The EU’s giving its blessings to Google’s acquisition of DoubleClick bodes well for Microsoft-Yahoo. Note that the EU cleared the DoubleClick deal because without conditions, with the rationale that there were already “integrated companies such as Microsoft, Yahoo! and AOL” to which customers could switch. Given Google’s dominance in online advertising, we’d be surprised if they didn’t allow at least a couple of Google’s rivals to circle wagons to provide real competition – no matter how much the EU hates Microsoft.
Our take is that the real obstacle to combinations won’t be regulatory, but cultural. We agree with Steve Ballmer that so far, Google has proven a “one-trick pony” – try to name a viable Google business outside its search and adsense franchise. But in a sense, Microsoft is another one-trick pony in that the company has until now had such a highly centralized (although very non-hierarchical), largely PC-centric business model where all paths have lead to Redmond. Yes, Microsoft has scattered research centers across the globe and it has regional go-to-market organizations, but the core brain trust and decisions remain concentrated inside the ivory tower back in Redmond. Other issues, like Yahoo’s embrace of open source, will likely prove non-issues as Microsoft has been striking live-and-let-live deals with the likes of JBoss (we believe that the Novell indemnification is saber-rattling). As news accounts of Ray Ozzie’s address to MIX last week pointed out, Microsoft won’t be in any rush to assimilate Yahoo — at least they realize the kind of uncharted ground they’re heading into. So the real question isn’t simply whether Microsoft can implement the kind of distributed business model that it never has before. It’s whether Ray Ozzie really has a new vision for how Microsoft will operate, and whether he has the clout to pull it off.
On another note, we received an interesting response to our January post SOA in a Recession from partner-in-crime James Kobielus, now a BI analyst with Forrester. In his latest Network World column, which we’d nickname “BI in a Recession,” he commented on the conventional logic from the BI vendor community that of course any tooling tracking enterprise performance would of course be in sharp demand during an economic downturn, as these tools provide the navigational aids for weathering the storm. Of course, there was similar rationale behind the conventional wisdom of the 1990s and 2003-2007 booms – lean management and enterprise systems helped eliminate much of the inefficiency and slack that made companies more vulnerable to economic spikes in the past (globalization, which enabled companies to spread their risks, helped).
Nonetheless, Kobelius contends that while BI provides tools that are not likely to be sacrificed in a downturn, he also emphasizes that you can’t assume these investments are sacrosanct, and therefore must be protected by shrewd strategies, such as leveraging SaaS (Software as a Service providers) to minimize your exposure to stranded investments, and virtualizing your back end resources so you can spread the costs of whatever processing power you’ll need. We agree with him that “None of these belt-tightening recommendations should be radically new or unfamiliar to IT professionals.”