Becoming big: a task to grab by the tail
February 28, 2008
I can’t imagine a world where the Web doesn’t play a big role in success. But as IT pros, you know better than to believe any computing tool always delivers as expected. Downtime, mistaken design; these life lessons become experience and then wisdom. Somehow the Internet seems to escape this skepticism, since it connects us in innovative ways. We’re all counting on the Web like gravity, government forms, and mergers designed make organizations bigger and better. Smaller is supposed to be weaker, in that last model.
This month a few bigger-is-better alliances have been put in play. Microsoft and the HP user group Encompass both want to be bigger, adding allies. Microsoft made a $44 billion bid for Yahoo, a deal nearly double the size of the HP-Compaq merger of 2002. Microsoft might have sledding ahead of it just as tough as Hewlett-Packard's merger. HP CEO Carly Fiorina battled an angry, nearly equal share of stockholders to push through her merger back in 2002. It looks like Yahoo might push back with as much force, saying the record-breaking offer is undervalued for an information content provider.
Much has been made about this deal being a way for Microsoft to keep up with Google. A few years ago Yahoo was compared to Google in the pages of Wired. That was long before Google was trading above $500 a share.
The merger tussle reminds me of the days when HP was working to adopt Compaq, a company which had fallen from its heyday as Yahoo has now. At least Fiorina had Compaq’s board in her pocket when HP did its big grab. Yahoo is pushing back already, so expect another messy fight. Not so with the Encompass alliance and its new user group partners.
It took HP CEO Fiorina’s firing and more than three years to make the HP purchase “a good earner,” as they say in the wiseguy movies. I wonder what Microsoft will need to succeed.
Mergers can be delicate operations, attempts to embrace each other which the Web is expected to enable. Encompass and its two new partners, Interex Europe and the ITUG group, see the Web’s social networking tools as a way to attract younger members. The new Endeavor group wants to create community instead of an association. The latter sounds aged, while the former sounds fun.
One Encompass director pointed out that the merger of corporations is very different from making allies out of user groups. Chris Koppe talked of mergers “being one of those things where somebody decides to buy somebody else. User groups don’t come together as quickly, but I think this [association] is getting close to where we want to be. Individually it was very hard to get HP’s attention, and that model now changes going forward.”
Being big is within reach when you can stretch across the Wide World of the Web. Using the Web as a lever to connect can deliver benefits, especially if you can be in the business of delivering the hard to find. That’s the Long Tail theory that’s made Amazon and Netflix work. Neither claims to be the biggest. But they succeed by specialization. Specialization, plus the Web, has let the NewsWire connect with your community. Perhaps social contact through the Web will let user groups, maybe Microsoft, grab you by the tail.