Outside the Lines

Yahoo CEO Jerry Yang talked to a few press outlets Monday, opening the door to further negotiations if Microsoft is willing to show him the money, or what he considers the appropriate price.

Microsoft's final bid was $33 and Yahoo held out for $37, or something close to that number, but Ballmer decided on Saturday not to continue the courtship. With Yahoo flaunting its possible ad serving deal with Google and holding out for an 80 percent premium over the January 31 closing stock price, Yang appeared to overplay his hand.

According to Reuters, Yang said it was Microsoft who decided to cease negotiations. With shareholder lawsuits piling up in the wake of the failed deal, the stock suffering, and no other suitor in sight, Yang may now be looking for rapprochement with Ballmer.

"If they have anything new to say, we would be open...I am more than willing to listen," Yang told Reuters.

SAP CEO Henning Kagermann has some advice for how Microsoft CEO Steve Ballmer should spend $45 to $50 billion.

"I'd encourage him to spend it on Yahoo. For Microsoft, the challenges are more on the side of the consumer space, not the enterprise space," said Kagermann.

While Ballmer walked away from Yahoo over the asking price and other issues, he might be back if Yahoo fails to show that it can gain momentum.

Kagermann was speaking at SAP's Sapphire conference in Orlando, Fla. ZDNet's Larry Dignan captured the action. Kagermann speculated that Microsoft wouldn't have made the offer if it didn't have a good handle on how to integrate the two companies.

In 2004, Microsoft and SAP were in talks to merge but nothing came of it. It could be that Kagermann hopes that Microsoft acquires Yahoo so it will be distracted with the merger and not get any ideas about trespassing on SAP's enterprise software territory.

At SAP's Sapphire conference this week in Orlando, Fla., a question posed by one of my colleagues concerns the status of Business ByDesign, an on-demand suite of applications that has been in development for about five years.

SAP co-CEO Leo Apotheker

(Credit: Dan Farber/CNET News.com)

Last week, it was announced that the product would take 12 to 18 months longer than the original target of 2010 to reach $1 billion in revenue and touch 10,000 customers in the mid-market globally.

ZDNet's Larry Dignan reports on a conversation with SAP co-CEO Leo Apotheker, who explained that Business ByDesign was delayed because the company wasn't able to achieve the planned 10-times reduction in total cost of ownership.

Larry wrote:

That's a fancy way of saying SAP hasn't figured out how to make money at its $149-per-user, per-month price point. SAP confirmed that it was delaying Business ByDesign when it reported its first-quarter earnings. "We've announced a price point, and now we're working backwards," says Apotheker.

Apotheker is looking to "labor arbitrage" (cheaper programmers offshore) and the next release of SAP's NetWeaver middleware to help bring the costs in line. He contends that the delay won't give an advantage to competitors: "No one will be able to offer an end-to-end, comprehensive business suite."

Being bigger and more comprehensive may prove to lead to unwieldy, more costly, and less agile software development. Perhaps SAP will offer some demonstrations of Business ByDesign at ... Read more

I saw Iron Man (cool Web site) on Sunday, joining the hordes who contributed to the $100 million dollar plus opening of the film. The movie was a blast so to speak, and Robert Downey Jr. was outstanding in the lead role. It has plenty of digital special effects and great production design, especially the futuristic computer usage scenarios.

(Credit: Paramount Pictures and Marvel Entertainment)

Minority Report has some interesting computer usage scenarios, but Iron Man is far more sophisticated. It's difficult to describe the digital systems, but they are artificially intelligent (pass the Turing Test), and allow Iron Man, aka Tony Stark, to design, fabricate, and control very complex gear, with voice commands and hand movements, in matter of weeks, not decades or centuries.

There were some old-fashioned keyboards and command line screens along with advanced 3D user interfaces and heads up displays, but no Google searching, Twittering or iPhoning. The cars (Audi paid for the new R8 to have featured role in the movie) were very ordinary but fleet.

A note to movies goers: the jumbo popcorn with the free refill has been suspended due to the rising cost of corn and production of ethanol, at least at my theater.

See Metacritic for reviews of Iron Man.

In a memo to Yahoo employees, co-founder and CEO Jerry Yang asked his troops to redouble their efforts and to focus on executing what he called the most important transition in the company's history. It was the expected post-game motivational speech after declining to take Microsoft $33 per share offer.

On Monday Yang, will face some irate investors and employees. The stock is expected to head south at the market open. He will need to provide more evidence than slideware about doubling operating cash flow in three years that Yahoo has a plan to grow revenue and profits ahead of competitors.

Yahoo co-founders Jerry Yang and David Filo flew up to Seattle to meet with Steve Ballmer and Kevin Johnson but rejected Microsoft's $33 per share offer.

(Credit: Dan Farber)

In the note, Yang mentioned the exclamation point in Yahoo's name (we leave off the "!" in references to Yahoo!) and looking forward to the future:

there's a reason why we're the only fortune 500 company with an exclamation point at the end of our name, and now is the time to demonstrate what that exclamation point stands for.

I am intrigued by the rendezvous of the most important transition in company history and the exclamation point. Yang appears to acknowledge that Yahoo hasn't fully earned an exclamation point after its name, and his memo wasn't explicit on what the most important transition entailed.

What would it take for Yahoo to reach its manifest ... Read more

My friend Marc Canter has written a series of blog posts outlining the issues, constructs, technologies, and standards required to build out an "open mesh," as he put it. It's a kind of unified field theory for the Web.

Marc Canter

(Credit: Dan Farber)

Canter has been an evangelist for a Web without walled gardens. He also has a financial stake in the open mesh. He runs a company called Broadband Mechanics that has developed a white label social network and Web site creation service that depends on open standards.

The open mesh is not Microsoft's Live Mesh. The open mesh is "made up of vendors, standards, and glue code that connects a wide range of services, applications, and platforms together," Canter said. And, it has identity at the center:

"The key foundation set of constructs, web services and APIs to support when building the mesh - is the area of profiles, personas, friendships, relationships, social graphs and groups. It all starts with humans and every construct, element and component of the open social web we're building has to do with people."

ID is at the center of the open mesh.

(Credit: Marc Canter)

"Coming out of all this is an awareness of a new kind of infrastructure - which simulates the blood veins, nervous systems, skeletons, fire hose and neural networks of the open mesh. Its about RSS, Friendfeeds, XMPP, attention, two-way APIs, OpenID, DNS-like backbones and an international approach."

Canter recognizes that a completely unified ... Read more

In a special edition of the Gillmor Gang, Steve Gillmor, Mike Arrington, Doc Searls, Dana Gardner, Robert Anderson, Robert Scoble and I discuss Microsoft's decision to walk away from its bid to acquire Yahoo.

The consensus: Google is a big winner, Microsoft is not dead, and lives to bid another day, and Yahoo better be able to execute with precision on its strategy or it faces difficult times and a less lucrative result for shareholders.

Listen to the show

If you were to put Yahoo CEO Jerry Yang and Microsoft CEO Steve Ballmer in the ring, you would expect the boistrous Ballmer to be left standing. With Microsoft taking its offer to Yahoo home, it's hard to tell who the real winner is in the long run. Microsoft certainly coveted Yahoo. However, if Yahoo falls on its face in coming months, Microsoft could be back...with a lower offer. Consider this a chapter closing in a longer tale, whose ending we don't precisely know.

Jerry Yang and Steve Ballmer last words.

(Credit: Dan Farber)

Full coverage of Microhoo

At the close of the 20th century and the beginning of the 21st century, the tech industry experienced a massive consolidation, culminating 40 years of market and technology development, from the mainframe to client/server computing and now the Internet.

Since 2005, Oracle made more than 40 acquisitions, totaling more than $20 billion. Microsoft, IBM, HP, Sun Microsystems, and Cisco Systems have each made dozens of acquisitions in the same time frame.

Consolidation is a sign of the mature phase in an industry, in which the biggest players stake out more territory as a way to increase share of wallet from customers by fusing together more complete solutions. It's the proverbial "one throat to choke" approach to enterprise computing.

In the Internet era, the consolidators want to be the data center infrastructure providers to the giant Web colonizers--Google, Yahoo, Microsoft, AOL, eBay, Amazon, etc.

The commercial Internet is relatively young, rearing its head with Netscape in the mid-1990s. But consolidation is already taking place, driven by Google's meteoric rise with search and advertising revenues. Instead of one throat for CIOs to choke, the Internet giants aspire to dominance in online ad serving and want to serve as the home base for billions of Web users on the planet.

For starters, the big advertising networks have been scooped up. Google paid $3.1 billion for DoubleClick, and Microsoft picked up aQuantive for $6 billion in cash. Microsoft's lust for Yahoo is in a similar vein. Google has 60 ... Read more

At 7:00 a.m. PDT I was heading for my video page on YouTube and ran into this message:

I was getting to other sites just fine, so it's safe to assume it's a Google problem. YouTube receives 10 hours of video per minute and is by far the leader in the crowded field. This provides another example of why the Internet isn't like television, which tends to have higher uptime but the content just isn't as interesting as what you can find on YouTube. Awaiting word from Google on this topic.

Update: As of 7:20 a.m. YouTube has been revived.

Allen Stern at CenterNetworks has some more detail.