Yahoo!'s board of directors is to meet today to decide the fate of the company. There is a lack of an alternative suitor since the only viable one, Softbank, bailed out today. Microsoft CEO Steve Ballmer said in Business Week that the Yahoo! brand will "live on" which means the death of MSN and possible the Live! brand as well.
Yahoo!'s only other option is a deal with Google and try to stay independent. They would have outsource the search and ad functionality to Google and shut down that operation, laying off thousands (some estimates are 33% or more of the company) and focusing on the portal/content side of the business.
AOL did that. It did not work out well for them, they lost drastic market share and have never recovered. If Yahoo! did the same and lost market share, then they would be ceding eyeballs to Google.
My gut tells me that Yahoo! is not going to make the same mistake twice. It is Yahoo! that put Google on the map. Yahoo! outsourced their search to Google in the early days of Google and Google eventually took all the market share away. Why would all those smart people make the same mistake twice? My gut tells me that Ballmer has assured them of independence and they will swallow their pride and take the deal.
As a Microsoft watcher, I am excited about the deal. Here is my message to Microsoft: Don't mess this up! The whole world is watching. Microsoft is the "evil empire" in Silicon Valley. Everyone hates Microsoft there. If Microsoft handles Yahoo! right it is a historic opportunity for Microsoft to win the hearts and minds of the Valley. If they mess up the brand (think of this: Microsoft Yahoo! MSN Live! Messenger for Workgroups Professional Edition 2008 Service Pack 2a) and come in all arrogant and have tremendous layoffs, then why bother? If Microsoft handles this in a great way and wins over the hearts and minds of Yahoo! employees (who all hate Microsoft) then it is the first step in repositioning itself in the Valley. The new new evil empire in the Valley will be Google.
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The opinions expressed herein are my own personal opinions and do not represent
my employer's view in anyway.