Microsoft & Yahoo Stalled but not Over – News Corp Enters the Fray: What it Means for Software, Advertising, & Innovation

With Yahoo shares down nearly 50%, Microsoft decided to prove the rumors true and make an unsolicited offer for Yahoo. The incredible $45 billion offer for Yahoo was designed to blunt Google's advertising momentum, and stall Google with its recent entry in to core Microsoft businesses such as word processing.

At last year's Wall Street Journal "All Things Digital" conference, Steve Ballmer said, "The world-wide advertising market is a $520 Billion industry, yet only a small fraction of it is online." Their acquisition of an ad server / ad network form last year was telling, but now Microsoft wants to expand its distribution channels. But that's not all. No World Borders believes Microsoft's dominance of Windows platform based applications won't be enough to sustain the growth of the company going forward. Software as a service (Saas) is the new opportunity Microsoft sees, and Google has the lead.

News Corp would have a different angle - expanding the search channel with social networking in MySpace, and leveraging its well-respected newspaper brands such as The Wall Street Journal.

• Global spending on Internet advertising rose to nearly $20 billion in 2007, according to PriceWaterhouseCoopers and eMarketer.

• Open source "free" software (nothing is free - you pay at least for support) means that more and more companies will innovate and move toward the relatively open playing field of Saas.   The distribution channels are harder to control.  Just as song artists who may have been unknowns have used MySpace for visibility and iTunes for distribution, a new "Ubiquitous Web" linked by Semantics (see our posts on the Semantic web and applications of semantics) will enable a renaissance of Saas innovation.

• Saas promises to cut licensing cost and make use of software universal, rather than tying it to a particular PC or server. No World Borders believes that as Saas permeates web sites, this development will help improve collaboration, collective intelligence, empowerful sharing of information tools with global populations. Even traditional enterprise software will have to compete with Saas, with new market entrants such as Coghead, providing asset management and other tools via Saas. This will mean more competition for Oracle, SAP and other firms who will either innovate toward more Saas or acquire companies such as Coghead in the future. Big companies like SAP have launched DNA, and Oracle is pushing OnDemand. For big companies, they have to move carefully so as not to blow up their multi-billion traditional software businesses.
  

• Those economies and demographics that have not had access to expensive Windows based systems will increasingly have access to faster internet connectivity, thus giving them access to Saas. It will lower the barriers to new products and services being viable. Analytical tools, communication techniques, and the ability to publish blogs and web sites reach more people, it will further the proliferation of empowerful individuals and small groups publishing information to the web. A renaissance of creativity and innovation will emerge with the best ideas coming from the best minds, rather than the largest corporations.
  

  
  

• Social networking usage has recently dropped. News Corp, fundamentally driven by an advertising model, would be challenged with the combination which assumes even more advertising revenue. The amount of time the average person spends on a social-networking site has dropped 14% over the last four months, according to Internet research company comScore. The reason: they're turned off by too much advertising on social-networking sites.
  

Microsoft's attempted acquisition of Yahoo, a key gateway to finding new ideas on the web, is a mixed development for innovation and advertising. As a gateway to innovation, Yahoo will be molded into something to protect Microsoft's core business, rather than be a free-thinking destination for innovation. Fortunately, Google has enough market share that Microsoft and Yahoo plus MSN do not pose a complete monopoly for the marketplace.
As a fierce competitor to Google, Microsoft and Yahoo's competition will likely cause price erosion in paid search advertising and ad placement.

News Corp (also parent of the Wall Street Journal) may actually have a more innovative plan between its well-known content assets in news, and the social network momentum of MySpace, but it will have to be careful in the rapidly maturing market about how advertising Is presented to users.

Managing Virtual Teams & The Soccer ("Futbol") Generation

Some companies like Nokia are much better than others at managing virtual teams. At Nokia, they are up to 120 people in size and are much more complex than previously imagined. Finland is a tiny country that had to access markets outside its boundaries, so being virtual is something that Nokia grew up with. When people move into a virtual team, they have met and have prior working history. Also, Nokia is a technology company that helps in virtual management.

Young members of virtual teams have some important attributes, and have been described as members of "...the myspace generation..." meaning that they enjoy casual collaboration. Also, in the U.S. the growth of soccer has contributed to the current generation of new workers having grown up since Kindergarten playing soccer or other team sports. Team orientation and learning is more important culturally to this group. Also, very importantly, soccer (better known as futbol outside the U.S.) is a global sport. American children who used to play American football and baseball have been injected with an understanding of different cultures, names of players, and teams playing on global satellite broadcasts that the prior generation did not experience. So, they are much more apt to seek ways to make a difference and be involved globally than just nationally.

A new survey by Vistage, an organization for CEOs of small and mid-size businesses, found that 31% of the more than 2,000 CEO surveyed listed staffing as their greatest challenge. (Economic uncertainty was second at 21%.) Later in the survey, 45% of the CEOs say that they’ve installed technology that lets employees work remotely. What’s the connection? When asked why they’ve invested in this technology, the most popular answer — 27% — was that it helped them retain staff.

“You have to use technology to attract and retain the best workers,” Vistage CEO Rafael Pastor tells the Business Technology Blog. That’s partly because the generation now entering the workforce is so technically inclined. If a small company is going to be in the running for the best and the brightest of these young workers, it has to be supportive of the way they want to work – which includes using the latest tech.

Not surprisingly, the Vistage survey found that 46% of the CEOs say they’re changing their management style to adapt to the needs of these young workers. Additionally, 30% say that they’re using or planning to use new media like MySpace and blogs in order to market their businesses.

No World Borders has experience managing virtual teams for outsourced projects, including software development and call center processes and management.