Business/E-Business
Commentary
2/1/2008
08:04 PM
Fredric Paul
Fredric Paul
Commentary
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What "Microhoo" means for Smaller Companies

Should small and midsize companies fear a Microsoft takeover of Yahoo? Or welcome it? That depends on how you feel about Google. And how the deal plays out.

Should small and midsize companies fear a Microsoft takeover of Yahoo? Or welcome it? That depends on how you feel about Google. And how the deal plays out.The arguements over the merits of Microsoft's proposal to buy Yahoo are already reaching a fever pitch. But to bMighty, the real issue is whether the deal is good or bad for smaller companies.

I'm going to cop out and say it's too early to know for sure, but don't stop reading. It's not too soon to examine some of the possible implications.

Most observers think the combined company, already being dubbed Microhoo, will be a stronger challenge to Google. And if you think that Google is too powerful for the good of the smaller fish with which it shares the Internet, then a stronger competitor should offer hope -- even if that competitor is Microsoft. One thought from J. Nicholas Hoover at InformationWeek, is that "Yahoo's infrastructure, products, and brainpower could bring significant new energy to Microsoft's emerging 'software plus services' strategy"

On the other hand, combining Microsoft and Yahoo will eliminate one of the top 3 competitors. Google has 58.4 percent share of the U.S. search market, Yahoo 22.9 percent, Microsoft 9.8 percent, per comScore. And there's already a backlash of folks who seem convinced that Yahoo technology is over the hill, and that the company offers Microsoft nothing more than traffic and that Google will race ahead while Microhoo struggles to integrate competing systems and cultures. Of course, a deal this size could prompt Microsoft to change its controlling ways.

CRN, meanwhile, offers both sides of the coin.

Me, I believe in the law of unintended consequences. This deal won't make Microhoo top Google in search any time soon. But Yahoo's vast traffic and Microsoft's enduring desktop strength will pose another kind of challenge for the Googlers in things like email, instant messaging, and social networks. But hey, you ought to get something for 44 freaking BILLION dollars!

Of course, it could all play out completely differently. Todd Bishop at the Seattle PI says Yahoo may end up seeking other partners. Got $50 billion jingling in your pocket?

Wa

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