Posted May 3, 2008 10:53 pm by with 15 comments

Tweet about this on TwitterShare on LinkedInShare on Google+Share on FacebookBuffer this page has released an email sent by Microsoft CEO Steve Ballmer to Microsoft employees:

This afternoon I sent the attached letter to Jerry Yang announcing that Microsoft has withdrawn its proposal to acquire Yahoo. We proposed the deal in the belief that a Microsoft-Yahoo merger would create a combined company with the resources and assets to win in the fast-growing market for advertising and online services.

Ballmer spends most the email bolstering the company’s initiatives in terms of Internet advertising, and explains that the Yahoo merger was more of an accelerated means to obtain the company’s vision on the Web rather than an end all be all.

Although the acquisition of Yahoo would have accelerated our ability to deliver on our strategy in advertising and online services, I remain confident that we can achieve our goals without Yahoo. We have a strategy in place to do so and we will continue to expand on this strategy and accelerate our progress.

The strategy, according to Ballmer had three main components:

· Deliver on the basics. We will continue to improve search relevance and build out our ad platform.

· Change the game through innovation. We will expand investments in engineering and deliver transformative tools and Web experiences.

· Expand our global scale and focus. We will pursue partnerships and investments to realize the competitive advantages that come with scale.

I take this email with a grain of salt.

As much as his letter to Yahoo seemed to be structured to devalue his search competitor, this email looks like a bid to boost Microsoft’s value.

The reality remains.

Among the big three Microsoft’s Live Search is by far the most lacking search property in terms of relevance and usage. Besides there investment in Facebook, their approach towards becoming a far reaching online media power has been rather tame.

The question for Monday will be whether this withdraw will be seen as a swing and a miss to Microsoft investors, or as a well played business maneuver?

The time and the market will answer that.

The reality for Microsoft is that they need to take Ballmer’s advice and go back to work on Monday with focus.

Ultimately, our goal is to build the industry-leading business in search, online advertising, media, and social networking.

We are absolutely committed to being the leader in each of these areas. Now is the time to do what we have always done best—be tenacious, focus on the long term, innovate, and keep working hard.

I think they have more than a short distance to go in reaching their goals.

  • Their strategy sounds good (if not spot on) and it seems like they have focus – I wouldn’t count them out. They just need to work on their innovation a little and improve their SE results.

    They have the resources to compete IMO

  • I too feel Microsoft have the resources to be able to compete online. Acquiring Yahoo would be a quick way to doing this but it is certainly not the only way of doing so.


  • Microsoft is a bunch of wind sucking lumbering dolts. Their products are shoddy and they hardly seem to care, intent on using the same ramrod business techniques that have become obsolete in this new fluid and agile business age that puts pleasing the consumer in the driver’s seat. Look to watch their base continue to slip away until it dawns on them that quality matters.

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  • David Snyder

    Sure Microsoft has the resources, if we are talking about that in terms of financials.

    But why hasn’t the software company been able to figure out search? They have made strides with their adCenter system in the last year, but for the most part their search product has been far from efficient. Until they can deliver a quality search product, and a competitive search base they cannot compete in the market at the level they desire.

    Yahoo was going to give them the search technology and user base to make the leap they needed.

  • Microsoft has the resources to compete, i don’t know about creativity and talent

  • Microsoft have to solve its inet issues by itself now.

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  • PS3

    I agree David, adCentre has come along way in the long year but they have left search lagging behind.

    And when you say, Andy, that “the question for Monday…”, don’t you guys have a bank holiday today (we do here in the UK).

  • This saga is hopefully drawing to a conclusion now, all the positive and negative signals and statements being issued back and forth is really leading to a lot of investor confusion.

  • Their main strategy should be: “write an algorithm that works”.

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  • This deal has been in news since quite some days. Finally a decision on the same was a good news. i guess Google would be very happy to hear this news.

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  • Good that Yahoo did not give in! – Microsoft have killed many good companies/products after acquisition..

    Does Microsoft really have edge for future?

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  • It’s even worse for Microsoft than the (circa 2006) usage stats you linked to – their share of the market continues to decline.

    Yahoo has a real strategy to make the Y! portal even more of a destination. That doesn’t mean they’re going to take much from Google, but they at least have a plan to keep their customers.

    Microsoft’s moves for the past few years have done nothing but take the air out of MSN as a portal.

    They created in an apparent attempt to mimic Google’s simple search interface, and forgot that they were getting searchers the same way Yahoo was – through their (MSN) portal.

    Microsoft is trying to have two brands in search. When there are *already* two established brands, that’s a strange strategy.

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  • Microsoft is very confident that Yahoo will soon agree their offer. Very optimistic!