Blogosphere: The Microsoft-Yahoo bid dissected

Microsoft Corp.’s $44.6 billion offer to buy Yahoo! Inc. to leverage its presence in the online advertising space got bloggers ruminating on the state of the software mogul’s business — and its potential to succeed.

Charlene Li, a Forrester Research analyst said in her blog: “After all, why would Microsoft want to ante up $38 billion for Yahoo!? For one reason (and it isn’t simply Google). It’s Windows, or rather, the declining importance of the operating system as it gets relegated to the background…To survive going forward, Microsoft needs to have a robust online strategy and just doesn’t cut it.”

Another blogger, Jessica Dolcourt, wrote on CNET blogs that Microsoft’s troubles are due to the harsh battleground that is the office productivity arena: “To many, the buyout offer signals Microsoft’s continuing woes in a playing field now dominated by freeware competitors and other rivals that have done Microsoft’s end-user businesses longer or better.”

Scott Karp blames Microsoft’s lack of a distributive model. “Microsoft and Yahoo rely on software lock-ins (Windows, Office, IM clients, web mail) to maintain their user bases — but without distributing any of that value to the network or harnessing the value that the network would give back if they did. As such, they do not benefit from network effects, which is precisely what powers Google — and why Google will likely still beat a combined Microsoft/Yahoo.”

George P. Alexander Jr. wrote that, despite the setbacks, Microsoft is attempting a comeback with a fresh twist: “Microsoft is back in game with a vengeance and wow, they’ve even got roadmap to grab the Internet back from Google and Yahoo in a few years time with a plan to integrate all their products and provide a services structure via the Internet similar to the way all its products are integrated on the desktop.”

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