Ballmer, Ballmer, Ballmer, Ballmer
Ok, I was reading this VentureBeat piece on Microsofts new strategy. What new strategy? You ask. Well… their new strategy of M&A. They need to get their innovation going, so in fine tradition, they’re going to start gobbling up startups to try and keep them on the edge.
This is a standard strategy. It works for some, it doesn’t work for others, but it’s not new or anything, a tale as old as time. But then Microsoft has to go and screw it up. It isn’t enough for them to just say they’re in the market, nope… they have to put a quota on it. They have to be the best at it! Microsoft! That’s right, so the plan is to buy 20 companies a year for the next five years. 20 companies. That’s way more than Google and Yahoo put together! It’ll make Microsoft twice as innovative as the big G!
Ugh. Why would they have to put a number to this? It just doesn’t make sense. Sure you have to budget for this, so you say, we’ll budget x dollars for this and be looking for great fits for the company. That gets you the same interest from startups, they know how much you’re going to be spending. But no, you’ve got a quota now, that investors will be looking for. How do they know that there will be 20 start-ups worth buying every year for the next 5 years? What if there’s only 5? To live by their own words, they’ll have to buy 15 more that might not really be valuable to them.
Beyond that, what are the integration costs of buying 100 new companies? Sure it’s easy to suck in a 5 man company, but MSFT’s startups will range up to $1 billion - that’s not a small company. My issue isn’t really with the strategy, it’s just with the mindset that Ballmer goes into it with. This one-upmanship mindset, it’s a strategy that’s not “Microsoft has these deficiencies, let’s enter this M&A phase focusing on how we can make Microsoft better.” No, instead it’s, “Google is beating us! Look at these numbers, they bought ten this year, we only bought 4! Next year let’s buy 20!”
We’ll see how this goes for them. I’m not confident.
On the other hand I was reading this other bloggers post on this. The main point of his is that because Microsoft has it’s own web technologies (.NET) their purchasing will, generally speaking, need to be of .NET startups - but that’s going to be a very small portion of them. I agree with this to an extent, although, I don’t think it’s as drastic as he points out. For example, he tries to compare the 2+ billion hits for PHP vs 15 million for C#, but that’s not a fair comparison. It’s more right to compare to to the 1+ billion hits for ASP which easily trumps 135 million he cites for Java.
Which also jibes with my understanding that .NET is actually quite well done. I can remember when it was first coming out, it received nothing but derision from Java devs (including myself) all around. Until it actually started being used and people realized that in many ways it was superior to Java. Now, you generally hear positive words about it from folks. That’s not even with the recognition that you can program .NET in many pop languages like Python, Ruby, Perl and PHP. I don’t know what that experience is like, if it is good or not, but it is certainly interesting.
In my opinion there’s two problems with his view. One is the problem of Microsoft focusing on .NET. Companies will naturally gravitate to startups who are using the language of their choice, Yahoo’s using PHP, so it’s easier for them to ingest PHP based technology. But it doesn’t necessarily rule out the purchase of other technology. Witness Microsoft attempting to take a stake in Facebook.
Secondly, I think the blogger jumps to a “loss of community” conclusion based on his google searches. It’s a pretty big jump, methinks. A commenter in his blog posted some craigslist job search numbers, but again leaves out ASP, doing that search in NYC reveals much more muddled numbers. I wonder as well, what effect this announcement will have on the startup community itself. That is, if you now know that Ballmer’s in the market big time, it might incline more .NET startups to take the field.
Ultimately, it isn’t an inherently bad strategy. I just think they’ll muck it up. I’ve said it before and I’ll say it again, Ballmer isn’t the guy to be steering that ship no mo’.
