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Feb. 20, 2008 at 1:49pm Eastern by Greg Sterling
Gates On Yahoo Acquisition: It's The Engineers We Want
CNET reports on Microsoft Chairman Bill Gates' speech at Stanford University yesterday in which he said that it wasn't the advertisers, the brand, or the traffic so much as the engineers that Microsoft wanted in the Yahoo acquisition. Of course, others in the company, including perhaps CEO Steve Ballmer, would say that the brand, advertiser relationships, and traffic are critical parts of the deal. But Gates stressed the engineering worker bees.
That sure seems like an excessive amount of money for a bunch of engineering hires, but the message and speech may have been somewhat slanted, given that Gates was speaking at a university that produces lots of engineers.
Postscript From Danny: Back when Microsoft's plans were announced, Greg and I specifically asked why Microsoft didn't just spend a billion or two to get the people they needed. We were told it wasn't just the people -- it was the need to combine all of Yahoo with all of what Microsoft had:
Question: If the saving is in the indexing, why couldn't you consolidate by fighting back against Google by proposing an open index that you, Yahoo, and anyone else would use? And if getting more engineers helps for R&D, why not save by just stealing them away by paying a lot more? Can you express what are the key features that make getting Yahoo worth so much money? In particular on the call, no one talked about the traffic they have -- that they are a strong number two, and by getting them, Microsoft moves up from number three. Isn't that part of the value?Answer: "The main point is by combining the two, the best of both, we can get the scale, a search effort, a platform effort and an audience effort to get what we want to occur, to create a credible alternative [to Google]. Right now, we have two number twos out there in the marketplace, neither of which is at scale, which makes consumers think 'I'll use the other guy' .... That we definitely know. That's what drove the proposal to make this combination."
So, today we hear it's about the people? It shouldn't cost $40 billion to get them. And for Gates to be saying this now, it either feels like Microsoft's management isn't clear on why they want Yahoo, or various people in management will say it's whatever is closest to what they do (Gates, being a programmer, would likely see this in terms of engineering talent), or it was a tailored message meant to make Stanford students feel Microsoft loves engineers that much, so come work for Microsoft when you graduate.
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By Greg Sterling
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See Related Stories In: Microsoft & Yahoo Merger, Microsoft: Business Issues, Microsoft: Employees, Yahoo: Business Issues, Yahoo: Employees
