Is the rumored Microsoft/Yahoo deal about search and online advertising or something more? If you own Microsoft stock, you better hope it’s more because a $50 billion price tag on Yahoo does not forebode ROI for quite some time.
Microsoft still leads the way in business software, from their hugely popular operating systems and office product lines, but change may be on the horizon. More and more, in the Web 2.0 world, organizations are leaning towards online processes for business development, and arch-rival Google is positioning to fill this void. Through shared application and collaboration services like SharePoint (a Microsoft product), businesses are exploring more ways to migrate from PC-based (stand-alone) to inter/intra-net-based mechanisms for work product development. Companies are also “searching” for ways to increase productivity with business products through cost-effective means.
Personally, I am a huge fan of Office 2007, both as a shared application and stand-alone, but the price is steep ($559 for an upgrade to Office 2007 Ultimate and $800 for the full version). Microsoft must find ways to create and develop profit margins in this unit as it expands with the Office-Live initiative without passing the bill directly to the consumer. If Microsoft cannot adapt to more effective price models, they risk losing their “Golden Egg” to Google. One speculative possibility for these "alternative" profit-making measures is through targeted online advertising, of which Yahoo is the "second-most" authority in the world. Their assistance in this effort might very well be the answer and the rationale for spending the $50B.
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