Saturday, February 2, 2008

Yahoo! + Microsoft: what it could mean for small business e-commerce

What could the Microsoft + Yahoo! merger mean for small business e-commerce?

Let's take a look.

Microsoft's Office Live offerings include hosting and Web site building services for small businesses. Office Live (as of today) does not include any hosted e-commerce services.

In addition, Microsoft has never offered a licensed small business e-commerce system. In other words, Microsoft is not currently a player in the small business electronic commerce solutions market. Different story with Yahoo!

Yahoo! Stores has been around for years. It's definitely not the best small business e-commerce solution out there, but it's good enough for many, and thanks to its big brand has accumulated over 40,000 subscribers.

So, will Microsoft simply roll Yahoo! Stores into Office Live, assuming the merger goes through? It's not that simple.

Yahoo! Stores uses a difficult (according to many), proprietary programming language called RTML (Real Time Markup Language), which is unknown to most Web developers. That's because it was developed by the company that originally created what later became Yahoo! Stores. The company was Viaweb, bought by Yahoo! in 1998.

I doubt Microsoft will want to keep using RTML. It simply would not be consistent with the overall .NET strategy, which is an integral part of Microsoft's strategy for the Internet.

With tons of developers on hand, developing an equivalent to Yahoo! Stores in ASP.NET will not take years. In fact, given the somewhat limited feature set, it will probably take less than 6 months (I'm thinking of a team of 40-50 senior developers). Or they might decide to do it by acquisition, picking up some existing small business e-commerce software (*), and developing internal tools to migrate existing Yahoo! Stores account to the new platform.

So here is my small business e-commerce prediction out of the Yahoo! + Microsoft merger:

- Yahoo! Stores is rolled into Office Live
- RTML is gradually phased out
- Office Live Stores is rewritten in .NET

Now the big question: if the merger does not happen, am I supposed to delete this? Sorry, just kidding... the question is: will Microsoft want to become a player in this space? If the Yahoo! merger goes through, yes, I believe they will. And an aggressive one too.

(*) Hey, Microsoft, if you decide to buy some e-commerce software for this project, let's talk. ProductCart costs less than $31 a share, I promise. And we can yodel too!

A few weeks after I wronte this, Microsoft actually did release a hosted e-commerce service, called Store Manager. It's a pretty basic service (very small feature set), and follows a revenue model that's almost identical to Yahoo! Stores (monthly fee + 1% of sales). Yet another "me too" product by Microsoft, and a lost opportunity. One more service that competes directly with Yahoo! The two probably would end up getting merged into one small biz e-commerce offering did the companies decide to get married (no wedding date yet, as I write this).