“Do you MicroHoo?” Nah, doesn’t have the same ring does it? however, judging from the recent semi-hostile bid from the folks at Redmond, product branding and name recognition are just a couple of trivial details Microsoft has not thought through with regards to the software giant’s bid to take over number two Internet search provider Yahoo. The past week’s happenings surrounding the possible acquisition of Yahoo have proved almost as interesting a drama as the political primaries, and they’re arguably just as pointless in the final assessment. Look at the players and consider what each has to lose and win and see why:


While Microsoft has done many things right; a consistent and successful Internet strategy has not been one of them. Therefore, their desire to purchase an under-valued web pioneer (Yahoo) is not surprising, and on the surface looks like a shrewd move even at the current offer of 44 Billion. Notice I say “current” – expect this number to go up! The thought of the Operating System / Application behemoth mated with Yahoo’s online market share congers thoughts of a technological juggernaut previously unequaled.

Fear mongers are quick to point out that such a marriage would certainly result in a monopoly that would crush all competition and leave only Google and Microsoft to slug it out for technological and market dominance on the web. Perhaps, perhaps not – Microsoft does not have the best track record absorbing companies, and they have never bit off a mouthful like this before.


While Google may be the reigning Silicon Valley media darling don’t kid yourself, Yahoo is no also ran. The undisputed veteran of the portal, Yahoo has over a decade in the space. Unlike others who have come and gone (remember: AltaVista or Dogpile?) Yahoo has not just rested on its past success, but has remained relevant via a combination of internal innovations, brilliant partnerships and enlightened acquisitions.

Yep, Yahoo has a lot going for her – and its not surprising that she is looking for a bigger Valentine’s gift then the current 62% per share premium MS is offering. But other than cash, certain to please share holders, what does Microsoft have to offer Yahoo long term?

Or does it matter, has Yahoo’s usefulness as an innovator been out lived? Yahoo Mail and Messenger platforms boast large users, but so do Hotmail and MSN Messenger, is there any motivation, specifically a financial one for them to be consolidated? Sure Flickr is sexy and drives traffic, but can it be monetized successfully? By these standards Yahoo should take the money and run, what Microsoft does with the brand and properties becomes secondary.


And then there is the 800 pound gorilla in the mix – Google. Frankly, there are so many upsides for Google with the possibility of a Microsoft/Yahoo merger, the entire Mountain View campus has to be watching with unabated glee. That comment might surprise some, but think about it, to start with the longer this drama plays out the more uncertainty is injected into Yahoo and Microsoft web plans and futures. Google is already firing on all cylinders in the web space and quickly reading its entry salvo into the mobile space this year. Market and personnel uncertainty at MS and Yahoo, would only serve to distract these competitors and allow Google to move even farther ahead.

So will there be a Wedding?

Others have speculated that the DOJ and EU will likely block this merger, and I don’t really have an option on that aspect of the merger. I tend to think not, as the inflated demands that Yahoo is now seeking, but its just as well for both Microsoft and Yahoo if there is no deal.

Should this take over proceed I have to believe it will be a catastrophic disaster for both, especially Microsoft. Some point to long term synergies of the two firms, and that might even be true, but the short term consequences will be staggering. For 12 to 24 months Microsoft’s focus will be redirected drastically into the morphing of Yahoo services under the MS brand. Backend systems will be impacted, staff will be transferred, you know – general chaos!

Compounding this Microsoft is struggling with its worst OS launch since Windows ME, Apple is having a real impact in the PC space, Linux is eroding Windows market share and oh yea, the 800 pound gorilla – Google – just keeps on rolling.

So MSYahoo, or MicroHoo or YaSoft, Do a deal if you must, someday we will look you up on the internet WayBack machine.