Gates and Portals

The speculation about a Yahoo/Microsoft merger is delicious. Scott Rosenberg, comparing the deal with the Time Warner/AOL buy-out before the Clinton speculative bubble burst, says:

Acquisitions at this scale virtually never lead to useful combinations, strategic synergies, or anything else of use. They are financial engineering. What’s happening with this one is pretty simple: Microsoft and Yahoo have both found themselves at dead ends, but they both have formidable assets, and their leaderships are acting out of desperation.

I’m sure I’m not the only one to disagree with Scott on this call. First, Yahoo has something that AOL couldn’t hope for, a cozy relationship with AT&T. Second, the association of the top browser maker and the default portal vendor for everyone who buys consumer broadband from Mummy Bell will create a synergy that will assure a continuing upslope on the growth curve for the combination. Individually, each company should be worried about what’s next. Together they can plan what’s next for a huge number of people who access the web. Rosenberg predicts,

If Microsoft acquires Yahoo, the companies’ stock will initially prosper and the media will cheer on a new round of the War on Google. But seven years from now Yahoo will be as much of a shell as AOL is today.

Not a very bold prediction when you look at the seven year horizon… hell, in seven years the Iraq war could even be over. Be that as it may, I predict that if the combination occurs now then in seven years it will be a juggernaut worth twice as much as it is today. It will attract digital-media talent like a magnet, and it will be a countervailing market force to Google in some areas and Google’s best customer in others. And the fiber under Interstate 5 from San Jose through Portland to Seattle with the Yottabyte connector under I84 from the Google server farms on the Columbia will cram so many photons down the pipe that they practically melt the roadways.

My big hope is that Google buys Amazon and then with the good offices of the DRM consortium all of us Internet users can throw away the mice, throw away the keyboards, hang a 60 inch HDTV screen on the walls, crawl into our orange sofas and (equipped perhaps with a drool-cup)  just sit there and let Googlezon, Microhoo, and Rupert Murdoch manage all our retail and information needs.