Options? Great… Pick one!

The Microhoo situation has made some considerable developments since I last posted on the subject. Sadly though Jerry and his board haven’t made their minds up yet, but that’s justified to an extent now that so many interesting options have presented themselves. Next Tuesday we’ll get to see Yahoo’s earnings report which will (hopefully) give everyone a big clue as to where this is going. Of course other Q1 numbers that will prove interesting are those of AOL – rumoured to be down to the tune of 25-30%. Platform A is being streamlined, which has a short term cost cutting win and could be used to adjust the compatibility of the team for any longer term aspirations such as say a merger with Yahoo!

AOL’s moves as of late have been focused on turnaround. First Bebo was acquired for $850 million, allowing AOL to own a social network and have access to a lot of users. This huge jigsaw puzzle piece will give AOL what it needs over the next few years to allow it to compete with the big players on the Internet. Combined with Platform A, it means they can keep everything that’s ad revenue based in house which is much more respectable than just outsourcing to Google; aka admitting defeat or Yahoo’s great idea. Platform A has taken on Verizon’s web and mobile properties, offering AOL a real opportunity to lead innovation on how to target ads at the mobile internet and its ever increasing number of users. Ultimately whoever gets this right first will hit the jackpot, and the brain power Google has at its disposal makes competition high, so teaming with Verizon on this journey boosts AOL’s chances of success.

Next up, relationships have been built to boost usability and accessibility of AIM, but in this field allowing Google to merge GTalk contacts with AIM buddies is not admitting defeat to Google. It’s a sensible move because it keeps hold of those users that were slowly discovering that the switching costs of going to Google might actually be cheaper and more efficient; as well as being in line with the trend wave of opening up access for communication through web2.0’s like Meebo.

On April 15th, Sphere announced it had been bought buy AOL. Sphere started as a blog search engine that would compete directly with giants like Technorati and Google Blog Search, but it rapidly differentiated itself by becoming a related content engine. In short, it allowed blogging to link itself and search through the big news media sites, generating related stories from big news sites when viewing a blog. This acquisition will now sit squarely inside AOL’s content sites. AOL has been doing a good job of keeping these content sites fresh and relevant, with their recent launch of a women’s lifestyle site for example. There have been other acquisition moves that have made important differences to AOL’s sites and using Platform A ads on them, such as Goowy Media the widget makers and Perfiliate Technologies the Internet marketing specialists. The complete chain looks something like this:

AOL Content sites –> Bebo and public blogging of content –> Platform A ads generate revenue –> Back to start

As dumbed down as this might seem, it’s important to realise that AOL were lacking some of these critical elements (or components of these elements) only a few years ago; and that if they’ve got their heads sewn on properly, they’ll figure out how to make something of the mobile web. At least there’s a clear path that cash is flowing in, and it’s an encouraging direction. But it seems to me that there are two thought patterns or objectives at work inside the top management think-tank. The first objective shows us we have a company that’s trying to pull off this turn around and stand on its own two feet, whilst the opposing decision makers want to see AOL sold to Yahoo! (or anyone that will realistically buy them) to make some cash for TimeWarner.

Does no one else see the problem with this? Right now, having two objectives creates no conflict as they are both achieved by boosting the company’s size, revenue… essentially every method you have of measuring the success of a company. The problem arises when Yahoo! caves to M$’s persistence and leaves AOL out in the cold, or when something similarly devastating takes place in an environment outside of AOL’s control. We are going to see top management fighting it out over which path is right for them, with little or no consideration for the end user.