Microsoft's Yahoo Bid Could Benefit Enterprise Users

By Renee Boucher Ferguson  |  Posted 2008-02-01 Print this article Print

While the deal is clearly aimed at search and online advertising, it is also a shot at Google Apps.

Microsoft's $44.6 billion bid for Yahoo Feb. 1 is clearly a push by Microsoft for a greater share of the online advertising market dominated by Google.

That said there also are implications for enterprise applications users as well. And those too come back to Google.

Microsoft has for some time been trying to make inroads into on-demand computing for business users, first with its Office Live initiative-essentially a set of online services for small businesses-and most recently with its Dynamics CRM 4.0 release in December that provides on-demand, multi-tenant CRM (customer relationship management) software.

While CRM 4.0 is not quite in the same ballpark as Office Live, it's all based on the same concept: computing in the cloud, or in Microsoft's parlance, software-plus-services. What Yahoo brings to the table, through its $350 million Zimbra acquisition in December, is a set of online Office-type applications-e-mail, calendar, documents, VOIP (voice over IP) -that could help Microsoft compete with Google Apps, not only with the applications themselves, but also with the engineering talent.

 "Clearly [Microsoft] stated this deal is about search and advertising and a lot of the dollars are there today, but we have to keep in mind that Google is changing the game around business applications," said Forrester Research analyst Rob Koplowitz. "Yahoo could bring some very interesting assets to Microsoft's software-plus-services [strategy]. It has lots of consumers that could be business users and lots of data center savvy, so there could well be an enterprise part of this deal as well."

Yahoo has 500 million live users that could be, if nothing else, eyeballs looking at a new class of Microsoft online business applications. And the timing couldn't be any better, according to AMR analyst Jim Murphy.

"The reason why it's kind of urgent that Microsoft address this now is the hesitation a lot of companies have now to upgrade to Vista. ... With companies coming out with budgets, Microsoft obviously still wants to strongly motivate people to move forward and they can't let Google get a step forward," Murphy said. "That's the most direct impact on the enterprise."


Submit a Comment

Loading Comments...
Manage your Newsletters: Login   Register My Newsletters

Rocket Fuel