Why Should Microsoft Try for First Place When It Can Buy Second?

With this morning’s announcement that it had made a $44.6 billion offer to buy Yahoo, Microsoft continues a multi-year streak of indicating that it will settle for buying second place instead of battling its way to first. Can’t beat Google at its own game? Here’s an idea: Why not buy the company that’s literally choking on Google’s exhaust? No wonder Bill Gates decided to step back from the day-to-day in 2006. When you’ve ruled the world for a decade-plus, it’s little too much to constantly accept the silver medal.

Why the philosophical shift? Because when they try to do it themselves, they constantly come up short. For starters, there’s the matter of Apple’s iPod and Microsoft’s Zune. Does anyone you know own a Zune? Us neither. While the company’s Xbox is turning into a legitimate gaming powerhouse, just when Microsoft was on the verge of trouncing Sony and its PlayStation, along comes scrappy little Nintendo with its Wii, sucking all the air out of the room. Microsoft Money? Please, give me Quicken. When it comes to Web-based financial software, upstart Mint has already stolen everybody’s thunder. But don’t worry, Microsoft will buy them soon too. MSNBC? Are you kidding me?

What can we give them? We’re no gamers ourselves, but we’re told that Halo really does kick ass. And this story is being typed in Microsoft Word. Despite the efforts of Google and the open-source community, Microsoft Office is still pretty much the stuff. Windows, the basis of Bill G’s fortune? Sure, it’s still got 99.999999 percent market share or whatever, but it will never be Mac OSX, no matter what those programmers in Redmond do. Of course, when you’re sitting on $21.1 billion in cash, you should feel free to buy whatever you’d like. And anyone who follows financial markets these days knows that gold is getting more expensive by the day. But that doesn’t mean you have to settle for silver. —Duff McDonald