Nine Questions: MSFT + YHOO = BALL(MER) & CHAIN?

Okay, we get it.

$44 billion is a small price to pay for share and time, and that's what Microsoft thinks it's getting out of this would-be deal. Four times more search share than it currently pulls in (Yahoo gets 12.8% while Microsoft is down to a puny 2.9%), and lots of audience (587 million uniques compared to its own 540 million). But Microsoft's key problem is obvious to many -- it doesn't know quite what to do with that audience, with audience monetization not a core competency of Microsoft. (John Battelle notes how Yahoo could be Microsoft's "half-hearted media arm," here.) So I think it's share + the elusive value of time. It's the flipside of the Microsoft mantra: We seldom get it right out of (shrink-wrapped) box, but give us enough time, and we'll get it good enough.

"Half-hearted" is one good way to put it. Another is to play with the name of the new combo. MicroHoo and MiHoo have been out there early. I'm thinking: BALL(MER) & CHAIN? We read that Bill Gates has given his blessing, but this is Ballmer's deal and may be his weight to carry around for his remaining years as ceo.

With that notion before us, let's look at a starting list of nine questions about the Ball & Chain that would be. What's yours?

Wouldn't the acquisition just multiply the questions about what's a media company and what's a technology company? Yahoo has kept on acting like a media company, creating vertical after vertical (often competing with itself and confusing its customers), but ultimately making most of its money off of its search and ad matching technology. Microsoft's plainly a technology company with a reverse Midas touch when it comes to consumer products. Over the years, we've seen Microsoft's various Media Center plays, trying to make itself the center of our consuming media lives. It's tried Sidewalk. It's tried Slate. It's tried MSNBC. And sold each one for small money.

Does the acquisition just give Google a greater edge in time? Time -- think development and deployment -- is the name of the game in the search/ad matching business. For starters, once a deal is struck, it will take 4-8 months to close, and during that time, much will put on hold and key talent will be up in the air and out the door. Then, once done, there's integration. Months more. In the meantime, Google expands its already-substantial lead. 

While the puck may be in the cost-per-click zone, isn't it moving to cost-per-action? All the companies are working on it, with Google just recently making an expansion announcement. Especially with a gift of time, isn't it more likely to get there first and bigger? The next puck may be in the text world now, isn't it likely it moving toward video with increasing advertiser want pushing up CPMs that have already topped $100 for the best verticals? Even a combined Ball & Chain starts from behind in competing credibly with Google's YouTube and increasing ad platform/video plays.

Can you imagine a world without the Yahoo brand? Don't get too Excited, but no Lycos, we've all adjusted to a changing web Netscape every few years.That said, I think Techcrunch has it right that Yahoo's still a superior brand compared to the underachieving MSN. (Same post, Techcrunch offers good functionality-by-functionality comparison.) Add in the WindowsLive and Live.com consumer confusion, and Microsoft's declining search share, and you have one brand that's been fading into obscurity and the other well-known, but surprisingly little defined.

Could it be that being number one means less than it used to? For a long time, Yahoo's been a #1 player in news reading, having lost that lead recently to a CNN push aided by its smart inclusion of Internet Broadcasting numbers in its roll-up (via investment and affiliation). Yahoo may have proven there's less value achieved when you are #1 by default.

Isn't singularity the name of the game? Used to be people could remember at most three things about something -- a place, a person, a company. Now, maybe it's one thing. For companies, we understand the singularity of Amazon (great customer-helping shopping), Apple (intuitive design from its hardware through iTunes, iPod and iPhone), Google (universal search) and even newspapers in print (News!). Quick, what's the one thing Yahoo's great at? Mike Markson lays out well how woeful Yahoo's attempts have been in regard to product, while also skewering the value inherent in the deal.

Won't the price be closer to $34? That's the 52-week high, a psychological barrier, and nice sweetener to get the deal done.

Can you raise your hand if you didn't think Rupert would try to get into this deal? There are so many synergies (other than ego and new trophy) that make sense here, though there are good doubts whether a private equity-funded deal won't compete well against Microsoft, which is willing to over-pay. Last year, he offered to help Yahoo get up to speed in the social networking game. The offer: trade MySpace for 25% of  Yahoo. Now Rupert also has his global Dow Jones business news play in mind as well. Open up any (Google search) for a company and you get five screens -- finance sites of  Google Finance, Yahoo Finance, MSN Money,  MarketWatch, CNN Money and Reuters. Wouldn't Rupert like to combine Dow Jones content artfully with one of those portals, making financial sense of his 60%+ premium for Dow Jones. Can't you just see Rupert in a bear hug with Ballmer and Gates?

What are the many parts of Yahoo really worth? This exercise should finally answer some of those questions. While it's clear Microsoft believes Yahoo buys it more time and share in competing in a search-driven, pay-for-performance digital world, it would also be buying lots of spare parts. Whether it fancies itself as a media company or not, it has decide what to keep, what to divest and what -- horrors! -- to operate. The persistent enigmas of Yahoo Personals, Yahoo Sports, Yahoo Travel, Yahoo Shopping and lots more, persist. Good post from Tim O'Reilly on a Microsoft/Yahoo email advantage and the power of its potential networking play.

Bonus Question 10: What's the poor newspaper consortium to make of this deal? After staking much of its future on Yahoo's success over the last year, 22 US newspaper chains look at the titanic offer from the sidelines, wondering what it will mean to them. 

Nine Questions: MSFT + YHOO = BALL(MER) & CHAIN? Special Newspaper Edition,  here.