My competitor has one product that is not free and can’t be given away for free. This single product is so profitable that my competitor uses it to fund development of a copy of my main revenue driving product (that they give away for free) just to fuck with me.
My first business model is in a lot of danger. I already make some money from my competitor’s main market, but there aren’t a whole lot of my companies resources dedicated to that market and we spend a bunch of money on other random crazy shit.
My competitor is Google and my company is Microsoft (not really, its a story.)
Microsoft’s complete takeover of Yahoo search business is imminent. The organic listings have already transitioned and paid search results will come shortly.
Big problem for Microsoft, its not a seamless transition. Each Yahoo advertiser will need to manually move their campaigns from their Yahoo account in to Microsoft’s Bing Adcenter. Account limitations and set up on Yahoo are very different than Microsoft’s Adcenter. So different that some people are recommend you take your Google Adwords campaigns and migrate them to Bing! Guess what, a lot of advertisers will not be able to fully make the transition. Some will make it, but with a struggle. In the meantime, Microsoft is not going to make as much as they expect to (hopefully Yahoo got a flat rate guarantee.)
I feel bad for Microsoft. When big industries change, and they have poor leadership, your good employees go work for your competitors and make them better companies. The people that are left aren’t the visionaries. They may be bright, they may be sharp, but they weren’t sharp enough to see bigger opportunities for themselves, and they certainly won’t be able to take advantage of those opportunities for their employer.
I hope I’m wrong. Google needs strong competitors. It means a better environment for advertisers and stronger payouts for web publishers.
Update 10/30/10: Looks like I was right, to some degree. Yesterday Search Engine Roundtable reports on advertisers seeing a “major” drop in traffic in their Microsoft Adcenter accounts (which is how you buy advertising on Bing.) I can confirm this first hand as its happened to us as well.
What I reported in this post earlier was an early sign, to me, of potential problems. While they finally did come out with an account migration its likely that this transition was not well prepared. That is not a good sign for Yahoo or Microsoft shareholders.