Good for Microsoft - if the merger works

Yahoo purchase puts Microsoft back in the online fight


Big question we should ask about a Microsoft – Yahoo merger is whether or not it will be successful. The IT business, like other sectors is littered with mergers that destroyed, not enhanced shareholder value. After the Time Warner/AOL merger, success should not be assumed.

However if the integration process proceeds – assuming the merger goes through, Microsoft gets substantial benefits from the deal.

It gives Microsoft a real search product and a better webmail client than its existing Hotmail. Microsoft will also now be in the e-commerce shared hosting space. Yahoo hosts many small storefronts.

Yahoo Finance is a very valuable property, as is Flickr, the online photo sharing service.

Zimbra, the open source messaging and collaboration software, acquired by Yahoo last September is likely to be released to the OSS community or spun off. Exchange is, after all, one of Microsoft's crown jewels.

The acquisition puts Microsoft back on the map against a now-vulnerable Google and effectively saves Yahoo from a long decline. The immediate casualties of the move are likely to be those working for MSN/Microsoft Live.

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