Still, there are big questions hanging over this deal. Will consumer and enterprise Web businesses ultimately be synergistic, or will they end up being completely (or mostly) separate? Microsoft has "committed" to the consumer world through MSN and Xbox (not to mention Office and XP), but its still unclear if consumer products are really Microsoft’s best prospects, given its massive enterprise market share and standout products like SQL Server 5 and Sharepoint.
If the consumer/enterprise convergence trend accelerates, a Microsoft/Yahoo deal right now would be brilliant in hindsight. But if having a strong consumer Web capability ultimately adds little value to enterprise customers, and vice versa, Microsoft might be better off making its leap into the Web big-leagues through a Salesforce.com acquisition, for example. And Yahoo might do better with a large media or communications parent, like a Verizon, Comcast or (gulp) Time Warner.
The next question centers on customers: would they view a Microsoft/Yahoo deal as a distraction for both companies, or as an accelerator for most robust competition not just to Google, but to Oracle, IBM and SAP?
And finally, there’s the people question. When Terry Semel took the reins at Yahoo in 2001, most of the top talent were 20-something Web entrepreneurs. Semel added a heap of traditional entertainment and media folks from places like Readers Digest, CNET, print publishing and the big Hollywood studios. None of these folks ever had a lot of love for Microsoft, by the way.
Now throw into that mix Microsoft’s 40-something techie/product manager army, and who’ll come out on top and after what kind of carnage? It’s anybody’s guess.
One final thought. With the exception of small tactical acquisitions along the way (Great Plains, Groove Networks, Hotmail, etc), Microsoft has grown organically into what it is today: the largest technology company on earth by market value and the most profitable by a mile.
Yahoo, by contrast, would be nowhere if not for it’s big acquisitions (Four11, eGroups, Geocities, HotJobs, Overture, etc). Maybe a Microsoft buyout is just the last, logical stop on a long M&A tour for Yahoo co-founders David Filo and Yang.
So let the negotiations begin… and lets hope the result is something Yahoo!ing about, for both enterprise customers and consumers.