The Race for AOL

The Race for AOL
The race for supremacy in the Internet Domain is getting exciting as each day passes.When Yahoo, Google and Microsoft challenge each other, its a battle worth to be watched.The synergies of an combined business with AOL is what is making a losing commodity like AOL still very attractive. AOL gets more than 100 million hits a month and thats a huge number to be ignored, even for these heavy weights.

Google seem to be the darling of internet community now, with innovations churned out of Google labs being widely accepted. Google has a big advantage in their fight for internet supremacy, as unlike previous competitors they not only have the technology knowhow, but they also have enough financial prowess to match any Microsoft's move. It is also believed that Comcast will join hands with Google at later stages on the AOL deal. A Google- Aol- Comcast combination would give Google a very good leverage and an entry point to compete in the Internet based media business against Yahoo.

The recent restructuring efforts by microsoft to make themselves a more web enabled company indicate that they do not want to Quit this profitable business. Microsoft has been working hard to catch up with the lead that Google has already taken. In a recent Email sent by Gates at Microsoft he clearly indicates at a move towards more web enabled applications is inevitable to keep the company ahead of competition. The Memo from Ray ozzie is even more elaborate that it talks about timelines for setting up focussed business units and finding the right people to head them by early 2006. Microsoft already believes that the internet business will be the most profitable in the long term. The Operating system business division is the largest at microsoft now, however the manpower needed to sustain in that business has been much higher than in a similar internet based business. With The Windows crashing everyday, it only means more routine work to do for no additional revenue and less time for innovation.Given these considerations, an AOL - MSN combine would give Microsoft a much stronger foothold in its competition against Yahoo and google.

After inital negotiations,Yahoo seems to have lost its interest in the deal. Yahoo is mainly an internet based media company, and AOL 's business model is very similar to it, so it makes more sense for Yahoo than anyone else to combine hands with AOL. However the similarity in business also leaves the possibility of duplication of assets and content between the two. Hence the price that Yahoo would offer AOL would logically be much less than what the other key rivals offer.Time warner would hence be much keener to cash in on AOL by selling it to one of the others in the race yet.

It is also interesting to think about what would happen to brand AOL after the buy out. As the internet space consolidates, it would leave smaller players much more vulnerable against much larger rivals.I am sure that on one of these days google or microsoft will buy out blogger or some other blog site, which has a substantial member base.