Friday, May 04, 2007

Microsoft in Pursuit of Yahoo?

Microsoft is said to be in pursuit of Yahoo to bolster its MSN business in response to threats from Google. However, it is not clear is as to how it will this help Microsoft / MSN. Here are some reasons I could think as to why Microsoft would want to buy Yahoo..
  1. Customer base / Traffic: This seems to be most plausible reason. Yahoo attracts more traffic than MSN and Microsoft might want to buy that. But then assimilating overlapping set of customer base very different technologies would be a very challenging task.
  2. Search Technology: Microsoft has been pouring millions to enhance its search engine capability and might be looking at Yahoo to better its search technology. After all, Yahoo is doing better than MSN today in terms of search capabilities.
  3. Middleware Synergy: This is least likely. Microsoft and Yahoo are on two very different technologies (Windows Vs Linux / BSD) and it would be very challenging task to switch the OS and middleware. Even assuming it is doable, what would be the business case for it?
One thing is clear though, Microsoft is having an identify crisis and is trying to figure things out. It started out as an OS company and branched out in to Office suite and Portal business. With the advent of software as service, OS and thick clients are becoming a relic of the past and in a way Microsoft is forced to reinvent itself. Not very long ago, it tried to buy SAP hoping to dominate the application software business and when that failed, Microsoft took software as service seriously and Yahoo might be helping in that journey.

Regardless of what happens to this deal, software industry is in for some big changes and customers are in for some beneficial but exciting ride


  1. Digital world is the umbrella under which Yahoo, Google, Msn, IBM,and several others operate. I believe, if you look at it that way, MSN eye on Yahoo falls under that umbrella. Synergy may not be there in our eyes for MSN to buy Yahoo, but MSN think tanks may have seen some synergy.


  2. I should have sold my Yahoo stock on this rumor. Missed the chance. BTW what's happening with IBM. I'm hearing that IBM is slashing its workforce by 40% in US...

  3. :-) I just enjoy this! Indeed its going to be a lot of fun and excitement in this space. Thanks to these biggies in the software business.
    Fun apart, if you take a closer look into Yahoo's search mechanism, you will look at a Big Blue presence...Yes, its DB2 Omnifind! With this in place, I'd say that if MS settles down to buy Yahoo's search , it will be a feather-in-the-cap for the Big Blue (this is less likely to happen).
    And, for MS to buy out Yahoo...hmm...quiet not sure of the suitable business case - Search? Customer base?...lets wait and watch the fun!

  4. Yes, technology wise there synergies are limited !! I guess the greatest synergy comes from another player called Google !

    Both MS and yahoo are up against a formidable player ! And, perhaps, they figured that the best way to beat Google would be to merge !

  5. Microsoft has no identity crisis. OS and thick clients becoming a relic of the past?

    1. Silverlight will change everything. The adwords drunkards at google have not realised that the uture is not the cloud but a combo. ajax will look lika a relic, give silverlight 3-4 developer months.

    2. Yahoo is NOT doing better than MSN in terms of Search CAPABILITIES. it is doing better in terms of market share. think abt this: google is NOT the best search engine. only, ppl have LEARNT how to type in the right keywords into google so they get the right results. ?? think abt this again, and u will agree.