Microsoft! needs! Yahoo! developers! developers! developers!
Lose the tie, SteveO!
Analysis The rhetoric surrounding Steve Ballmer's unsolicited $44.6bn offer for Yahoo! will focus on the obvious - the potential market share growth that a Microsoft and Yahoo! tie-up would have against Google.
For all the talk of saving Yahoo! shareholders, Google is uppermost in the Microsoft chief executive's mind, and Microsoft is - once more - trying to buy its way into the internet club having already spent billions to no visible effect.</p
While much will be spoken in the coming weeks and months of synergies, structural integration and the combined market share potential of a Microsoft and Yahoo! marriage, it will be the practical and philosophical decisions that Microsoft takes in relation to maintaining and supporting the Yahoo! Developer Network that will really determine whether this deal becomes a success or whether it's just another merger that barely moves the needle or, worse, sees developers drift away from Yahoo!.
Microsoft has a track record of "not getting" it when it comes to building and supporting online services, from the early days of SGI's mighty Rick Belluzzo taking Microsoft's internet helm to the snotty nosed de-activation of measly-sized Hotmail email accounts,
Even today, having spent billions to challenge Google, Microsoft is pushing a decidedly portal-based strategy akin to Yahoo! while the company's Hotmail growth has stalled out at 270 million "active" accounts, up from 201 million in 2001.
This bodes poorly for both Ballmer's proposed deal and for those millions of programmers and entrepreneurs who are currently using the one thing that Yahoo! has managed to get right: support for developers through the Yahoo! Developer Network.
While Yahoo!'s business and monetary fortunes have foundered and been eclipsed vis-à-vis Google, the company has proved relatively successful in working with third parties to build out its platform. Yahoo! is up there with Google, Amazon and eBay in having realized early on in the web services boom that, to become a successful online service provider, you needed buy in from developers who can extend the platform.
Yahoo! joined its peers by not only making its APIs openly available to third parties, but also in devising toolkits and programs for those working with its APIs to build applications, services and businesses online. These resources are available under Yahoo! Developer Network, while developers have had a number of properties that they can target for deployment - chiefly Yahoo!'s search, mail and messenger.
Despite more than a decade online (and Steve's love for developers), Microsoft has been significantly less adroit at building offerings around its MSN service. MSN has been eclipsed by the company's money spinning offline offerings such as Office and Windows.
If Ballmer wins Yahoo!, then Microsoft could rectify past failings of outreach by taking control of a major channel for communicating to those building online services. Owning the Yahoo! Developer Network would provide a single place for Microsoft to bring the APIs for its own "Live" email, search and collaboration software and services to the attention of a massive audience.