MOLI VIEW™

At first, Microsoft's offer for Yahoo! looks like a bold bid to combine two key Internet players. But I think it's a sign of weakness. For years, Microsoft has tried to grow its own new businesses, as it did with Xbox and Zune. But its online ventures haven't met with much success. Buying Yahoo! might be its last resort.

By any standard, Microsoft is a very successful company. But its most profitable products are Office software and operating systems, and both may never again be as important as they are now. Many pundits believe that, in the future, word processing and spreadsheet programs could be used on the Internet, in what some have called "cloud computing." So could many aspects of an operating system. Microsoft's Windows business is already under pressure from open-source alternatives, and the reaction to Vista has been polite at best. If Microsoft's core businesses do tail off, it could coast profitably for decades. But the company has always been about growth.

And growth can only take Microsoft in so many directions: To the developing world, to the living room, and to the Internet. The first isn't promising; if Microsoft wants to compete with open-source software, it will have to reduce its prices and cut down on the piracy of its products. The second direction has some promise — especially with the Xbox division building up market share — but it will be a long battle that an engineering-driven company is ill equipped to fight. Anyone who has suffered through the process of installing Windows wants another company in charge of his set-top box.

Previous Page  1  2  Next Page