« Microhoo » – a massive proof we’re there yet

Let’s get straight to the point: this article will not discuss or criticize the deals Microsoft has concluded with Yahoo.  The goal of this article is to rather point out how this acquisition demonstrates how far the web has gone in terms of business value.  It’s definitely not just about writing HTML or a Java applet anymore; it’s officially about changing massive business models such as the one from Microsoft.  This phenomenon is something Clayton Christensen calls ‘disruptive technologies’ and the Microhoo deal is a tremendous example.

If you’re in the IT business and haven’t read the Innovator’s Dilemma yet, now’s the time to add it to your collection.  To sum up, it explains how big and well-established companies fail to embrace new technologies, the main reason being they often go against their business models, hence the adjective ‘disruptive’.  How is Google disruptive to Microsoft?  Your first guess will probably be their web applications.  It’s true some of Google’s programs act as substitutes to the world’s largest software provider, but stopping here would refrain us from swimming up the current: Windows.  It’s no coincidence Microsoft came back on their decision to buy Yahoo not too long after Google announced they are working on an OS.  It’s pretty obvious Google is now more than ever becoming a ‘disruptive’ technology to Microsoft, and it’s willing to attack the beast while it is still a child (or teenager maybe).

Defining the problem

The question is: why is Microsoft  »late » in online advertising?  It’s very simple: the business model Google developed never really fitted until today. Since most of Microsoft’s revenues come from consumers like you and me, giving away their applications would simply be foolish. While Microsoft was busy working on the products that made them famous, Google was working on other applications that would one day change the game.

Don’t get me wrong, I am not criticizing Microsoft. You can’t blame them for not being as advanced within the web business as Google. Microsoft built a whole empire thanks to their native applications.  In order to survive, they had to keep the production going. They had to keep working on the things that made them what they are today. The market for native apps was, and still is there.  When Google started its existence, there was practically no market.  The web was just beginning and online advertising was still in its early stages.  The need just wasn’t there yet.  For a large company like Microsoft, investing so much time and money in something that people don’t really need yet can be very risky.  Unfortunately, not taking it can be just as costly when competitors grow.  Not only is Google able to offer awesome applications like Analytics for free, but every time we use them, we improve their system.

Wow, that is really something.  That’s what we call disruptive technologies.

A bright future

Let’s look at this acquisition from a wider perspective, from someone who works in the web industry.  I can only rejoice.  The fact Microsoft wants to beat Google so bad at their game can only mean so much: it means really large companies like Microsoft aren’t just willing to put up a website anymore.  They are now willing to change their business models to embrace the Internet.

While only time will tell what Google has in mind with its OS, I see the Microhoo acquisition as a huge milestone. Yes we’re there yet: it’s not just about presence or selling a few items over the World Wide Web.  It’s about taking it very seriously.  The future of the web looks very bright; we can only thank Google so much for that.