Microsoft Faces Online Services Challenge Without Yahoo

 
 
By Clint Boulton  |  Posted 2008-05-05 Email Print this article Print
 
 
 
 
 
 
 


While many experts rightly point to the fact that acquiring Yahoo would help Microsoft narrow the gap between itself and Google in search and online advertising, perhaps the more significant assets Yahoo boasts are its online services, flexible open-source architecture and data center infrastructure.

Were Microsoft to acquire Yahoo, it would be better positioned to challenge Google in the cloud computing market. Without Yahoo, Microsoft must build its cloud strategy organically. On top of that, the company would have to provide backward compatibility between its legacy Windows and .Net architectures and the more distributed cloud services architecture.

"In order for them to be competitive, they're probably going have to embrace Linux, PHP, Apache Web servers and more, [such as] Hadoop, where it's [a] similar approach to the supercomputing approach on the grid," Gardner said. "That's going to be a long haul because Microsoft has not designed its technology for that. It's designed its technology for department-level servers and PCs."

Ultimately, Microsoft will need to be on the short list of the best providers of cloud-based services in the next five years, Gardner said. This won't happen overnight and Google will continue to execute and innovate, doubling Microsoft's challenge.

Meanwhile, the world can look to Wall Street for an idea of what financial analysts think the failed deal means for Google.

While Yahoo's shares plummeted almost $5 on May 5 following Microsoft's official exit from the deal table, Google's own stock ascended nearly $13 on the development, a sign that financial analysts believe Google won a significant victory over Microsoft.

By announcing a test to run its paid search links on Yahoo search April 9, Google essentially came to the Microhoo table with its own poison pill. Did Microsoft want to buy a Yahoo with Google's search terms running on its site?

The answer, resoundingly, was no. Not given the potential to pad Google's war chest and not with the specter of regulatory issues hanging over the Google-Yahoo outsourcing pact.

Now the industry waits to see if Google and Yahoo will make the test an actuality, bringing new sales to Yahoo and more Web real estate and cash for Google-served ads. Google did not respond with comment, but the common belief is that the deal could go through as early as the week of May 5.



 
 
 
 
 
 
 
 
 
 
 

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