Microsoft-Yahoo deal: What about developers?
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While observers believe that Microsoft is willing to pay Yahoo $44 billion primarily for its users and advertising base, Microsoft's chief software architect, Ray Ozzie, wants to grow its developer community as well.
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The Yahoo bid is a dramatic statement from Microsoft, a company that delayed acknowledging the importance of emerging Web business models for so long.
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Yahoo! must consider the Microsoft deal on the table.
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In a bid to halt Google's growing dominance online, Microsoft has offered to buy struggling Internet giant Yahoo for $44.6 billion, an acquisition that would unite the world's most influential software company with the Web's most-trafficked site.
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No other buyer will be willing to pay more for Yahoo. Since Yahooâs management will not be able to justify turning down that sort of premium, Microsoft is likely to win the prize.
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Microsoft bid may be catalyst for needed change at Yahoo, but Yang and company are expected to fight it, insiders say.
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Yahoo Inc's board believes Microsoft Corp's unsolicited bid of $44.6 billion to acquire Yahoo "massively undervalues" the company and directors are set to reject the offer, the Wall Street Journal reported on Saturday, citing an unnamed source.
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At first blush, Microsoft's proposed acquisition of Yahoo for $46.6 billion is about growing its consumer advertising and portal business to better compete wit Google. And that's certainly part of the mix, but perhaps lost in the discussion is how such an acquisition could help Microsoft execute its software-plus-services strategy for delivering business apps over the Internet faster and better, said several analysts. That strategy could help Microsoft compete with Google's own business-apps initiative, they said.[ Follow InfoWorld's ongoing coverage of Microsoft's offer to buy Yahoo ]"Yahoo has very efficient datacenters, as does Microsoft," noted Rob Koplowitz, a Forrester Research analyst. By combining their datacenters -- and, more important, their engineering talent -- Microsoft should be able to move faster and more efficiently on delivering business apps over the Internet, something that Microsoft has done at a fairly slow pace so far. "Yahoo's engineers can help," he noted, "And you know that there'll be engineers who are freed up" after the acquisition, should it go through."Although Google Applications have yet to make a real dent in the Microsoft Office giant, they do pose a long-term threat," said David Mitchell, a senior IT researcher at the consultancy Ovum. "As a defense against this position, Microsoft needs to accelerate its own move into online services. The online engineering capabilities that Yahoo has will undoubtedly offer Microsoft the potential to bring new services to market" and will help Microsoft stay competitive.Koplowitz said he does not believe Microsoft is trying to buy specific technology from Yahoo to fill a hole needed to compete against Google's business offerings. Microsoft wants more talent and capacity to follow its existing strategy, he said. Google's approach is to offer pure Web-based apps, which he noted are more mature than Microsoft's Web-delivered apps. Microsoft's approach is to extend its 450 million Office desktop seats through additional software delivered via the Internet. The strategies have some overlap, but because they are different, Koplowitz expects Microsoft and Google to take different technology paths rather than try to copy each other.Microsoft's acquisition of Yahoo would also bolster the company in another area where it has fallen behind Google: search, said Charlene Yi, a Forrester analyst. "Microsoft is interested in search because it provides a beachhead into businesses -- especially small and medium-sized ones that don't have a direct relationship with Microsoft," she said, as businesses typically buy Office software from retailers and resellers. Google is using search to forge those direct relationships and then offer business apps that compete with Microsoft's plans.
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Like many, I was pretty shocked by the recent Microsoft-EU deal to settle the long-running investigation into interoperability issues.  This was not so much because of the way Microsoft has used every kind of delaying tactic it could before eventually agreeing (for the nth time) to try harder in the future.  My real dismay was provoked by the gap between appearance and reality â a chasm that I think bodes ill for the future of open source. read more
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InfoWorld - Microsoft may end up having to raise the amount it is willing to pay for Yahoo if the software company's stock continues to drop while Yahoo's continues to rise.
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InfoWorld - Microsoft has offered to buy Yahoo for $44.6 billion -- but how did a company that started so small come to be worth so much? That's a story that began in the early days of the World Wide Web, when people were struggling to keep track of the new world of multimedia it offered them.
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Keeps financial terms under wraps Microsoft says it is to acquire software developer DesktopStandard for an undisclosed sum.â¦
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Whether Microsoft intends to take its case to Yahoo shareholders, and maybe raise its offer in so doing, remains well within the company's rights. Nonetheless, Bill Gates said, at the very least, that a price hike wasn't necessary.
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Microsoft has offered to buy Yahoo for around $44.6 billion in cash and shares, to better compete with Google in the market for online services.The market for online advertising is increasingly dominated by one player, Microsoft said, and merging with Yahoo will allow it to offer a competitive alternative.Microsoft expects the market for online advertising to almost double in size over the next three years, from $40 billion in 2007 to $80 billion by 2010. A merger will allow it to realize economies of scale and reduce capital costs as it addresses this market, it said.&quot;The combination of these two great teams would enable us to jointly deliver a broad range of new experiences to our customers that neither of us would have achieved on our own,&quot; said Ray Ozzie, chief software architect at Microsoft, in a statement.Microsoft expects to cut costs by $1 billion a year by realizing synergies with Yahoo in four areas: obtaining economies of scale as its audience increases; combining its research and development efforts with Yahoo&#39;s to innovate faster; eliminating operational redundancy to cut costs, and pooling expertise to innovate in video and mobile.The companies will work together to develop the merger plan, Microsoft said.It intends to pay key Yahoo engineers and other staff to stay following the merger.The offer represents a 62 percent premium over Yahoo&#39;s closing price on Thursday. Microsoft expects to receive all necessary approvals in the second half of this year.
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Is Microsoft's offer too low, too high, or just right?
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Microsoft&#39;s $44.6 billion offer to purchase Yahoo&#160;is a dramatic statement from a company that delayed acknowledging the importance of emerging Web business models for so long, it faced becoming an also-ran in the Web 2.0 economy.But the cultural implications of the move are so tricky that the deal could end up backfiring for both vendors if Microsoft doesn&#39;t take care to learn from its past and use Yahoo to transform its business and&#160;not just help bolster its unproven efforts in online advertising and hosted services.The unprecedented deal, which would put a sizable dent in Microsoft&#39;s wallet, would be the largest purchase ever for the company. If Microsoft is willing to spend that much money, it also has to be willing to change some old ways of thinking to make the most out of the investment, analysts say.To achieve this, analysts caution Microsoft to be careful not to view Yahoo as a one-trick pony, taken onboard only for its user base and infrastructure to bolster Microsoft&#39;s online advertising interests against Google. While this is certainly the primary reason for the deal, to make the most of it, Microsoft has to not only respect the strength of Yahoo&#39;s brand but also be willing to let go of some of its own traditional proprietary interests -- not just on the product side but in its culture as well.Microsoft has never been one to let go of its vision or proprietary interests too easily; when acquiring companies, it usually subsumes the products and services and brands them as its own.While this has worked in the past because Microsoft traditionally has shied away from acquiring big-name or big-ticket items --&#160;last year&#39;s $6 billion aQuantive deal&#160;was a notable exception -- it&#39;s not as simple to do this with a company like Yahoo, analysts said.In the areas of online search and particular services and as an online destination for users, Yahoo is a stronger brand than Microsoft. Microsoft must recognize this and be willing to give up some of its interest in new content and services branded, respectively, under MSN and Windows Live to make the deal successful, said Ned May, director and lead analyst for market research firm Outsell.&quot;The big question is, will Microsoft take this and recognize it for being a stronger property and migrate its efforts there, or will it try to push its own efforts out through Yahoo?&quot; he asked. &quot;Historically, there&#39;s no precedent for it to do anything but use [an acquired company] to get Microsoft&#39;s message out.&quot;Though Microsoft and Yahoo are different types of companies and the union itself makes much more sense, Ron Schmelzer, analyst and managing partner with Zapthink, likened the deal to Time Warner-AOL, in which AOL&#39;s brand was damaged, not enhanced, after all was said and done.But investing as much as the gross domestic product of some countries in one company could inspire Microsoft to &quot;change its stripes&quot; and rethink its own interests, he said.To make the deal a true success, Microsoft also has to prove that it can let go of its entrenched Windows OS and desktop software culture, which had been the anchor keeping Microsoft from moving more quickly against Google and Yahoo in online advertising and services in the first place, Schmelzer said.&quot;The application itself is moving away from the thing that sits captive on your desktop to the thing that&#39;s distributed on the Internet,&quot; he said. &quot;Microsoft has to rid itself of its &#39;80s and &#39;90s perspective -- which was great in the &#39;80s and &#39;90s, but now 80 percent of the value of the computer is not in the computer itself.&quot;Microsoft had been moving in this direction before Friday&#39;s news, but it has been burdened by its need to keep the customers of two of its biggest consumer products -- Windows and Office -- happy, as well as its enormous portfolio of enterprise and business customers. Instead of moving full bore into the Web, Microsoft had adopted a &quot;software plus services&quot; strategy as a nod to its software legacy and inability to move fully to a more services-oriented strategy because of it.Still, some think an entire cultural shift isn&#39;t necessary for Microsoft to make the most out of the deal. David Mitchell Smith, vice president and fellow at Gartner, said Microsoft can leverage Yahoo successfully without changing its usual way of doing things, by keeping the brand and merging the best parts of Yahoo&#39;s Internet business, such as its online content, advertising and search, with its online services efforts.&quot;I would expect to see the Yahoo brand come out of this very, very strong,&quot; he said. In particular, Microsoft has been making moves to drive more video and other multimedia content online through MSN, and that is one area where the company could give up its own identity in favor of Yahoo&#39;s, Smith said.Andrew Brust, chief, new technology for consulting firm twentysix New York, said that the combination of Microsoft&#39;s existing Web technology and the Yahoo brand would be &quot;nicely complementary,&quot; though he acknowledged the risks of such a union. Even so, &quot;risk aversion is not a good Internet strategy,&quot; Brust said. Taking a risk in this area as well as bringing &quot;some truly Internet-focused mindset into the corporate culture&quot; may be just what Microsoft needs.Others likened the deal to another risky one, HP-Compaq, which many feared would be a disaster because of product overlap and cultural differences. That deal eventually proved successful.However, it&#39;s important to keep in mind how much more of a role that culture and the cool factor plays on the Internet than it does in the world of traditional computer hardware, warned Outsell&#39;s May. He said Yahoo users may be put off by the notion of Microsoft as their new daddy and see Google as the lesser of two evils, which would defeat the notion of the Microsoft-Yahoo union in the first place.
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By MICHAEL LIEDTKE  SAN FRANCISCO - It's not the blockbuster that some industry analysts envisioned, but Yahoo Inc. has sealed its first deal under new Chief Executive Jerry Yang.