I wrote a first pass on the Microsoft/Yahoo for ZDnet yesterday morning. Short version: are they nuts?

The silliest comment
Ray Ozzie was quoted saying:

Our lives, our businesses, and even our society have been progressively transformed by the Web, and Yahoo! has played a pioneering role by building compelling, high-scale services and infrastructure,” said Ray Ozzie, chief software architect at Microsoft. “The combination of these two great teams would enable us to jointly deliver a broad range of new experiences to our customers that neither of us would have achieved on our own.

I agree about the compelling services. Yahoo has a number of market-leading services, starting with mail.

High-scale infrastructure?
I don’t think so. Very conservatively Yahoo’s infrastructure costs are 3x Google’s. Probably 8-10x.

By all accounts Mr. Ozzie is a brilliant fellow. So why the silly comment? A few possibilities come to mind:

  • PR flacks wrote the comment for him and he was too busy to review it.
  • MS investor relations wrote the comment to try to paper over the fact that there is no technology synergy in the acquisition, figuring that Wall St. analysts wouldn’t know the difference.
  • He actually believes it. They are so-o doomed!

Other than IBM, Microsoft Research probably has the most brilliant CompSci group in the industry – and that includes Google. They can’t solve problems?

What is the real problem?
BillG and Steve Ballmer were out of new ideas – or good ideas they could easily copy – after Windows 3.1 and Office. The illegal strangulation of Netscape has cost Msoft billions in penalties and still, 10 years after, IE is losing market share. Gee, maybe the browser wasn’t important after all!

It also looks like Microsoft avoids the kind of clean sheet design that gave Google its cost advantage. You must use Windows. You must use Dell. You must use CIFS. Who knows what self-sabotaging corporate injunctions are stifling Microsoft developers? Because they sure have the smarts. And the money.

The StorageMojo take
Microsoft has to stop chasing the latest Big New Thing – be it game consoles, music players, web portals or Internet advertising – and start focusing on new opportunities that they are uniquely positioned to exploit.

For example, how about migrating web-scale technology down to the enterprise? Storage companies are using Linux to create commercial storage clusters like Google’s. Why isn’t Microsoft building Boxwood-style cluster software to help enterprises lower their storage TCO? Take advantage of the Microsoft army of admins and resellers to move the concept and further entrench Windows.

And that’s far from the only opportunity.

Instead Ballmer et. al. seem obsessed with fighting wars they’ve already lost against Apple, Google and Linux (see Farewell, Bill. Yo, Ballmer, now it’s your turn! on ZDnet). Even the richest and most powerful nation software company on earth has limits and should pick its fights.

Comments welcome, of course.