Henry Blodget And John Battelle Want MSN To Spin Out

Posted: March 25, 2006 in Uncategorized
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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Comments
  1. Unknown says:

    Definatly an outsiders comparison, but wasn\’t the same issue forced onto AT&T many years ago, and Standard Oil as well way before that. It takes less and less time, but what gets fragmented unnaturally will pull itself back together like a T-2. (no plug for the Gov. intended)