Slate's Farhad Manjoo offers an interesting suggestion for Microsoft: forget Yahoo, buy Palm.
What's most puzzling about the possibility of renewed merger talks [between Microsoft and Yahoo] is that in betting on Yahoo, Microsoft would be jumping deeper into a volatile business that is outside its area of expertise. Microsoft really has no business being in the business of advertising. It is a software company, and software remains an astonishingly lucrative market. So why does it want to sell ads?...
Buying Yahoo would solve none of Microsoft's software woes--and could likely make them worse if Ballmer spends resources fixing what's wrong with Yahoo rather than fixing what's wrong with Windows Mobile....Microsoft might pay tens of billions of dollars for Yahoo; it could pick up Palm instead for just $1 billion or $2 billion and then spend several hundred million more on transforming the Pre's user interface into a mobile OS that can run on phones made by multiple vendors. Microsoft would also gain a loyal Palm audience--and a base of developers looking to create apps for the device.
This is sage advice, and helps Microsoft compete in a massive market that it largely misses today. Wouldn't Microsoft rather own the world's next desktop, mobile? Isn't that a smarter bet for its skillsets than getting into the Web advertising business?
Ironically, Apple is pulling a Microsoft even as Microsoft fritters away its time on beating Google at the Google advertising game. The iPhone App Store is absolutely rocking, as Businessweek reports, pulling in tens of thousands of applications that make customers increasingly happy to pay for Apple's iconic iPhone mobile device. Sound familiar? This has been Microsoft's game plan on the desktop for decades.
Microsoft would be better able to withstand a potential Apple lawsuit related to the Palm Pre. Microsoft would be better able to counter Apple's increasingly deep pockets as it continues to nail its quarterly earnings.
In so many ways, Microsoft would prove an adept competitor to Apple in mobile, just as adept a competitor as it is not against Google in advertising. Why? Because Microsoft knows developer communities and platforms and operating systems. It doesn't know anything about Web advertising.
There's just one small nit in this master plan: Palm runs Linux. Yes, Microsoft would have to get over that. But given how weak Windows Mobile has been, maybe Linux looks pretty good to the Redmond giant right about now.