Henry Blodget has a smeared reputation but a really, really insightful blog, creatively called The Internet Outsider.
He recently suggested that if Microsoft doesn’t spin out MSN, MSN will die a slow & ugly internal death, being crushed by the twins, Vista and Office.
This follows a similar comment from John Battelle.
Here’s the link to the Blodget post… and below is a copy of my response to him.
(John, if you’re reading, I’d post this on your blog, too, if I wasn’t so late to the party. <chagrinned look> )
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Henry–
I just returned from speaking at the MIX06 conference as well.
I enjoy your stuff, think I can bring something to this discussion.
Seems like a lot of folks have been commenting about spinning MSN out.
My company, MessageCast, was purchased by Microsoft — actually MSN — about 10 months ago… so it wasn’t so long ago that I was an outsider.
I have long thought MSN needed to be spun-out. Focus efforts, shed reputation, unlock shareholder value, etc.
So when I got to Microsoft, I dug into this. I was surprised at what I found out… and now my opinion is no longer black & white.
I guess the best way to say this is — for the very first time — Microsoft really gets that MSN is the "tail wagging the dog" going forward.
That’s the critical difference.
MSN won’t get subsumed because:
(1) …that’s where the money is. MSFT finally gets that it will be faster for MSFT to double revs *not* by increasing Word sales 10% a year… but by taking 10% of a $400-$600 billion ad market *ripe* for the picking.
(2) MSFT is watching GOOG do this right in front of their very eyes (take 10% of ad market). Which — for the first time in years — makes MSFT an underdog again. MSFT secretly likes being the underdog… is most dangerous when it’s the underdog. Examples: OS/2, WordPerfect, Lotus, Novell, Netscape, etc.
(3) Vista and Office are late and heads are rolling. The dev stars in the company are clearly from MSN… where Messenger gets updated a few times a year… Spaces came out of nowhere to dominate consumer blogging… Hotmail is still cranking… etc.
Long-time MSFT observers have seen the company transition before.
Internally — my 2 cents — feels like they’re actually doing this again.
–Royal Farros.
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