Monday, October 10, 2005

Portal Play: MSN Spinoff Likely

Henry Blodget was kind enough to shoot us over a PDF copy of his firm's mesmerizing report on the Google/Yahoo/Microsoft war.

An Olympian clash between titans, it is.

Blodget reports from the trenches, cogently arguing why an AOL/MSN merger qua spinoff is Microsoft's only hope if it wants to seriously compete with Google.

Gates and Ballmer, whose guiding mantra over the last 6 months has been "kill Google," have one recourse, says Blodget.

Microsoft's best bet is to team with the #4 player and hope that, together, AOL and MSN can put some pressure on both Yahoo (#2 player) and Google.

Regrettably, as Blodget notes, even a combined AOL/MSN entity would barely dent Google's core business, which is search.

True, combined revenues of an AOL/MSN entity could theoretically surpass Google's, but not in the advertsing revenue space.

There, Google has everyone beat.

As Blodget says, you either step your game up, or let some "babyfaced entrepreneur" take all your market share.

He's referring to Google's young founders, obviously, but wait: Wasn't Bill Gates that "babyfaced entrepreneur" at one point in his life?

Is every Web 1.0 company, we ask, fated to be reinvented by its offspring?

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