Microsoft is back in the hunt for at least part of Yahoo! They are desperate to gain ground on Google in online advertising. To me, Microsoft's great interest is an indication that the party is about to be over in online advertising (and eventually people will realize in all advertising).
Quick show of hands: how many of you have ever clicked on a banner ad (on purpose)?
Advertisers keep trying to get more and more clever (and intrusive) because consumers are getting better and better at avoiding ads -- we don't like them very much. They are annoying. We put up with them because advertiser-supported content is generally free (or at least low priced) content and we all like free. Those two trains -- advertisers wanting advertising that is measurably effective and consumers wanting free content -- are on a collision course.
More important, Microsoft is better at being big than it is at being good (ask the users of Vista). Perhaps they would be better served by spinning some cash out as investments in other companies and then leaving them alone to grow. They could harvest innovation, technology and financial returns along the way if they can just get over the need to suck them all into the mothership. They need new thinking more than greater heft.
Microsoft has long lived with a world view that offers two options for any obstacle they encounter: eat it or kill it. Neither of those will work for them now. They need to adopt a Save-the-Children model -- let's call it Save the Start Ups. They need to start sending money without expecting much in return for awhile. They need to learn to nurture.
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