Networks Generation

May 6 2008   5:06PM GMT

Thoughts on Microsoft-Yahoo

Cliff Saran Profile: Cliff Saran

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Social networking

David Mitchell, SVP of IT research at consulting firm, Ovum:

“In the short term this will give the Yahoo executives a sense of short-term relief, seeing off the bid without having to enter into a forced relationship with another bidder that would only have been less-bad rather than a good option for the company.”

“What does this mean for Microsoft now? There is some loss of face but it would have been a much greater loss if Microsoft had paid over the odds for Yahoo…Microsoft needs to move on quickly rather than entering any period of mourning over what might have been.”

“For me, one of the most important implications is in the Asian markets. Yahoo would have increased the presence of Microsoft in China and other parts of the rapidly emerging internet markets in Asia. China is the number one Internet user-base globally, ahead of the US in terms of numbers, although not in sheer dollar terms – at least not yet. Microsoft will need to make a number of moves to bolster its operations in these markets. This cannot just be through an increase in the size and scale of existing Microsoft operations in its target countries. Asian acquisitions need to play an urgent role in the new Asian strategy for Microsoft, and China, Japan, and Korea would be fruitful places for the head shoppers at Microsoft.”

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