Yahoo + MSN IM Merger my 2c's
Posted by Ian Holsman
What was Microsoft thinking when it announced this deal?
If you belive the AOL buyout rumour where microsoft and Google+Comcast and potentially Yahoo are all vying to buy it this announcement makes no sense.
AOL currently has a 50m IM subscriber base, where both Yahoo and MSN has ve 25m a piece, and Google has 1m if it’s lucky.
So let’s imagine your a Google exec. you have a nice ad-revenue stream, and this GTalk thing is going to be a nice little earner if it could get some legs (user base)
Then on the grapevine you hear that AOL is up for sale, and MSN is interested. now.. you think to yourself.. ok I could lose a bit of revenue, and the gtalk thing will be a bit harder now (Metcalfe’s network effect and all) but it is still doable… and geess.. if we partner up with comcast we could make a offer as well, and get those 50m IM subscribers over to the ‘good’ side and they wouldn’t hurt our email user base either.. (and we can give the content stuff over to comcast who could make good use out of it). These users would make our dream come true.
So they make a matching bid. and the stories fly.
Now.. Imagine this exec’s horror when he finds that Yahoo + MSN are going to co-operate with IM.. He is seeing all his gtalk dream sink.. No one would be interested in it if Micrsoft buys AOL. They will all be using the other guys IM service and whatever VOIP solution they come up with..
All of a sudden this AOL deal got a lot more important for him. now it isn’t just a matter of losing 2.5-10% of it’s revenue base.. It is threatening it’s entry into the telco market. It NEEDS AOL even more now.. and it going to fight tooth and nail to get it.
If you were Microsoft why in heavens name would you want the other potential bidder to want AOL even more than it currently does?
Unless of course Microsoft + Yahoo don’t really want AOL in the first place, and are trying to get Google+Comcast to buy a really large lemon for a even bigger price.