|Why Microsoft Has Decided to Build|
Buy Or Build - Why I think MS hasn't opened the cheque book.
| 9:06 am on Apr 20, 2004 (gmt 0)|
MSN have been very open in saying that they have missed the boat on search but are aiming to catch up. This is not the first time the company has done this - look at how they responded to the internet and turned the company on a dime in repsonse to changing market conditions.
So, if they know they were slow, why haven't they gone out their and bought someone? Maybe they did or didn't make a play for Google but why not go after someone else?
I have been having a few thoughts about this and have come up with the following:
Microsoft's Eat Their Own DogFood Approach
With majority of SEs out there running on Linux or Unix technology, they are not going to be that attractive from a technology point of view. From an IP and Patents point of view they would be. But for a company who is facing the battle of the *nixs, what better proof of concept of Windows in a data centre than a search engine?
SharePoint Portal Server
Whilst a nice pretty product that tries hard to be a document management system but isn't quite there, it does have a really good relevancy algorithm for looking at documents of a known type i.e. DOC, XLS, PPT etc. The alogorithm was devised in the Microsoft Research Lab by a few PhDs and won aclaim when it was released. So they at least have a foot in the door for building the relevancy algorithm.
Development Team and Deep Pockets
When you have deep enough pockets, you can afford to throw warm bodies at a problem and hire some very important people. I would be expecting to see some "big name" hires in the future (if not already I may of missed them).
MS has several different storage technologies to adapt to for use - SQL or Outlook WebStore. Another solid-ish foundation to build from, that they are farmilar with. And again - another proof of concept for scalability.
So combine these things with:
Hailstorm / Passport to give you personal search
Smart Tags to do searching from a document
Ownership of both the desktop and the browser giving you an untapped market
MSN are going to be a serious player - maybe not in the first release but subsequent releases.
I also come back to, what is MS good at doing? Taking a product, making is simple and easy to use whilst increasing the number of features and options and all the time making a lot of money out of it.
| 11:23 am on Apr 20, 2004 (gmt 0)|
| 1:09 pm on Apr 20, 2004 (gmt 0)|
|When you have deep enough pockets, you can afford to throw warm bodies at a problem and hire some very important people. |
October 2003 - Microsoft hires Paul Ryan - Overtures Chief Technology Officer - to head up their search technology developments.
Feb 12, 2004 - Paul Ryan departs Microsoft....
| 1:31 pm on Apr 20, 2004 (gmt 0)|
I dont think the platform (OS) a search engine runs on would be enough to put Microsoft off. Im not sure if this is still the case, but Hotmail used to run on linux servers.
I think one of the major advantages of developing their own software is they can market it as a Microsoft branded product (enterprise search etc).
| 2:34 am on Apr 21, 2004 (gmt 0)|
MS couldn't economically afford to buy Google or Yahoo. Only other alternative left is ask.com. Perhaps MS considers ask.com inadequate?
| 2:39 am on Apr 21, 2004 (gmt 0)|
>>Why Microsoft Has Decided to Build
To force feed it to windows later... :)
| 3:47 am on Apr 21, 2004 (gmt 0)|
I think the reason Microsoft has decided to build rather than buy is that it needs an architecture that's different from what others have developed so far-- something that fits its strategy of leveraging market position. For example, a good strategy for Microsoft would be to build a seamless search integrating email, personal files, enterprise files, and Web/ftp content, with varying levels of access privelege but high relevance within a level of privelege. The would want their search to be the go-to place on the desktop, for every information need.
| 8:22 am on Apr 21, 2004 (gmt 0)|
>MS couldn't economically afford to buy Google or Yahoo.
MS could buy both Yahoo and Google using cash in the bank and still have several $billion in change left over. This has nothing to do with the ability to buy, it is to do with getting value for money.
I believe M$ realizes that both Yahoo and Google are over valued by huge amounts. Yahoo's PE is 150, M$ is 31.....something wrong with the valuations? Google is an unknown, but I bet it would be closer to 150 than 31 if a public company.
A search engine without users is useless waste of money, OV and Yahoo already paid plenty for those. $20 to $35 billion is a lot to pay for a slice of the pie. If you own the OS and largely control the environment there may just be a much cheaper way of getting that slice for next to nothing.
M$ didn't buy Netscape, it hasn't yet bought AOL, and I don't think for a second it is considering buying Google or Yahoo unless they are being offered at a song, at which time M$ won't want them anyway!
>MSN are going to be a serious player
MSN are already a serious player and the only one I see with current growth and huge potential.
They are already nibbling away at the competition, given a new OS with built in search, the others are going to feel the pain some more.
M$ are not in a hurry. I believe they will be very happy to play out a 10 to 15 year strategy of domination in search. They admitted they started slow, and I expect that to continue with only a little more pace.
Google was the Hare, the race will be between the Tortoise Yahoo and the Giant Turtle Microsoft.
| 2:02 pm on Apr 21, 2004 (gmt 0)|
>MS could buy both Yahoo and Google using cash in the bank and still have several $billion in change left over. This has nothing to do with the ability to buy, it is to do with getting value for money.
>I believe M$ realizes that both Yahoo and Google are over valued by huge amounts. Yahoo's PE is 150, M$ is 31.....something wrong with the valuations? Google is an unknown, but I bet it would be closer to 150 than 31 if a public company.
By "economically afford" I mean in a sense they could financially justify it, as opposed to possibly do it. As such, we seem to agree that starting their own SE makes more $ sense.
| 3:53 am on Apr 28, 2004 (gmt 0)|
" I mean in a sense they could financially justify it".
exactly. Just becuase they can afford it doesn't mean they're stupid to buy one for $20 Billion. Yhey can spend $2-$5 and build their own.
| 2:07 am on May 19, 2004 (gmt 0)|
One of the best ways to win the technology wars if you are the late comer is to start with a clean slate. While all the existing players are saddled with their luggage of yesteryear, the newcomer can emerge with fresh ideas, if they have the right minds at work.
Hey, it worked for Google just a few years ago. Just ask Alta Vista.
But to jump into the search engine wars with a clean slate now, you need big bucks, and Microsoft has deep pockets.
| 8:23 pm on Jun 11, 2004 (gmt 0)|
|what better proof of concept of Windows in a data centre than a search engine? |
Especially if that's a new version of Windows in a new market for them.
It would make a pretty powerful selling point if it really worked for them - you can just see some MS salesman saying something like, "well, it's the operating system behind MSNSearch which does XX million searches a day"
And I don't think there's any doubt that MS wants to take some of the server pie from Sun/IBM/Linux et al.