Tuesday, 20 May 2008

Microsoft and Yahoo

So the Microsoft/Yahoo talks are on again. Can I commend you to read Lex in the FT today - Microsoft and Yahoo as it contains much sense (Holwayese for "I agree with")

Firstly, it makes the point, which too few observers seem to understand, that Microsoft's main threat comes in Google (and others) challenge to its core Windows and Office franchises. Where Google has a "runaway lead in internet-based computing". Personally I am less sure that a linkup with Yahoo (however contructed) does as much to help Microsoft in that area as Lex suggests.

Secondly, Lex says "the latest idea - of Microsoft buying only Yahoo's search business - sounds unworkable." I agree.

I have never been in favour of this deal. However, if it had to happen then clearly a friendly and positive deal is much to be preferred. A hostile deal, only consummated after Carl Icahn has forced Yahoo to take the momey, would be the very worst start. A bit like a "Shotgun marriage". So as Lex says "much now depends whether Mr Ballmer and Yahoo's CEO, Jerry Yang, can swallow their pride and make it happen".

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