Experts chime in on aspects of Microsoft/Yahoo deal

Microsoft's $44.6 billion offer to buy Yahoo has analyst tongues wagging, here is a sample of what they are saying:

The Deal

"Over the past year both Microsoft and Yahoo have lost share in the U.S. search market, while Google increased its dominance of the market. Google's U.S. Internet search market share increases from 51.7% in fourth quarter 2006 to 58.4% during fouth quarter 2007, while Yahoo declined from 27.6% to 22.9%, and Microsoft's share fell from 10.4% to 9.8% according to comScore. Google is already well on its way to monopolizing the Internet search market, and a combination of Microsoft and Yahoo may be the only way to present a serious challenge to Google in the Internet search market."

-- Allan Krans, Technology Business Research analyst

"The addition of Microsoft engineering capability into Yahoo should allow the combined entity to bring new products and services to market more quickly, something that Yahoo has notably struggled with. Meanwhile, the online engineering capabilities that Yahoo has will undoubtedly offer Microsoft the potential to bring new services to market, which counter-mines against the undermining efforts that Google is pushing forward."

-- David Mitchell, Ovum senior vice president of IT research

"Perhaps this time government regulators ought to consider just saying no. Unlikely, perhaps - at least here in U.S.A., Inc. - but it's difficult to understand what the concept of antitrust means anymore if the world's most powerful technology company is allowed to buy its No. 1 competitor's No. 1 competitor. ... While Yahoo stockholders will likely be popping champagne corks this morning, the rest of us ought to be taking a considerably more sober approach to the deal and its implications ... this just can't be good for competition, consumers or the Internet."Network World Buzzblog

--Paul McNamara,

"This is the single largest deal that Microsoft has ever done and although they are capable of funding this deal, this is still a big chunk even for Microsoft. ... At the end of (Microsoft's letter to the board of Yahoo) there is a phrase that basically states that they are prepared to make the deal hostile (meaning without board support) ... On the regulatory issue, they are confident this will be accepted. They will argue that Google is in such a dominant position in search that their combination will not consolidate market power. They will also argue that the Windows monopoly has made no difference in the creation of this market and they would be true to a point."Network World blogger 

-- Greg Royal,

"Microsoft and Yahoo make a powerful pair to compete with Google, whose search engine dominance is becoming increasingly 'evil.' Complaints abound as to exactly how Google ranks its search results -- and even how it ranks the placement of its keyword-sensitive ads. This merger, should it go through, will make it a lot more likely that the EU will give the OK to the Google/DoubleClick marriage.Network World's Micronet

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Search

"Microsoft's long-standing interest in search -- and obsession with Google's dominance in it -- is the foundation for the acquisition. But we think that it's much more than that. Microsoft is interested in search because it provides a beachhead into businesses -- especially small and midsize ones who don't have a direct relationship with Microsoft. That's Google's real threat -- the ability to leverage today's search relationship into Google Domains and eventually, software as a service that could undermine Microsoft's long-term position. To that end, Microsoft is buying significant share with Yahoo, not only from search users, but also search advertisers and other relationships via Yahoo Store." Forrester analyst

Charlene Li,

Collaboration services

"Through Flickr and del.ico.us, Microsoft gains additional assets that help with its community-building and social networking efforts across consumer segments. Also, Microsoft's ability to leverage the install base of people using Yahoo Mail and Yahoo Messenger is also compelling. Yahoo has some brilliant people. While not every idea played out effectively - the creativity of Yahoo's employees (including those over at Zimbra) are clearly additive to where Microsoft wants to go concerning social media, collaboration, etc." Burton Group analyst

Mike Gotta,

"I think this deal has a lot to do with rich Internet applications (RIA). If Google Gears gets out of beta and works as advertised, then why do consumers need to buy desktop applications? They'll have RIAs that can go offline. And worse, if consumers rapidly adopt this for personal use it is only a short step into adopting the technology for business applications. Microsoft has to try something, but MSN doesn't have the consumer eyeballs to take on Google. Yahoo does.

-- Jasmine Noel, Ptak, Noel & Associates analyst

Enterprise

"On the enterprise side, Yahoo has tried and failed to sell enterprise software, so it shouldn't affect that side of Microsoft's business, with two possible exceptions. Firstly, Microsoft will have to decide what to do with Zimbra; our guess is that it will let it whither and die, rather than spin it off and leave it as a threat to Exchange. Secondly, it will potentially have an effect on Microsoft's still-nascent move into line productivity apps. Note that Webmail aside, Yahoo hasn't tried to get into this business."

-- Nick Patience, 451 Group managing analyst

"There are some hidden gems in Yahoo that will impact enterprise IT environments." Among them: Yahoo's massively efficient data centers that would enable Redmond's cloud computing aspirations.Rob Koplowitz, Forrester analyst

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