And again — Microhoo…

Well, here we are again. People are coming off of their All Things Digital high and in their euphoria continue to feel that a merger between Microsoft and Yahoo is in order. I’m not generally Mr. Naysayer, but I still feel it’s not a completely great idea.

Everyone’s rationale for Microsoft acquiring Yahoo is that Microsoft can compete better with Google if it owns Yahoo. People are, in particular, worried about search. Riddle me this. Why does Microsoft NEED (not want — NEED) to compete with Google on search ad revenue? Is the death of desktop Windows so eminent that Microsoft doesn’t have time to update the OS for other devices? Is all of their Office revenue drying up because Google Docs has been adopted by enterprises across the land? Or perhaps, Ruby on Rails has put such a dent in the ASP.NET ecosystem that CTOs have issued edicts that those who buy Visual Studio products and SQL Server will be cast out into the streets and eaten by rabid dogs. The thing is that I haven’t heard about any of that happening.

What I have heard is that Microsoft, a software company, has 9% of the search advertising market. Oracle, on the other hand, has 0%. The same thing goes for SAP — 0%. I’m guessing those companies realize that search advertising doesn’t fall into their set of core competencies. Truth be told, while it generates a good bit of cash from it, search isn’t Yahoo’s core competency either — which is why it’s a distant 2nd to Google.

As I see it, there are better options for Microsoft. If it wants to own the online space, it needs to focus on innovation and not just evolution (which it does really well). There are companies with technologies that will allow Microsoft to position themselves 3-5 years out ahead of where everyone will be when the Internet really becomes ubiquitous and our lives are driven by it (it may feel like it already, but not not hardly). Additionally, all of that ubiquitous Internet is going to require infrastructure on which runs — you guessed it — software. For Microsoft, it’s the software stupid. Where and how software runs may change, but we’ll always need it and some things just won’t be able to go open source because of the need for trust and accountability. There are other things and I would imagine that there are people far smarter than me that can detail those.

For me, once Microsoft is successful at getting Yahoo, they’ll find it a bit anti-climatic. It’s an idea lots of people believe makes sense, but once all is said and done will prove to be beneficial only to Yahoo’s shareholders. Thankfully for Microsoft, there are lots of important Yahoo shareholders who will push to ensure that it gets its way. Goodbye, Yahoo…