With the current collapse of the Yahoo! deal, Microsoft may be wondering what to do with all that cash.
I firmly believe the "semantic web" is coming and could be a disruptive force in current Google revenue streams. If I were still at Microsoft, I’d be strongly advocating that Microsoft focus on a disruptive innovation in search — namely, to do a better job with microformats, structured search, and understanding the intent of a searcher. I’d also be adding companies like Facebook that have a really well thought-through platform with millions and millions of invested users. Facebook users, I’d argue, are probably more invested in Facebook than Yahoo users are in Yahoo.
Some companies that I’d have my eye on if I were still at Microsoft:
- Powerset — a very interesting company doing natural-language and semantic analysis to deliver better search results. <$1 billion
- Facebook — Microsoft can still realize everything Passport and "Hailstorm" should have been. Oh, and add tremendous ad inventory, better user-profile-understanding and 70 million users at current writing. $15 billion.
- Friendfeed — very simple social aggregation technology, but very clever. Roll it into the developer platform of Facebook. <$1 billion
- TiVO — This is a bit random, but if there’s spare change left over, at "just" $808 million at this writing, TiVO still seems cheap to me, after the many fits and starts of Microsoft’s ITV efforts. I would buy it, help them teach Microsoft about developing passionate users, expand upon TiVO’s great distribution/partnerships with cable companies, and release combined XBox/TiVO/Zune efforts. Truly connected entertainment. $800 million
There — that’s a whole lot of Google competitive value for under half of what they were willing to spend for Yahoo.