Some people never learn...

The Wall Street Journal is claiming that Microsoft has it's MOJO back. Microsoft's Director of BusDev is turning up the PR hype machine. But haven't we all heard this song and dance before, especially after two internet or media giants merge?

SynOptics & Wellfleet

3COM and US Robotics

AOL and Time Warner

Lucent and Alcatel

So why will this one fail as well?

1. Geographic distance - Seattle and Santa Clara are both in the same timezone, but even technology like Telepresence or Halo isn't going to recreate the impromptu water-cooler meetings where most strategy gets originated.
2. Cultural differences - An Internet company and an Enterprise (and failed Internet) company. Oil and water don't mix.
3. Don't buy the Competition - People matter, and people that were competitors the day before don't easily become friends with "the enemy". This is a great way to have the best people from either company leave. And this little tidbit of detail won't make things any easier.
4. Lack of Innovation - While Bing is new, and contains some interesting technology, it's not a leap forward. It's an incremental difference that isn't sustained by superior scale or cost savings.
5. Lack of Problem Solving or Value Creation - Microsoft has tons of cash. Yahoo has tons of users. Neither could figure out how to bring new value to the business in the face of Google's growth. Merging the two doesn't create any new value for customers.

I was at Cisco for about 125 acquisitions. We didn't get all of them right (maybe 15-20% were big hits), but we made sure to try and meet each of those criteria before pulling the trigger.

In the digital world of the 21st century, scale is critical, but innovation trumps all. The media loves a big story, but rarely do shareholder benefit long-term when financial engineering replaces innovation.

5 Ideas for Facebook to make money - Part I

As an avid Facebook user, and following the recent trend to make lists, I thought it would be fun to come up with some ideas to help Facebook make money in 2009. Their user-base is seeing rapid growth again, but they are still struggling to monetize all that user data. For the sake of time, I thought I'd condense this list down to 5 things.

Many of these ideas are based on the growing number of 30-40 somethings that are joining. These folks use it as a distraction from their existing lives, or as a way to keep in touch with old friends, or to remember happier times.

Idea #1 - Charge for usage. $9.99/year. Millions of people pay that much for a month of NetFlix, or a day's worth of Starbucks. There's $1.6B in revenue (at 160M users).

Plenty of people will say that violates the spirit of what allowed Facebook to grow, which was the Freemium business model that gained popularity in 2005-2008, with the rise of many Web 2.0 companies. Fair enough, but how many of those companies are going to survive the latest economy crisis? And by survive, I'm really talking about being a long-term business entity, not selling out to Google, Yahoo, Microsoft or some other large internet company. Let's think in terms of truly building a business, not an exit strategy.

At some point, Facebook needs to be able to ask their users (directly or hypothetically), "if we were gone tomorrow, would you miss the service?" If the answer is "No", then charging a usage fee is dead. If the answer is "Yes", then you have a very viable starting point to explore a fee.

I have some ideas about how they would create the inflection point for making the change from Freemium / Ad-Supported to Fee-Supported, but I'll hold off on those for another post. I think 2009 is going to be an interesting year to see how some of these models survive and also how create they get with revenue models.

[NOTE - As I mentioned before, it's good to put large numbers in perspective.  Facebooks existing user base (160M) is equivalent to 52% of the US population; is equivalent to 73% of US broadband users; is equivalent to 10% of worldwide broadband users.  Needless to say, there is a lot of growth potential for Facebook worldwide.]