Re: Acquisitions: Google/YouTube, what do you think of the deal?

From: Simon Rolfe <ideas_at_creativegenius.ca>
Date: Wed 11 Oct 2006 23:48:15 -0500

Rob:

You make a good point, Wordperfect was the defacto standard in the DOS
realm as I recall.

In fact, Wordperfect owned the 'desktop' in the DOS realm (if all of us
are old enough to remember:)
Up until the introduction of WP 6.0 (if my memory serves me correctly)
but with the introduction of WP6.0 things went south ... and Wordperfect
failed to maintain their market leadership and the product never
recovered. Why? Because WP 6.0 sucked!

Same can be said for Netscape, they failed to maintain their market
leadership. For those of us who are again old enough to remember the
first revisions of the 'then new' Microsoft Explorer browser ... they
were terrible (laughable in fact). But Microsoft's dominance of the
desktop allowed Explorer to gain market acceptance, that combined with
the fact that browser standards fell apart after 4.0 and Explorer just
kept on adding functionality to their browser, regardless of what anyone
else did.

Failure to maintain market leadership is what plagues Yahoo! now as
well. While many still use them, they have been reduced to an 'also ran'
in my book.

The landscape is dotted with good examples of firm's that failed to
maintain market leadership and you provided us with some great examples.
Where the hell is AltaVista? They at one time had a great search engine,
but who cares about them now? Oh yeah, I remember - No one!

Regardless of cost, or their underlying motivation, Google (to their
credit) is attempting to harness competitive advantage. Not so much as a
search engine with the acquition of YouTube, but as a good bet when it
comes to getting ones ads placed on in front of surfers eyes when on-line.

The purchase of YouTube has far less to do with the dollar value (since
it was an all stock transaction) and as you have already stated, the
stock price of Google by any definition is ridiculous. The 'real
argument' is: How much an audience is worth?

The true value of the Google acquisition of YouTube in the end will be
measured by Google's ability to leverage the value of the cost of the
acquisition to their benefit - and not by the cost of the acquisition
itself. Perhaps another underlying factor is Google's wish to keep
YouTube out of the hands of Microsoft, whom I understand is looking to
strengthen their own 'video play'.


Regards

Simon Rolfe, Senior Partner
Creative Genius Communications Inc.
ideas_at_creativegenius.ca
www.creativegenius.ca
(613) 830-4208
    



Received on Wed Oct 11 2006 - 23:48:15 CDT