By \ May 26, 2006
The Wall Street Journal had a great article today about the recent partnering activities between Microsoft, Google, eBay, and Yahoo! The gist of the article is this: Everyone is freaking out about Google, its momentum and its potential. eBay, Yahoo! and Microsoft are working together through several partnerships to put themselves in a competitive position with Google. Microsoft is a little gun-shy to make too much out these partnerships because they don’t want to seem weak and as if they are ganging up against Google. But they are. And they should be. Google is scary! Ever-more-so-now that Dell agreed to pre-install Google software on their computers. Ummm… someone help me, but isn’t this how Microsoft cornered the browser market way back in the day?
Anyway, lots of incestuous back scratching, backstabbing and jockeying – the makings for an entertaining read. I started talking to the intern about it this morning and he had a very interesting point of view that I thought we could benefit from. Interns are getting smarter and they have opinions too, even suggestions.
idfive intern Tom Pucciarella:
This just in: teens love videogames, instant messaging, cell phones, MySpace, Facebook, and cheap (preferably free) music. Go figure! Now that the major blue chips of the world have finally realized that the teenage generation, or echo-boom, is the largest demographic the world has ever seen, what do they need to know to lock us in?
When we hear “Microsoft” we think: The operating system running my Dell. When we hear “Google” we think: Search. When we hear “AOL” we think: “AIM.” And when we hear “Yahoo” we don’t think of anything. Now that eBay and Yahoo have created an alliance it is clear that both companies desire more exposure from their new partners respective demographics. Unfortunately, Yahoo is not our first place to search and the few extra bucks we have at the end of the week we want to spend on ringtones not someone’s “priceless treasures” selling for $5.00 bucks on eBay.
While the elite companies scamper to correct their mistakes it is clear what they must do: Google’s move to align itself with Dell was incredibly perceptive. Both are extremely popular among teens. Dell is popular for its low-cost computers, and Google for its easy to use search.
However, as a teen, I believe Google needs to become an immediate staple on Dell computers if it has any hope of competing with Microsoft, MSN, and Internet Explorer for primary use among teens. Microsoft has a decided advantage because it already has a strong foothold in this area. Whenever we buy a new computer, without hesitation, we know the programs guaranteed to be there are: Microsoft, MSN, and Internet Explorer. Yahoo and eBay must find some way to become more appealing to teens, by embracing their desire for simple designs and relatively low-cost options.
On the surface Microsoft appears to be flailing, and from an investing perspective they most likely are, however, they have gambled and strategically positioned themselves to capture the teen market. With the newly released Xbox 360 and the purchase of Massive, a company that puts ads in videogames, Microsoft has become the leader in the race to capture teens’ attention. Also, Microsoft has realized the huge advertising capabilities of cell phones and may try to acquire Third Screen Media, a company that places ads on cell phones.
If Microsoft can finagle a deal with News Corp’s Fox Interactive Media Division, which includes the immensely popular MySpace, Microsoft will have all but closed the book on its competition. However, if they fail to shed the extremely unfavorable corporate conglomerate image they project to our generation they ultimately may turn us off and their substantial risks would translate to substantial losses. Ultimately I believe that if Microsoft captures MySpace, and continues its dominance throughout the gaming market, teens will have little problem excepting their overly corporate personality. However, if Google somehow can contain Microsoft’s influence in MySpace, or obtain some type of foothold in the gaming universe in a partnership with Sony, or by strengthening Google video, Google could ultimately become the company of the future. They possess the perfect balance between fun, easy, simple design and big business giant, something Microsoft lacks. Nevertheless, for now my money is on Microsoft.
While countless partnerships have been orchestrated, and with many more still to come, it is clear that the echo-boom generation will continue to dominate big corporation business strategies for years to come. For these companies to ascend to the top of the proverbial leader-board they must strike now before current trends becomes yesterday’s news.