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Will Microsoft Get Lucky With Yahoo?

Will Microsoft Get Lucky With Yahoo?

Microsoft may have been "lucky," as CEO Steve Ballmer put it, that its 2008 bid to buy Yahoo for $47 billion fell through. But what he might have really meant was that now, Microsoft may be able to scoop up Yahoo for a fraction of that sum, a venture it's reportedly pursuing. Meanwhile, Google shows Ice Cream Sandwich, RIM shows BBX and Apple shows its teeth.

By Paul Hartsock TechNewsWorld ECT News Network
10/22/11 5:00 AM PT

Microsoft CEO Steve Ballmer recently commented on Yahoo's present situation by saying "Sometimes you're lucky." He was referring to his company's rebuffed attempt to buy Yahoo a few years ago for $47 billion. But that doesn't necessarily mean he thinks owning Yahoo now would be a bad idea -- perhaps all he meant was that by waiting a few years, Microsoft may be able to get Yahoo for a whole lot less than $47 billion.

And that's exactly what it intends to do, according to a Wall Street Journal report. Several billions in Microsoft cash would be joined with financing from Silver Lake and the CPP Investment Board.

Although Microsoft's and Yahoo's search engines are already connected in a roundabout sort of way, an all-out purchase could put a little more kick into Yahoo's ailing search business. Microsoft's been able to bring Bing a long way in its short time on the market. And despite Yahoo's problems with vision and direction, its properties still get tons of traffic. Visitors may skew a little on the older side, but that means more disposable income. Microsoft could get all of this for much less than it would have had to pay in 2008.

But if it really does want Yahoo, Microsoft may have to outbid some competition. The same report indicated China's Alibaba is putting together a group to buy up Yahoo, which actually already owns a large stake in Alibaba. Very tangled. Microsoft may be especially willing to pay a premium for Yahoo not only to get what Yahoo has, but also to keep it away from Alibaba, which could become a new search competitor in the U.S.


Listen to the podcast (13:16 minutes).

Imperfect Harmony

Google's been dabbling in music for a while now, but soon it may be ready to go big with a real-life music store.

What Google has right now is Google Music Beta, a service that doesn't really sell music -- it just gives you space where you can store it and access it later, however you so choose. How you get that music in the first place is your business, and honestly, I would guess Google really doesn't want to know how a lot of its users actually do acquire it. But whatever it is and however you got it, you can stick it in Google's cloud and come back any time to get it.

Whether it sells downloads or runs on more of a subscription model, an actual store would mean charging users money for access to music they didn't already have, and that's what The Wall Street Journal claims Google is getting ready to do. This would mean Amazon and Apple would have a huge new competitor to deal with.

But you can't very well sell music without permission from rights holders, and record companies may be tough nuts to crack. They've learned a lot since Napster and the days when iTunes was the only major and legitimate online store around. The price of admission could be very steep.

So perhaps Google will try to forge ahead without all four of the major labels at its back. Maybe it'll end up cutting a deal only with the smallest of the four, EMI. Or it could just throw some money at independent labels and wait for the majors to change their minds. That might not be such a great way to kick off the service, though. Users are accustomed by now to being able to find almost anything they want in an online store without having to worry about whether this label or that released it.

And things are further complicated by the fact that there may already be some bad blood between Google and the big studios. Its Google Music Beta was done without securing all the labels' permission, and it's unclear whether that was something Google needed to obtain before building its music locker service. But Google went ahead and launched Google Music anyway, and that could add a lot of tension to whatever negotiations might be going on right now.

That blessing that Google never got from record labels has to do with copying. Google claims that since its Music Beta service is just a virtual locker in the sky that holds a user's personal data, it doesn't need permission from music labels. It's not selling or distributing that stuff. It's not mine, I'm just holding it for someone!

But if it ever came down to a huge legal fight, the labels might argue that putting music into the cloud means making an unauthorized copy of a song, violating copyright. I only wonder what they'd think if they ever found out that every day, millions of people copy songs onto iPods and other gadgets without explicit legal permission.

Tablet Showdown

Apple's lawyers have been dispatched to all corners of the globe to do battle with Samsung, which now bears the distinction of being Apple's most worthy target. The patent fights have been going on for months in places like the U.S., Germany, South Korea and Australia, and many of them have to do with the physical design of the iPad, which Apple says Samsung copied when it designed its Galaxy Tab.

On the face of it, it's true that a Galaxy Tab looks an awful lot like an iPad. In fact, Samsung's own lawyers reportedly weren't able to tell the difference from across a courtroom when a U.S. judge held one in each hand and asked whether they could pick out which was which.

You never hear about companies suing each other for similar designs in the world of flat-screen TVs or computer monitors, yet most of them look identical to each other. But these are the formative years of the mobile devices market, and the way these battles play out will determine exactly how this part of the gadget world grows up. Patent skirmishes are being fought on both the software side, in which it's mostly Google vs. the world, and the hardware and design side, where many of the bigger battles involve Apple in one way or another.

So what's the score so far? Well, Apple seems to be on a bit of a roll. Recently it won a preliminary injunction in Australia that will prevent the Galaxy Tab from being sold there until a resolution is reached. Technically that doesn't mean Samsung has been defeated, but now all Apple has to do is keep the proceedings dragging on for a few months and it'll basically achieve what it came to do: ruin Samsung's holidays down under.

Meanwhile, a judge stateside has declared that the Samsung tablet does indeed appear to violate Apple's patents. That's the same case in which lawyers couldn't ID the right tablet from across the room. That probably isn't the single biggest factor that influenced the judge's decision, but it couldn't possibly have helped Samsung's argument. A preliminary injunction in the larger U.S. market would be a much bigger bruise for Samsung, but the judge in this case stopped short of issuing one just yet. She said Apple would first have to prove its patents are valid in the first place, so the ball's in Apple's court on that one.

While this was happening, Samsung went on the offensive and asked courts in Japan and Australia to ban the importation of the iPhone 4S in those markets on patent violation grounds.

This international patent brawl is turning Apple's strange relationship with Samsung even stranger. Apple happens to be Samsung's biggest customer of flash memory chips, yet here it is stomping on the little finger Samsung has on the tablet market by trying to abolish the Galaxy Tab.

Often these kinds of patent fights are solved relatively quickly and quietly with a nice fat check, with one company paying the other a licensing fee in order to carry on business as usual, long before a judge actually makes a ruling. I'm not privy to whatever behind-the-scenes negotiations might be going on here, but this fight doesn't seem to be going in that direction. Apple's already sitting on piles of cash. Right now, it looks like it really is going for the Galaxy Tab's throat -- or at least aiming to put it into the hospital until next February.

Slumps and Streaks

Apple's usual game of teeter-tottering iPhone sales played out a little differently this year, and the company's stock was given a big kick in the teeth as a result.

AAPL shares lost nearly 6 percent just after the company released its financials for the quarter ending in September. This is despite revenues and profits that made serious gains over the year-ago period and all-time highs for Mac and iPad sales.

In fact, Apple's stock value itself had hit an all-time high recently and was hovering above $400 for several days before it took the dive. Days before the numbers were released, some analysts were already bracing themselves for bad news -- BGC Partners analyst Colin Gillis even downgraded the stock from "buy" to "hold" on the basis that AAPL's valuation was just so ridiculously enormous that a hiccup was sure to come along, after which it might be safe to put it back in the "buy" bucket.

Maybe that hiccup is what we just saw, maybe not, but the reason Wall Street yanked down Apple's value so abruptly at first seemed kind of strange: Not enough iPhones had been sold, and analysts found that very sad and disappointing. That's odd, because just a day or two before, Apple claimed to have sold 4 million iPhone 4Ses in a single weekend, which it said was more than double the iPhone 4's debut weekend sales and a new record for any cellphone. That's disappointing?

Actually, the period covered by the quarterly report -- the one with the sub-par iPhone sales -- ended in September, weeks before iPhone 4S hit the shelves. And even though Apple sold 17 million iPhones in that quarter, the Wall Street guys expected to see more. What may have thrown them off was all the rumor and uncertainty regarding when the next iPhone would finally arrive. Apple changed its release rhythm this year and skipped its usual June release, with no word on when anything new would come along. Sales always dry up right before buyers expect a new phone is right around the corner, and perhaps analysts were expecting the uncertainty would actually stabilize sales to a certain degree.

But you can't stop the rumor mill. Evidence began to pile up that October would be the month (thanks, Al Gore!), and as usual iPhone sales ground to a halt as everyone waited for the next big thing.

New OSes Sprout Up

Autumn is bringing in a big harvest of new mobile operating systems. Microsoft was on the early side with Windows Phone Mango a few weeks ago, then Apple pushed out iOS 5, and just now Android and Research In Motion have shown previews of their latest mobile OSes.

First let's look at what's coming from RIM. A while back it bought a company called QNX and put it to work building the next generation of BlackBerry software. It wanted more than just a few tweaks here and there to the existing BlackBerry OS -- it needed a new foundation, an injection of new DNA. What it got at first was the QNX operating system found in RIM's PlayBook tablet. Reviews of the software weren't terrible, but QNX was overshadowed by the fact that the PlayBook didn't ship with basic functions like native, standalone BlackBerry email support.

Future RIM phones, however, will be endowed with something called "BBX," a hybrid of QNX and the usual BlackBerry operating system. It's supposed to combine the best of both worlds, featuring an improved gaming engine, a new browser with HTML 5 support and a revamped user interface.

BBX will also support Android applications in a virtualized environment. It's not quite clear whether all Android apps will work on BlackBerries or if the selection will be limited, but users will be able to venture outside RIM's modest collection of native software and use apps from the other platform.

There are some risks here for RIM. Every major platform wants to have its very own line of applications, especially proprietary systems like BlackBerry. When that platform starts letting in foreign apps, developers will have fewer reasons to create anything for BlackBerry at all. It could lose a degree of control over the software running on its own phones, and the move could also theoretically raise questions about security, which is still one of RIM's biggest selling points.

On the other hand, it sounds like it'll benefit users and give them a wider variety of apps to choose from, and those who begrudgingly carry around BlackBerries just because the boss says so might especially enjoy the extra software. And for RIM, happy users mean handset sales, regardless of what apps they might happen to run.

Meanwhile, over in Hong Kong, Google and Samsung shared a stage to roll out Ice Cream Sandwich, the long-awaited 4.0 version of Android. The previous version, Honeycomb, was developed especially for tablets, but Ice Cream Sandwich will be ready to run on both tablets and phones, which will hopefully give developers fewer headaches.

The new OS will give them a boatload of new APIs to play with, and end users will get interactive notifications, resizeable widgets, a faster browser and a People app that integrates social network feeds. There's a new voice control engine, improved multitasking capabilities, and much more.

The first phone to be released with ICS out of the box will be the Samsung Galaxy Nexus, which will arrive in November.


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