Microsoft's Organic Plan?

The normally very perceptive Kara Swisher appears a bit nutty with her latest Microsoft granola post. Kara appears to misunderstand the term "Organic" in the context it's getting used by Microsoft, though complicating all this is the fact Microsoft is about as likely to succeed online "organically" as they are likely to succeed in crop farming.

By "organic" Microsoft is trying to say that they will seek to develop their online environments internally and with their own talent and resources rather than buying up the competition. My take is that all of this organic talk is a part of the big Ballmer bluff that will probably lead to an acquistion of Yahoo, but it's possible that Microsoft actually believes they can actually succeed where so far they have so dramatically failed to succeed with Microsoft LIVE search.

On Charlie Rose earlier this week Mike Arrington noted how, unlike Yahoo and Google, Microsoft has no search "brand". Despite an enormous internal spending spree and some external marketing, few outside of the industry could tell you that Microsoft intended to make "MS Live" their key search brand as they slowly phased out "MSN Search". This of course was the key reason that Ballmer has been so intent on aquiring Yahoo. Without a search / internet brand Microsoft has little hope of winning the epic online battles with Google. Yahoo's quality brand, second place search market share, and huge internet empire would have given Microsoft the recognition they needed to fight Google head on in the online spaces Google has come to dominate so dramatically.

Can Microsoft build their brand organically? Probably not, which is why - correctly understood or not - the organic talk is nonsense and Microsoft is probably working many angles right now hoping to buy as big a piece of the internet as they can. Will they succeed? Almost certainly yes. Microsoft may not have much of an internet brand but they have something almost as good. Cash. And lots of it.

Yahoo's board - which includes some people who lost *hundreds of millions* in stock value on Monday, is rumored to be considering heading back to the negotiating table with Microsoft. Given that Microsoft has offered $33 per share and is likely to go at least a few dollars more and given that Yahoo's hopes of seeing $33 per share anytime soon given their lackluster performance, low morale, and angry shareholders, a deal still may be looming on the horizon. However even if Microsoft Yahoo is not to be look for Microsoft to be on the hunt for major internet properties.

Disclosure: Long on YHOO