Microsoft


aQuantive Today, Microsoft announced that they’ve just bought aQuantive for $6.0 billion in cash.

It’s the biggest acquisition that Microsoft has ever done in its history. It’s funny because Google has challenged Microsoft when they bought Youtube for more than $1.5 billion and DoubleClick for more than $3.0 billion.

I think that Microsoft has just responded with $6.0 billion. :)

Those two companies are crazy. They’re having a tremendous fight. It’s very interesting to watch.

I was gonna forget to tell you that aQuantive is a digital marketing company…

Everyone would like to be rich (I presume). Everyone would like to be sucessful (I presume again). Everyone would like to have an ingenious idea to make a lot money quickly. Those two guys at Google did it.

How things work in the physical world One month ago, an interesting article from ReadWriteWeb talked about the Google model to make money.

You will see two charts describing how it works in the “physical” world compared to the “online” world depending on the demand on the market.

ReadWriteWeb tells us that Starbucks Coffee is the equivalent of Google in the physical world. It means that they’re making good money but it’s funny when you look at the differences:

  • Starbucks spends money on expansion, but Google ads spread themselves
  • Starbucks spends a lot of money on maintenance, Google spends little
  • Starbucks spends money on marketing, but businesses flock to Google because it just works
  • Starbucks relies on people, Google relies on software

Those four points are so relevant.

I take advantages of this article to give you the financial results for the Q1 2007 of the Internet Giants:

  • Google with a net income of $1.0 billion
  • Microsoft with a et income of $3.48 billion
  • Yahoo with a et income of $142 million
  • Apple with a et income of $1.0 billion

For Apple, it’s a record when for Yahoo is a clear decrease. Is Microsoft gonna merge with Yahoo ? Steve Ballmer doesn’t rule out the idea… We will talk about it !

Stay tuned

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Windows Vista has been launched on January 30, 2007 for consumers. After two months, we can find some interesting analysis about the impact on the Internet giants.

Logo Windows Vista In my opinion, the main goal for Vista beyond the improvement of security and entertainment is to deploy the Internet strategy of Microsoft. They want to attack Google and this OS is a huge (the last?) opportunity to force Google to put a feet down.

In Vista, you can in a easy way interact with web. Of course, Windows Live Search is the default search engine. So, it’s a huge advantage for MS. We will see in the coming months how people are gonna react to Vista in their daily usage.

At this point, we have an interesting analysis from ReadWriteWeb. It shows with a few graphs that the traffic from Live.com and Msn.com have been increasing since the launch of Windows Vista whereas Google slipped down.

We will keep you updated on this topic

NB: Let’s finish with a geek joke right here .

Recently, Thomas Rubin, Microsoft’s associate general counsel, addressed the Association of American Publishers’annual meeting in New York and argued in his speech that Microsoft’s Live Search Books honors copyright protection and fair use whereas Google’s Book Search abuses it. He said that “Google has chosen the wrong path for the longer term, because it systematically violates copyright and deprives authors and publishers of an important avenue for monetizing their works. […] Google has also undertaken this path without any attempt to reach an agreement with affected publishers and authors before engaging in copying“. Indeed, Google’s book’s policy is one of the main chink in Google’s armor and Microsoft envisages to capitalize on it.

googe book

Two different approaches

Google’s concept is to index the World’s libraries and to offer entire books or sometimes just snippets to the public. As books are copyrighted (like websites), Google allows authors to opt-out of the search engine. In contrast to Google, Microsoft has adopted an opt-in approach; in other words, Microsoft only indexes books that are no longer copyrighted or books which have been approved for indexing by their authors via Microsoft’s Publisher Program. However, in this Battle, the arguments of Google are weak. Indeed their opt-out approach is not justifiable and can not be compared to websites indexing insofar as the authors have never come down in favor of an online use of their books. Moreover, opt-out approaches on the Internet are not very popular: take for example the Spam issue.

Microsoft’s opportunity

As Forbes explains it, Microsoft’s attack against Google is strategic. For 10 years, Microsoft has been criticized because of his supremacy and its monopolistic will which has been illustrated by anti-trust trials; whereas Google enjoys a very good image. Thus, by criticizing and bashing Google, Microsoft is trying to differentiate itself from its opponent and position itself on a higher moral ground.

So, its time for Google to adjust its strategy and to remenber its “Don’t be Evil” mantra or else Microsoft is going to use it against it, which is dangerous for Google whose capitalization is in a great extent based on its popularity.

American Giants Google, Yahoo! and Microsoft have made China one of their priorities for growth and are considerably expanding their research and development centers in China. Thus Google has recently announced (source: IHT) its plan to hire thousands of people for its Beijing development center; Yahoo! is launching Flickr.com, its photo-sharing site, in China and Microsoft is developing its partners network. This expansion has also raised several polemics one of whom was the rumor of complicity of Yahoo! in the arrest of a journalist in China.

The Chinese Market

Almost unknown outside China, Baidu.com is very similar to Google, has almost the same simple home page and the same Business Model. Launched in 2001, Baidu went public in 2005 and was the biggest opening on Nasdaq since the dot-com peak in 2000. According to the Search Engine Market Survey 2006 from the China Internet Network Information Center (CNNIC), “Baidu’s market share is increasing constantly to 62.1%. This means more than 60% internet users are going to choose Baidu as the first option when searching online. Google’s market share in this segment is 25.3%, decreased 8 percent points when compared with the performance at same period last year.“. Thus Yahoo! and Google are challengers on this Market which is presented below (source: NYT):

Baidu

Yahoo! and Google’s Chinese Challenges

The Chinese Internet Market is very different from the Western one. Indeed in China there is a really developed entertainment culture, which appears on the Internet and which Internet companies follow. However Google and Yahoo! do not take enough this culture difference into account and therefore are loosing ground (cf. evolution of the pay-per-click market on the graphs above). However, beyond this necessary cultural adaptation, the American Giants have some advantages: a big capitalization and an important technical task force.

So, the Battle begins and is off to a good start!

Net Neutrality is at the core of the Internet Battle and will be one of the main aspects of the trade war which we will follow through this blog. To sum up, Net Neutrality refers to the current principle that Internet should be neutral which means Internet users should have the choice in what content they view and what applications they use on the internet.

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As the SavetheInternet.com Coalition explains it in the video on the left, American’s main cable and telephone companies such as AT&T, Verizon or Comcast want to charge Internet companies for quality-of-service (QoS); in other words they want to tax content providers to guarantee faster delivery of their data. For example, last year, Verizon’s CEO argued that Google should have to pay for bandwidth. However, even if they pretend to do it in a non-discriminatory way, their main strategy is to discriminate in favor of their own search engines, Internet phone services, etc by blocking or slowing down their competitors. Paul Kaputska notes in his blog that the message of telecommunication companies is “Google is bad, and wants to control the Internet to keep its cash pile growing. Telcos, meanwhile, just want to innovate, so please don’t write laws keeping them from doing so.”. However, beyond this trade war is the issue of the Public Interest.

Google and Microsoft common position

Even if Google was recently at the center of a buzz which alleges that Google was backing off its full commitment to Net Neutrality legislation, rumor that has been refuted 4 days ago, Google, Microsoft, Amazon, eBay, InterActive Corp., Microsoft and Yahoo! are the principle supporters of Net Neutrality among the leading high-tech companies and they try to influence the FCC to adopt a Net Neutrality Law. Via this blog, we will follow this issue and its economical and technical consequences.