to stop competing with Google. Google owns the search engine marketing space. With the Doubleclick acquisition, they own a good bit of the display advertising space, too. So, what. From mobile to set-top boxes to movies-on-demand, there are numerous other arenas where Yahoo can bring its advertising experience to bear as they all become Internet dependent. Moreover, a company with Yahoo’s resources and knack for innovation should be able to look into the future and prepare for where everyone else is going to be 5 years from now.

To my mind, what Yahoo has always done best is figure out what we, the consumers, want and then given that to us. Its list of successes include Yahoo Mail, My Yahoo, Yahoo Messenger, Yahoo Music, HotJobs and Yahoo Local, to name a few. Most of us have used all of them at one point or another. Where Google focuses on utility, Yahoo’s focus has been on user experience. It needs to get back to that. All of this worrying about what Google does simply distracts their management from focusing on who Yahoo is and, quite frankly, whether it’s going to be around in another 20 years.

Have you ever noticed how when you’re driving on the highway right behind an 18-wheeler that you can’t see ahead of you at all. You don’t know what’s coming and all you can do is react to the moves the 18-wheeler makes. However, if you just move over one lane all of a sudden the view gets clear again (barring another 18-wheeler) and you can get a better feel for the road and make better-informed decisions about how you approach the road. Yahoo has reached that point where it’s time to change lanes and get from behind the 18-wheeler. It’s time for the Yahoo gang to let their hair down and go back to being Yahooligans and living up to the wild ideas and innovation that the word ‘Yahooligans’ suggests.