In the not so distant past I would always be pumped when Microsoft won a victory, made a big acquisition, or crushed an opponent. The reason for this is that I used to believe (for good reason) that Microsoft was the only company that was capable of moving us out of the dark ages of computing. They did in fact do just that and for the most part, they used to have a better product that Apple IMHO. I feel more confident about the future of the Internet considering the following news.

Having said that, I don’t think I’m the only one that thinks Microsoft is now holding back innovation in some ways by running the roost in the OS space, but I don't think they will continue to have a whimsical product. Vista isn’t as bad as some people say, but it’s not fantastic either.

...and Yahoo is worth a lot!

Microsoft's statement in part:

“We continue to believe that our proposed acquisition made sense for Microsoft, Yahoo! and the market as a whole. Our goal in pursuing a combination with Yahoo! was to provide greater choice and innovation in the marketplace and create real value for our respective stockholders and employees,” said Steve Ballmer, chief executive officer of Microsoft.

Without executing past bundling type activities, I don’t see how this is economically possible.

Yahoo! Issues Statement in Response to Microsoft

SUNNYVALE, Calif., May 03, 2008 (BUSINESS WIRE) -- Roy Bostock, Chairman of Yahoo! Inc. (Nasdaq:YHOO), a leading global Internet company issued the following statement today in response to Microsoft Corporation's announcement that it has withdrawn its proposal to acquire Yahoo!:

"We remain focused on maximizing shareholder value and pursuing strategic opportunities that position Yahoo! for success and leadership in its markets. From the beginning of this process, our independent board and our management have been steadfast in our belief that Microsoft's offer undervalued the company and we are pleased that so many of our shareholders joined us in expressing that view. Yahoo! is profitable, growing, and executing well on its strategic plan to capture the large opportunities in the relatively young online advertising market. Our solid results for the first quarter of 2008 and increased full year 2008 operating cash flow outlook reflect the progress the company is making. Today, Yahoo! has:

-- a refined strategic focus to drive enhanced volume and yield;

-- reorganized to focus its efforts on its most promising products and services;

-- invested in innovations designed to revolutionize display advertising and facilitate closing the competitive gap in search; and

-- enhanced expense and resource management to support improved profitability."

Jerry Yang, co-founder and chief executive officer, Yahoo! Inc. added, "I am incredibly proud of the way our team has come together over the last three months. This process has underscored our unique and valuable strategic position. With the distraction of Microsoft's unsolicited proposal now behind us, we will be able to focus all of our energies on executing the most important transition in our history so that we can maximize our potential to the benefit of our shareholders, employees, partners and users."

According to a recent Millwardbrown study (PDF), Yahoo!’s brand name alone is worth over 13.2 billion. Take into consideration that the OS spaces is becoming less important, the mobile channel is becoming more lucrative, the technology sector is becoming more lucrative & advertising is going to grow into a trillion dollar industry and you can figure out why Yahoo! shareholders will be more rich if they hold onto their cash for the next 3 years than if they got attached to Microsoft. I don’t know how many people left Yahoo as a result, or how bad the poison pills taken by Yahoo have hurt the company if any, but if anything, they took my advice and opened the source to more of their products. This is great in an age of crowd sourcing.

Yahoo!, more than any other company contains user sweat & blood created semantic goodness. As we spend a great deal of time uploading our correctly tagged photos, events, and other great things. Yahoo provides an excellent way of interacting with that data in exchange for user karma. If Microsoft purchased Yahoo, it might have made Windows better, but it would have held back the other two operating systems from competing squarely perhaps and Microsoft’s efforts to provide a premium to shareholders would have to have come at the consumer’s expense.

Everyone knows that you cannot concentrate on the consumer and corporations concurrently. Your products reflect what you are doing. Microsoft wanted all of that semantic data for new emerging types of business intelligence farming to ramp up its CRM products as well as a host of other corporate products. This makes my participation in Web 2.0 feel more like I just got tricked into spending thousands of hours of my time to make billionaires richer.

When Facebook’s beacon was greeted with a wave of criticism, the company quietly changed its tactics. Instead of the program harvesting user data directly, a slew of spam “apps” were created that spread like the virus on my dad’s Vista box (not kidding) and there is so much data about people that it’s practically becoming free. It’s times like these when I’m glad that companies like Chi.mp are just around the corner. Users need to be behind the steering wheel of their own data, they need to know where it goes, what it’s being used for and how. Yahoo holds more semantic data about users and what they like that even the mighty Facebook. I’m glad Yang didn’t get yanked into becoming the next Zuckyerdataborg.

I think most of us have a special place in our hearts for Microsoft--that spot in your heart right next to hope. I do think we can respect what they have done for computing. I also understand that Windows is not a consumer OS any longer, and as I’ve said before Microsoft never said a word about how this combination was going to help either the consumer or the shareholder, not to mention how the heck on earth it could end up benefiting both at the same time.

Parenthetically, I think Microsoft has become the poster child for what’s wrong with our country lately. No transparency and no real focus on us everyday people. Each move they make is a move which will help the shareholders and their partners in the long run. As a friend of mine told me, Microsoft is a great competitor, but they don’t play the game of chess, they play the game of Go, and that makes a world of difference.