May 2008 - OurView: The Opinion Blog

What happens when you take the man in charge of the world’s most-used operating system and ask him to talk about the future? Not a lot when that man is Steven Sinofsky.

Ina Fried from Cnet today posted an interview she did with Sinofsky, asking him about Windows 7 and Microsoft’s plans for the future. Full credit goes to Ina for mentioning the Translucency vs Transparency memo that Mary-Jo Foley published in her book. Josh over at Windows-Connected has the translation out of corporate-speak, which in summary equates to:

“i iz keeping it on lockdown, kthxbai.”

The reason for our mentioning this over here in the online services land is that Sinofsky is also the chief of Windows Live. Oh dear. While we can see some rational behind his corporate disclosure policy for Windows, unfortunately we stand on the total other side of the fence when it comes to the Internet.

• Microsoft isn’t winning in web services. Sure stay quiet when you’re The Man, but when your social networking products are barely a footnote and search share is going nowhere, you should probably start telling users how you’re going to deliver.
  
• Microsoft isn’t making money online. Unlike Google, the Online Services Business Unit has been loss-making ever since Microsoft announced Windows Live. Sure we’ve mentioned that this is due to high-levels of investment, but what about the bloated staff numbers, continued recruitment and the total lack of monetisation plans. Softies ask yourself how many Windows Live services would get VC funding. Microsoft shareholders have a right to know how its leaders plan to turn this ship around, and frankly the silence is deafening.

Perhaps the most worrying aspect about all this is a comment made at the recent MVP Summit, where Chris Jones (Sinofsky’s under-study in Windows Live) apparently said that Microsoft could learn from Apple. From what we heard, his logic was that part of the iPhone’s success was due to there being no leaks, meaning that the PR was controlled and carefully managed. I guess Chris doesn’t read Techmeme then.

To help spell this out:

1. Develop products that are innovative, make money and people actually want

2. Don’t try to control the PR, viral marketing has taken off for a reason

3. Ship on time!

In recent months we’ve also heard that there is a pr team ready to combat any Windows Live Wave 3 leaks, which makes me wonder why Microsoft doesn’t put them to better use and actually start working with the community and putting out positive pr. The Community Clubhouse on Spaces is a start, and any Windows Live uber-users who blog on Spaces should go and fill out this survey to take part (currently private for the time being).

This movie quote is perhaps the most fitting conclusion I could find [NSFW].

In the latest twist on the Microsoft-Yahoo! soap opera, Microsoft issued a statement today, announcing that they were back in the game, but this time looking to make a deal for "an alternative that would involve a transaction with Yahoo! but not an acquisition of all of Yahoo!”.  While reserving the right to "reconsider that alternative depending on future developments and discussions that may take place with Yahoo! or discussions with shareholders of Yahoo! or Microsoft or with other third parties.”

Now what the heck does that mean?  According to sources quoted by Kara Swisher, Microsoft is proposing to buy just the search ad business from Yahoo!:

Sources said that Microsoft, in its long-running war with archrival Google, wants most of all to grab Yahoo’s search ad business to become a credible #2 in the important sector.

Yahoo would would like to keep its online display ad business, its communications assets, including mail and instant messaging, as well as its many content properties.

These are all areas where Yahoo actually excels and should have been focusing on in the first place, instead of competing with Google in search.

In fact, sources said, when Microsoft was considering involving News Corp. in its unsolicited bid to buy Yahoo, it was going to own the search and search ad business, while spinning off all content and communications assets into a separate company that would also include New Corp.’s MySpace.

There are a couple of reasons this makes sense.  First off, Yahoo! is between a rock and a hard place.  It MUST do something, or shareholders, including Carl Icahn, will tear the company apart in order to get fair value.  Even if Yahoo! can hold off Icahn (and there are some indications that it might be able to do that, if Microsoft were to remain out of the game), it faces intense shareholder scrutiny, lawsuits present and future, Google circling the waters smelling blood, and the Microsoft elephant in the room.  Not a pleasant way to face a business day.

And in a letter to his team published by CNET News today, Microsoft President, Platforms & Services Division (edit: fixed job title) Kevin Johnson clarified Microsoft’s strategy:

1. Innovate and disrupt in search - We will disclose some elements of our plans with this week's release of search and sharpen our focus on user experience and business model innovation. The work we have done over the last 4 years on search has established a solid foundation to build upon.
2. Win targeted distribution - With this release of search, we are now ready to throttle up broader distribution initiatives.
3. Reinvent portal and deliver new experiences across PC, phone and web - We are building our new releases of Windows 7, Windows Live wave 3, Windows Mobile 7, Internet Explorer 8, Search and MSN with an eye towards optimizing and unifying experiences and scenarios.
4. Fix our online branding - Our brands are fragmented and confusing today, and we recognize a need to clarify and align our online branding. We are now driving forward to address this opportunity.
5. Win in display advertising - We have an advantage in tools, agency assets/relationships and a team laser-focused on capturing the display ad platform opportunity. As we build from a position of strength, we will increase engineering resources to drive even more innovation.
6. Build on our strengths in Europe - As measured by comScore in March, our online business in Europe is doing well. We have over 3 times the page view volume and nearly 7 times the minutes of usage compared to Yahoo!, and 68% reach to internet users throughout Europe. We will double down on our investments in Europe and expand on this strong position.
7. Expand strategic partnerships - In addition to our organic innovation agenda, we will expand strategic partnerships that increase inventory on our display ad platform, enable new paradigms in search and accelerate growth in key geographies.
8. Pursue small, targeted acquisitions - Looking forward, we will focus on small, targeted acquisitions that support our work in search, complement our value in the ad platform and help us grow scale in key geographies. Recent acquisitions including Rapt and YaData are examples of these types of acquisitions.

(emphasis mine)

For Microsoft, acquiring just the search business from Yahoo! would seem to fit in well with these goals.  What is interesting about Google is that while they have dominance in text based advertising around search, a market they basically created, that market may not look anything like it does today in 5 or 10 years time.  Microsoft doesn’t need to win that space, it just needs to “innovate and disrupt”, and win in the next round.

Of course we may have to wait until next weekend (and wouldn’t it be fitting if this all came together on US Memorial Day weekend, thereby capping the ruination of any semblance of a real life for tech journalists?) for this all to play out, but Microsoft wants search share, Yahoo! needs to fend off the sharks, there’s billions of dollars just burning a hole in Steve Ballmer’s pocket, and left unchecked Google will just keep getting stronger.  In his letter, Kevin Johnson mentions the Advance08 advertising summit on Microsoft’s campus.  I’ll be there, and can’t wait to fill you in on what happens next.

Today, billionaire investor Carl Icahn sent a letter to the Yahoo! Board of Directors, announcing his intentions to force Yahoo! to work out a deal with Microsoft. He announced a slate of candidates who will be up for election at the annual meeting on July 3, and an aggressive plan to acquire enough stock to make sure they would be elected (and then to force a sale to Microsoft). In the letter, Icahn pulled no punches about his intentions:

It is clear to me that the board of directors of Yahoo has acted irrationally and lost the faith of shareholders and Microsoft. It is quite obvious that Microsoft's bid of $33 per share is a superior alternative to Yahoo's prospects on a standalone basis. I am perplexed by the board's actions. It is irresponsible to hide behind management's more than overly optimistic financial forecasts. It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72% premium over Yahoo's closing price of $19.18 on the day before the initial Microsoft offer.

After Microsoft walked away from the deal, Yahoo! stock slid, but not nearly as far as the pre-offer price of $19.18. Clearly Yahoo! investors weren’t ready to walk away. First there were rumblings from large investors about ousting Jerry Yang, and now Icahn has stepped in. While some have said that the Microsoft pull-out was a ploy, there were clear indications that Ballmer had soured on the whole idea, and that the damaged goods Yang was offering was not what Microsoft was looking for.

A new blog entry on the Live Search blog from Evan Malahy, Designer, Live Search describes the “guiding principles for this latest version of Live Search” as Simple and powerful. Human. Fast.  And maybe indeed, the new look lives up to that.

However out here in the world, we don’t get to see design concepts, or PowerPoint presentations, or get to sit in on design reviews.  We only see what is presented to us.  So when new looks appear and disappear with no warning or explanation, when elements of designs long gone by still linger, and when a different set of “guiding principles” seems to be in place depending on what Windows Live page we visit, things become less simple, and certainly less powerful.

This is a sampling of the current state of Live Search pages, all taken in the space of a few minutes.  While none of these pages is offensive or poorly designed, is it a common experience?

 live.com home page

live.com search results

 msn.com home page

maps.live.com 

home.live.com 

my.live.com

Note that there are four different “search buttons”, two different “orbs” (and four different sizes), search boxes with and without subcategories (web, image, maps, etc), and 6 different banner backgrounds.

One part of the problem is that without any insights or any visible strategy to go by, we have no idea whether these are works in progress, or whether some of these pages will soon (or ever) be redesigned, or if this is the work of one design team, or many, or any at all.  Some transparency would go a long way here.  If these are in transition, fine.  Just let us know what’s going on (and move fast to get everyone “on the same page”).

Of course a unified search experience won’t vault Live Search up in the rankings, or make searches more relevant, or may not even be necessary at all, for that matter.  In our opinion, however, it might make for a better experience, and that can’t be bad.

For a tour of elements of the new Live Search, check out http://www.newlivesearch.com/

Microsoft just walked away from its proposed acquisition of Yahoo!, ending 3 months of speculation on what would ultimately happen. While I have been generally supportive of the Yahoo! deal, I was skeptical of the thought of a long protracted proxy battle. And with Jerry Yang doing everything he could to burn and pillage the company and let Microsoft pick up the pieces, the deal became less desirable as it continued to drag on.