YAHOO FROM PAGE 9 new, adjacent markets.” customers in more than 11 million
its freshly tucked-in aQuantive ad The suggestion is that Microsoft mailboxes. This is apittance compared
network with Yahoo’s network, which could add controls to Yahoo’s various with the millions of corporations teth-includes the Right Media assets that user communities in Flickr, Del.icio. ered to some flavor of Outlook, but
Yahoo absorbed last year. us, Yahoo Mail and others. However, Microsoft would need to decide whether
“Acquisitions are messy, ranging it’s unclear what such controls might Zimbra’s software would stay.
from trying to consolidate advertisers do for Microsoft. Web mail and IM What is more murky is what
on one platform to figuring out what to are free and, unlike search, do not Microsoft’s position in cloud com-do about competing brands like Yahoo, provide the same opportunities for puting—or Web-based computing
MSN.com, and Windows Live,” infrastructure and applica-Forrester Research analyst Char- tions—would be. Microsoft’s
lene Li wrote in her blog Feb. 1. software-plus-service strategy
Other analysts warned that has not borne the fruit the com-any misstep by Microsoft in pany hoped, while Google and
integrating Yahoo could help Salesforce.com have pushed
its rivals. Given that the online forward in the space.
ad business requires significant Microsoft CEO Steve Ball-levels of account service, “even mer told financial analysts
the perception of a diversion Feb. 4 the company is not
could wind up delivering busi- simply a desktop software
ness to their competitors,” said maker but can leverage its suc-Gartner analyst Andrew Frank. cess on the desktop to enable
“We could see a scenario by access through the cloud to
which Google would actually Windows, Office and all soft-gain more market share due ware Microsoft makes. “We
to industry uncertainty over With the bid for Yahoo, Microsoft wants to offer better are going to have to innovate
the integration of the deal,” access to software via the Internet, Ballmer said. like crazy to get the position
Citigroup Investment Research ana- online ad revenues, analysts said. that we want to have in this market,”
lyst Mark Mahaney wrote in a Feb. However, Forrester’s Li said that Ballmer said.
1 note. should Microsoft leverage its invest- Can adding Yahoo’s engineering
Combining Yahoo Mail with Win- ment in Facebook—or even buy the talent and data centers help bolster
dows Live Hotmail would enable Micro- social networking vendor—the com- the would-be acquirer’s position ver-
softtoclaim426million Webmailusers, pany would be better positioned to sus Google? Forrester analysts Rob
compared with Google’s 90 million court its Web mail users, possibly Koplowitz and Kyle McNabb said as
Gmail users; a Microsoft-Yahoo com- with ads. much in a blog post Feb. 1.
pany would boast a combined instant Microsoft must also figure out what “Yahoo has massive data centers
messaging audience of 298 million, or to do with Yahoo’s Zimbra messaging that are extremely efficient,” Koplow-roughly 77 percent of the IM audience and collaboration software, an open- itz and McNabb wrote. “Microsoft is
worldwide, ComScore estimates. source suite aimed at the lion’s share in the process of building out mul-
In opposing the deal, Google Chief of Microsoft Office and SharePoint tiple massive data centers, but the
Counsel David Drummond said add- users. To be sure, the Yahoo busi- additional capacity and expertise that
ing Yahoo would give Microsoft too ness unit’s latest collaboration suite, Yahoo brings to the table will be wel-many IM and Web mail accounts, unveiled Feb. 5, includes e-mail, con- come assets in developing a long term
allowing Microsoft to create a PC tacts, calendar and task synchroniza- software-plus-services strategy.”
software monopoly that would keep tion from Zimbra to Outlook 2007. Analysts said the union with Yahoo
consumers from accessing competi- Would Microsoft offer these over- would make Microsoft a stronger rival
tors’ services. “Microsoft’s hostile bid lapping products alongside Office and to Google in search, a formidable foe in
for Yahoo raises troubling questions,” SharePoint tools, preserving Zimbra’s online advertising and a viable competi-Drummond said in a written state- open-source architecture? John Robb, tor with strong resources to create a vast
ment. “Microsofthasfrequentlysought vicepresidentofmarketingandproduct cloud-computing network. However,
to establish proprietary monopolies— management for Yahoo’s Zimbra unit, such assumptions are speculative: They
and then leverage its dominance into said Zimbra has some 20,000 paying assume Yahoo, [CON TINUED ON PAGE 12]
