Whats the Big Deal?
Business Decisions of 2006 and why theyre such a big deal –by Rupa Dev | January 15, 2007
Gone are the days when young professionals used a leather-bound daily planner and a chic fountain pen to keep track of their hectic lifestyle. These days, every meeting, tennis match, and first date is directly stored in memory- your computer memory, that is.
In 1982, Time Magazine changed their annual Person of the Year award to Machine of the Year to deem The Computer as the unexpected recipient. Predicting that The Computer will dramatically change the way people life, work, and even think, Time Magazine editors wrote that America will never the same after the dawn of the information revolution. They couldnt have been more all-knowing.
Now, more than twenty years later, Time Magazine once again acknowledged the impact of the computer (more specifically, the world wide web) through awarding the 2006 Person of the Year award to You, the internet-savvy individual who is crediting for finding and framing the new digital democracy.
While we must give kudos to Time Magazine for thinking outside the box to come up with this years well-deserved recipient, we cant help but point out that 2006 marked yet another year during which Google continues to uphold its reign amidst this information, technology, and communication revolution.
We use Google to easily share calendars, groups, documents, and spreadsheets with coworkers. We conduct our academic and professional research using Googles Scholar and Personalized Search options. We opt to chat using the built-in feature of Gmail rather than signing on AOL instant messenger- partly because of the convenience and partly because it just looks more discreet at work. During our scare down-time, we use Googles Blogger to rant about our how scare our down-time is and post photographs edited with Googles Picasa. Despite the fact that the website is invitation-only, more than 35.2 million individuals- mostly in their 20s- are already on Googles social networking website Orkut.
So here at The Cultural Connect, weve decided to take a closer look at how the major business decisions that happened (and didnt happen) during 2006 have helped companies such as Google and AT&T; further establish themselves as big-time players in their respective industries.
The Deal: Google acquires Writely for a rumored sum of $2 million on March 9, 2006
The 411: Writely was an online word processor created by Upstartle, a Silicon Valley software company with four employees. Users were able to type, save, store, and repost documents online. In March of 2006, Google acquired Upstartle, and Writely closed registration until the transition was complete. Writely reopened on a invitation-only basis and later became integrated into the Google Spreadsheets and Documents feature by September of 2006.
The Last Word: To many, Googles motive behind the Writely acquisition is a no-brainer. Analysts believe that this is Googles attempt to produce a top-quality competing word processor to Microsoft Word. The standardization and longevity of Microsoft Word is tough to compete with, but the online-based characteristic of Googles Documents and Spreadsheets is a great innovation. Word processor users no longer have to deal with the hassle of attaching and emailing files back and forth. Google has taken collaborative work to the next level by the convenience of file sharing within the Documents and Spreadsheets feature. As we quickly forward through an era where our information is increasingly being stored online, Googles acquisition of Writely illustrates their timely attempt to keep apace. While the convenience and innovation of Googles Documents and Spreadsheets is steadily gaining popularity, big corporations may be skeptical to switching to an online-based storage system because of the fear of storing important files online.
The Deal: Google acquires YouTube for 1.65 billion dollars on October, 9, 2006
The 411: YouTube, a free video sharing website allows users to easily upload, view, and share video clips. Started by three early PayPal employees, YouTube was one of the pioneering websites to kick-start the emerging craze of online video sharing. By summer of 2006, only about a year after the launch of YouTube, more than 100,000 video clips were being viewed daily. In its largest acquisition yet, Google bought YouTube in an all stock transaction but opted to keep both companies and video-sharing features separate.
…Googles acquisition of YouTube illustrates a firm confidence in the insurgence of an online media era that is completely driven and dictated by the individual.
The Last Word: Some view the YouTube acquisition as a mixed-bag decision. One Hundred and sixty five billion dollars is a hefty sum to pay for a company that already had its own successful video sharing feature, so some experts believe Google took a gamble. Others believe that the exponential growth and number YouTube users, paints an obvious picture as to why Google decided to shell out the big bucks. A few attest the acquisition to Googles attempt to practice cross-media advertising – which essentially allows advertisers to sell and deliver ads to different mediums of media, including podcasts and online videos. Regardless as to which opinion an analyst leads towards, Googles acquisition of YouTube illustrates a firm confidence in the insurgence of an online media era that is completely driven and dictated by the individual. And Googles ever-rising ability to beat out any of the other corporations interested in buying YouTube reinforces their position at the top of the technological world.
The Deal: Google pays 900 million for Myspace advertising rights on August, 7, 2 006
The 411: Beating out rival company Yahoo to serve as the web search engine and produce advertising listings to the pool of 100 million MySpace users, Google began its highly-orchestrated partnership with MySpace in early August. MySpace users can conduct a multitude of different types of searches using the new Google search tool. Google will provide the sponsored ads and links that accompany searches using their search engine.
The Last Word: Analysts believe that securing a partnership with one of the most influential social networking websites is key for Google to stay on top. With social networking websites establishing themselves as one of the fast growing sectors on the Internet, Googles affiliation with MySpace allows the company to reach out to a more select pool of young internet users. With all the most popular websites on the internet offering their individualized services for free to users, advertising-based revenue – like Googles partnership with MySpace – is a significant contributor to the companys overall growth and profits. Having secured an overwhelming presence among online media and social networking, Google is evolving into the mogul-esque empire that Microsoft held in the 90s.
The Deal: AT&T; to pay 67 billion dollars to acquire BellSouth Corporation is announced on March 6, 2006
The 411: During the 20th century, AT&T; was the parent company to Bell South Systems, then known as the American telephone monopoly. The system was broken up into eight companies in 1984 because AT&T; was labeled a monopoly. Now, after AT&T; reacquires BellSouth, AT&T; will become the largest U.S provider of telephone service. With AT&T; holding 60 percent of ownership interest in Cingular Wireless and BellSouth holding the other 40 percent, the merger will make AT&T; the owner of Cingular Wireless, the largest cellular phone company in the nation. Besides mobile services, only three local telephone service providers will exist after the merger.
Skeptical analysts feel that the combination of decreased FCC regulation and increased company size will give AT&T; substantial control over the wholesale communications market…
The Last Word: The impact of this decision is monstrous, both in the cellular and local phone industries. The companies argue that the acquisition will create a more effective and efficient provider, which is undoubtedly true. Regardless of the service quality, AT&T; and BellSouth merging together will reestablish AT&T; as the dominating phone service provider in its industry. Skeptical analysts feel that the combination of decreased FCC regulation and increased company size will give AT&T; substantial control over the wholesale communications market, thereby perpetuating the fear that AT&T; could increase rates and weed out competitors without being controlled. Already, AT&T; announced that 10,000 jobs will be cut from BellSouth following the completion of the merger.
Online Media Industry
The Deal: NBC Universal buys iVillage for 600 million dollars on March 9, 2006
The 411: Deemed as the internet hub for women, the iVillage company consists of many online and offline media-based properties and publications. The company caters to provide content and community to women of all ages and backgrounds. NBC plans to use the acquisition of iVillage as a foundation to create and establish vibrant communities.
NBC is presumably hoping that the acquisition will prove to be an advertising haven for those looking to reach out to a loyal female audience
The Last Word: Analysts feel that the acquisition illustrates a leg of NBCs corporate-wide digital strategy. By buying control over strong, mid-size internet companies, NBC hopes to establish a wide-range, influencing force throughout the burgeoning world of online media. Aiming to combine the loyal community of iVillage with the well-established content from NBC universal TV, film, and home entertainment, NBC is presumably hoping that the acquisition will prove to be an advertising haven for those looking to reach out to a loyal female audience.
The Deal: The Walt Disney Company agrees to acquire Pixar for a transaction value of 7.4 billion dollars on January 24, 2006
The 411:In an attempt to bring together two leader companies in the industry of outstanding creative content and media, The Walt Disney Company opted for an all-stock transaction to integrate Pixar into their magical reign.
The Last Word: With Disneys long-running established presence within the creative world and Pixars enormous blockbuster animated movie success, great things can only come from this top-notch duo. Disney has the utmost loyal following that will only grow with the implementation of Pixars cunning-edge creative and technological innovation. The acquisition further cements Disney as the ever-present and ever-growing creative dynasty of the world.
Network Television Industry
The Deal: UPN and The WB networks respectively shut down and remerge as the CW network on September 20, 2006
The 411: Having both pulled in poor ratings and fallen fall behind in the race between major television networks, CBS-owned UPN and Time Warner-owned The WB decided to join forces to bring the best of each network together. The new network is projected to appeal to the 18-34 year old audience and will feature a mixture of programs from both previous networks.
Analysts believe that The CWs success will lie in its ability to foster the growth of the hit television shows that once dominated the UPN and The WB
The Last Word: Under the joint, 50-50 broadcast network venture, The CW launch may be the most fitting answer to a questionable presence of two struggling networks. Analysts believe that The CWs success will lie in its ability to foster the growth of the hit television shows that once dominated the UPN and The WB. With The CW shows appealing specifically to a younger audience than those of the other major television networks, the new-found network may have found its long-term niche among TV addicted teens.
The Deal: Red Hat announces the acquisition of JBoss for $350 million on April 10, 2006
The 411: In an attempt to provide the next generation of web-enabled applications low-cost, open source platforms, Red Hat believes it can accelerate a shift to service-oriented architectures through the acquisition of global leader JBoss. Citing the belief in software innovation and customer-based economics of enterprise IT, Red Hat believes these common threads between both companies will allow them to smoothly merge and establish themselves as the low cost prodders of open source software. JBoss will operate as an individual division under Red Hat.
The Last Word: Analysts express scattered opinion regarding the high-priced acquisition. Some foresee the mergence of both companies as a solid fit, citing Red Hats larger and more established worldwide sales and marketing infrastructure as a platform for JBoss to increase their subscription sales. Others question Red Hats ability to successfully market and sell an application platform. Despite some lingering skeptics, most experts agree that the combined power of both companies will take the open source software sector by storm.
Rupa, 20, was born and raised under the warm sunshine of the Bay Area, California but decided to pursue a BA in English and Sociology at the University of Illinois, Urbana Champaign (and yes, she enjoys living in the cornfields).
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