Big market share does not equal innovation or success

I wrote this post the day MSFT announced their offer to by Yahoo.

It seems like a million years ago but it wasn’t.

And now, MSFT has pulled their offer

I’ve been rooting for this outcome since the beginning.

But one thing I didn’t mention in my original post and subsequent posts is about the effects of improving market share by acquisition.

The best acquisitions is when a buyer can buy something they don’t have, plug it into their current system, make the entrepreneurs and customer win. And it gets even better when the entrepreneurs have a reason to stay with the buyer post deal.

That’s the best.

The worst kind is when two companies merge to improve market share. Large market share does translate into innovation or long term success. I dont’ beleve there is a correlation. I think it’s the opposite usually if anything. Consider Internet Explorer as the perfect example.

And without innovation …well you know what happens next.

If MSFT was successful in buying Yahoo, it would have been a huge disadantage for getting new products out the door at the combined company. The politics, committees, infighting woudl have been huge.

The reason Google is winning the search front is because they are singularly focused on that task, built it from the ground up and they are innovating. As a result their search product for now is the best.

But that could change in a moment. Not from two big honking companies merging. But from a brand new startup. 

That’s mostly likely where it will come from. And MSFT and Yahoo should be looking at those startups instead if anything.