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Jan 14

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May 16

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Apr 23

Steve Ballmer at MIX08 in MilanToday I had the great pleasure of presenting a session on Web 2.0 and Enterprise 2.0 at MIX08 Italy in Milan. I was there as a guest of our strategic partner in Italy and Germany, Reply. The day was kicked off with a keynote by Microsofy CEO, Steve Ballmer (see videos here). There are other posts about his comments on Yahoo! So I thought I would just share some of my thoughts on the other parts of his talk (and the follow-up Q&A).

Content + Community + Commerce was the mantra for the talk. This seems to be there way of recognizing that software is not the main driver in IT any longer. Now it is all about getting people what they want (content) in a social experience of their choosing (community) and, of course figuring out how to monetize that (commerce) so you can stay in business. The one thing that struck me from the talk was that the only monetization model he talked about was advertising. While I’m sure they are considering service subscription models as well, he didn’t mention it. During Q&A the theme came up again when he said the reason they were after Yahoo! was that they were a advertising and marketing platform that was already at “critical mass.”

Software + Services is the solutions theme for Microsoft. This is there take on how they will help us serve the C+C+C from above. Despite Ray Ozzie’s release of Live Mesh and some observations that MS finally sees that software is dead, Steve stressed the continued importance of software. He described how software will evolve in an environment that wisely balances desktop, Web, enterprise, and devices. Seems to me the “software vs. services” debate is semantic posturing. In either case we will still need engineers writing code that moves bits.

“Consumer, consumers, consumers.” That quote and his discussion of consumers was the only part Steve’s talk that made me cringe and think they still don’t get it. In this day and age, no business should look at their users/customers as consumers. I agree with Matt Jones’s definition of consumers. The people who use our products are our partners, not mindless consumers. Empowering people to partner with us to make our products better is at the heart of Web 2.0. If Microsoft does not get this, they are going to have a tough row to hoe.

Looking foward five years. Finally, perhaps the most animated and interesting part of his talk were his visions of the future of computing. They really were about services (supported by software) that reflected the pending convergence in media and technology. To paraphrase badly, he told a brief story envisioning a future when he is golf watching “TV” and shouts “Hey Bill, did you see Tiger sink that putt”. His intelligent “TV” would recognize that Steve wanted to say that to Bill Gates and would instantly find if Bill Gates was available for Steve. Bill’s “cell phone” would let Bill (sitting on a beach somewhere) know that there was a message from Steve and play the audio of Steve’s comment as well as the video of Tiger’s putt. Steve would respond, “that was nice – what kind of ball is he using?” Steve would rewind the video, zoom in on the ball, click it and get instant information about it and a link to buy it. He would tell Bill the brand and order two boxes for them. This was just one example of his crystal ball gazing – he also discussed ePaper and projectable surfaces.

Overall, his talk was interesting but didn’t break any new earth. But it did make me wear a tie. I try to avoid wearing a tie like I try to avoid root canal surgery. When I asked my Reply hosts if a tie was required for my presentation, the response was something along the lines of, “we know Americans don’t really wear ties – let’s wait and see what Steve does…” So, I was counting on Steve to go tieless. Wisely, he chose to show respect for the host culture and he wore a tie. So, I followed suite.  The most difficult part of the whole day was remembering how to tie my tie…

written by Jeff Kelly \\ tags: , , , , , , , , , , , , , , , , , ,

Apr 14

Steve BallmerJust a quick note:  If you will be in Milan on March 23, drop by the Crowne Plaza Hotel for MIX08 Italy.  Steve Ballmer and his Microsoft crew will be giving the Microsoft spin on what is hot in Internet development in the morning.  I will be joining a host of colleagues from our Italian partner company, Reply, for additional presentations on delivering Web 2.0 and Enterprise 2.0 solutions in Italy in the afternoon.  So, if you decide that Milan sounds like more fun than another year of Web 2.0 Expo in San Fran, drop on by!

written by Jeff Kelly \\ tags: , , , , , , ,

Apr 10

Here is some undoubtedly errant math from a former AOLer (me):

In December 2005, Google purchased 5% of AOL for just over $1 billion, pegging its market value of about $21 billion. The Washington Post ran this article today:

Murdoch and AOL Join Fight Over AOL

So, from the numbers in the article (notably all based on hear-say and conjecture), I did some back-of-the-envelope math:

Supposing first that Yahoo’s contention that the Microsoft offer of $42 billion undervalues them, let’s give them a 7% markup, bringing their current value to about $45 billion. From the article:

“Under the terms of the possible Time Warner deal, the AOL unit would become part of Yahoo. In exchange for AOL and an undisclosed sum, Time Warner would receive a 20 percent stake in the enlarged company, said the source, who cautioned that the terms were not final and that the deal could founder.”

I’m going to ignore the “and an undisclosed sum” to make my fuzzy math easier. Assuming the 80% of the new venture that Yahoo would keep reflects their current $45 billion value, then the resulting entity would be valued at about $56.25 billion. So, Time Warner’s 20% would be worth about $11.25 billion.

Now, that probably does not reflect the full current value of AOL. Earlier in the article it states:

“Yahoo, meanwhile, is working out a complicated deal to acquire most of AOL from Time Warner, the world’s second-largest media company…”

I’m guessing the part they won’t buy is the AOL access (i.e., dial up) business. It’s not news that Time Warner is seeking a buyer for that already, but I haven’t seen any guesstimates of what the selling price would be if they can find a buyer. So, I’m going to pull a sale price out of my elbow (see – clean language Mom!) and say they could sell it for $1 billion. That would give AOL a current market value of $12.25 billion (under the deal outlined in the Post).

So, loads of fuzzy math aside, that means since the Google purchase in 2005, the value of AOL has dropped 40%. Let’s compare that to the TWX stock price. On December 21, 2005 (the day after the Google purchase was announced), the TWX closing share price was $15.58. Yesterday it closed at $14.43 – a drop of 7%. If what Google paid in 2005 was just, and the AOL value tracks with TWX overall (a great simplification), then AOL’s current value would be about $19.5 billion.

So, if all the fuzzy math and conjectured prices in today’s article are correct, one (or more) of three things is true:

  1. Google paid too much for its 5% stake in 2005, and/or
  2. The other Time Warner divisions have compensated for the 40% drop in AOL’s value such that TWX overall value only dropped 7%, and/or
  3. The deal speculated in today’s Post undervalues AOL by about $7 billion

Given the conjecture in the post article, “In the unlikely event that both deals close, News Corp. and Microsoft would control Yahoo, MSN, MySpace and AOL…” and the fact that Google can decide to sell (or keep) its 5% of AOL this July, 2008 is going to be a very interesting year for AOL.

written by Jeff Kelly \\ tags: , , , , , , , , , ,


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