If Microsoft buys Yahoo: What happens?

The web was ablaze (still is) yesterday with news about Microsoft’s latest unsolicited offer to buy web portal giant Yahoo! for a whopping $44.6 billion in cash and shares. According to BBC News, the offer, contained in a letter to Yahoo’s board, is 62% above Yahoo’s closing share price on Thursday.

I am not entirely surprised or moved by this news. After all, this is not the first time Microsoft has offered to buy out Yahoo but the owners of Yahoo had always turned down the overtures. The essence of this blog post however, is to highlight some of the possible changes that would take place if indeed this take-over bid becomes a reality any time soon. Some of the points are mine, others from blogs and news websites.

A little perspective here though. No question – a merger of Microsoft and Yahoo would be huge indeed. The world’s biggest software company merging with the world’s leading web portal. Also, there is no hiding that a merger of the two would bring forth a new company that can compete with Google effectively in terms of ad revenue and search offerings.

Free Services
Analysts expect the combined companies to preserve many of their separate free services, like instant-messaging and e-mail programs. It wouldn’t exactly be a smart idea to merge Yahoo! Mail and Windows Live Mail (Hotmail); would it? Or merge Yahoo! Messenger platform with that of Windows Live Messenger? Well, that might be feasible/possible – in a long term.

Portals merge (?)
According to reports, Yahoo’s portal and web properties are still making profit while those of Microsoft’s MSN are recording losses. With this, MSN portal is likely to merge into Yahoo more especially because the MSN portal records less traffic than Yahoo and Google.

Web meets Desktop
Now, this is significant. Microsoft’s operating system  Windows is the world’s number one. Over the years, Microsoft has been trying to integrate more of the Internet into its operating system: RSS feeds, search, desktop background, etc. A merger with Yahoo will bring about a better and more effective way to combine the web with your desktop computer with Yahoo bringing its vast web content to your desktop. Look forward to having Internet data such as stock prices, sports scores, local traffic and weather are automatically baked into your PC. Forget about your traditional homepage as you have it today. The widgets on your PC (you know this if you’re using Vista already) will pay a more central role in delivering web content directly to you.

Mobile
Windows Mobile devices would of course integrate more web content and social networking  software just like the points listed for desktops above.

Web office suite
Yahoo’s popularity will be used to improve the stakes of Microsoft’s web office suite. Already, Google Apps has eaten deep into that terrain. A Yahoo branding might just help to bring  Microsoft’s web version of its office suite application software straight to millions of users globally – for a fee of course. Yahoo! Apps somebody?

Decentralized advert hotspots
The web is no longer centralized around web portals. Content is now getting more user-driven – thanks to the army of bloggers around the world as well as the thousands of social networking websites. Advertisers want to reach this millions of web users through these blogs and social networking sites. What better way to do that than through schemes like Google Adsense? Google has got it right already, but Yahoo! Publisher is still in beta and still limited to a US audience. This proposed merger would give the new company more muscles to offer something much better that can effectively compete with Google Adsense (for publishers) and Google Adwords (for advertisers).

One angle I cannot really figure is what happens to Yahoo’s open-source software culture as opposed to Microsoft’s proprietorship.

Do you have any thoughts I have not listed above? Or a better perspective? Do not hesitate: your comments are most welcome.

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