Microsoft's Faulty Yahoo Math
 Joe Wilcox
News Brief. Microsoft might just be way over-estimating the online advertising opportunity. |
Kevin Johnson, president of Microsoft's Platform & Services division, puts the worldwide advertising opportunity at $80 billion by 2010. But my former JupiterResearch colleague David Card has a "gripe about numbers." He explains further:
"Even if that's worldwide, and even if he's counting mobile, that number's too big, and smells of Wall Street calculators. We don't forecast markets outside the US and Western Europe yet, but the markets we do project will generate about $48 billion in 2010 online (if I'm converting euros properly) and another few billion dollars in mobile. There's no way Asia-Pacific and Latin America will amount to $30 billion that fast."
The JupiterResearch reseach director is really a smart guy and one of the best media analysts around. I believe him. The question then: What does it really mean for the Yahoo acquisition, if Microsoft so overvalues the online advertising opportunity?
No question that Microsoft needs something. For last year, JupiterResearch estimates the US online advertising business was worth $20 billion, with:
- 31 percent going to Google
- 14 percent going to Yahoo (but declining)
- 8 percent going to each AOL and Microsoft
I remain the ever skeptic that Microsoft will get enough benefit from Yahoo. Microsoft's $20 billion cash on hand would buy a bunch of smaller, more strategic companies that might better build competitive strength against Google.
Now that would be something to yell, "Yahoo!" about.
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- Microsoft's One Yahoo Mind Divided, Microsoft Watch, Feb. 12, 2008
- Yahoo Squeaks, Microsoft Squawks, Microsoft Watch, Feb. 11, 2008
- Yahoo Bounces Bid Ball in Microsoft's Court, Google Watch, Feb. 11, 2008
- Yahoo's Way Out, Microsoft Watch, Feb. 11, 2008
- Yahoo Poised to Reject Microsoft Bid, Google Watch, Feb. 9, 2008
- The Real Reasons Microsoft Wants to Buy Yahoo, Microsoft Watch, Feb. 6, 2008
- It's No Flickr of Hope, Microsoft Watch, Feb. 4, 2008
- Yahoo Music Is a Real Problem, Microsoft Watch, Feb. 4, 2008
- Yahoo Bid Reveals Microsoft's Fatal Flaw, Microsoft Watch, Feb. 4, 2008
- Google Fires FUD Volley at Microsoft over Yahoo Bid, Google Watch, Feb. 3, 2008
- Microhoo: The Worst Deal of the Internet Age, Google Watch, Feb. 2, 2008
- Is Yahoo Worth the Risk?, Microsoft Watch, Feb. 1, 2008
- How a Yahoo Merger Could Screw Up Microsoft, Microsoft Watch, Feb. 1, 2008
- There's No Must in Microsoft's Yahoo Bid, Microsoft Watch, Feb. 1, 2008
- Why Did Microsoft Yell Yahoo Today?, Microsoft Watch, Feb. 1, 2008
- Will Microsoft Yell Yahoo?, Microsoft Watch, May 4, 2007
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Comments (3)
@ Joe :
You just ain't feeling this Micro-hoo! thing, eh?
I think it's obvious by now...
Do you have any pull at Microsoft?
Posted by n0neXn0ne | February 25, 2008 3:44 AM
So the proof that MSFT is using faulty numbers is Jupiter, who provides no final number whatsoever and self-admits to not tracking anywhere outside the US and W Europe? LOL. The US online market was just estimated by IAB and PwC as $21.1B (growing at 25%). So Jupiter appears to already be wrong by more than $1B on what they do track. Bottom line, as an estimate and including mobile, MSFT's number doesn't look to be out of line. And there are numerous others who have forecast numbers in that ballpark by that timeframe.
Posted by Bob | February 25, 2008 11:45 AM
so u think msft can't integrate yahoo, but somehow they will be able to integrate a "bunch of smaller" companies?
where's the credit for msft getting 8% in a market that wass CLEARLY not in their DNA just a few years ago?
glass half empty everytime. never half full.
Posted by 23 | February 25, 2008 8:06 PM