02 February 2008

Microsoft says Yahoo to Google!!

Makes $44.6 billion bid for Yahoo!

The much rumoured acquisition has finally seen day light.The bid, which would consist of cash and Microsoft stock, values Yahoo shares at $31 a share, a 62% premium on Thursdays closing price.All eyes focus on Yahoo! now and whether they'll accept this one or not.

A clear move to consolidate and take over the Google challenge, this deal might give a shot in the arm to Microsoft's ailing search and online services. This is how the three giants stack up:

The interesting point here is that both Yahoo and Microsoft offer the same bouquet of services online.What can be the future of these services?
1)Yahoo ID vs Live ID
- These two IDs may be merged.Providing Common client for IM service.Not sure what they will do with the e-mail part.
2)Yahoo Search vs Live search
- I've never been impressed by the Yahoo search engine, so there might be a case of Microsoft Live taking over.
3)Maps:Microsoft maps being a less used service will be promoted over Yahoo maps.
Yahoo Search Marketing vs Microsoft AdCenter:
Many believe that this is what the deal is for.Microsoft takes Google Head On in this one, with an eye on the soaring AD revenues online.
Microsoft has already made its intentions clear with deals with Facebook and Digg for its ads. I guess Microsoft AdCenter will become the platform for the combined company.

Other than this, Yahoo's Flickr, Yahoo Answers and the social bookmarking site De.licio.us will also be huge pluses for Microsoft, specially Flickr, where it competes directly with Google's Picasa.

How about Branding??
This is one puzzle which they will have to sort out.They don't want to 'Microsoftise' evrything and loose Yahoo's loyal user base, which would be more than glad to move to Google.They would have to be extremely careful on how to Brand the Popular services like e-mail, IM etc.They might just decide to leave things untouched, which might not be a bad idea at all!!

Why Microsoft is so keen on the Yahoo deal?
Microsoft's online arm is posting huge operating losses.Until now running its online business at a loss was no big deal for Microsoft as it was carving out fat margins in its software stronghold.But things are changing now.With everyone from Google, Sun and Adobe,fighting to bring desktop applications online, Microsoft's premium operating system and bundled products may lose their sheen in the near future.

- Google is clearly the search leader today with roughly 55% audience.The combination 'Microhoo' adds up to within competing range, with a lookout on eating into Google's bread and butter.

- A Yahoo is anyday more popular in countries like India vis a vis Microsoft leading to a back door entry in such emerging markets.

What happens to the employees?
Hmmm...Yahooians better have their fingers crossed, because the merger creates a lot of similar workforce with varying cultures.Yahoo had already outcried for a lay off.There might be layoffs on certain sectors, but no body has commented on this.

All in all, i guess the time is right for Microsoft to come on strong. With Bill Gates retiring this year and the pressure on Steve Ballmer to take Microsoft to the next level, and with Google refusing to budge, this was inevitable.Users have nothing to complain though, as this fierce competition will see better services and applications in the future.

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