I can't say that I was startled when I heard that Microsoft had put in a bid for Yahoo. It makes perfect sense to me given the tremendous momentum behind Google. As I wrote last week about the Google Sneak Attack, it is clear that Google is both a media company and a company that is setting down a software foundation that challenges Microsoft in the market.

In Microsoft's official press release, the focus of the proposed acquisition was advertising revenue. Advertising has indeed been the engine that has propelled Google to its current position and has enabled the company to offer intriguing software assets to customers without cost. As I mentioned last week, these assets have the potential to enable Google to create a ubiquitous platform to build upon. Google, which has been quick to buy companies itself, has disappointed Wall Street.

What will it mean for Microsoft assuming that it will be successful in landing Yahoo? I think that it will be a challenge for Microsoft to integrate Yahoo into its organization as it stands today. Typically, Microsoft has purchased small focused software assets that neatly fit into their overall platform. Yahoo is different. There are overlapping infrastructures that will have to be rationalized. What about the software services that Yahoo offers? Will they be integrated into Microsoft Live? Will Microsoft work to build a strong link between Yahoo online services to its on premise office software? I suspect that Microsoft will have to move slowly in integrating Yahoo into the company. One does not swallow an elephant in one swallow (without choking...).

Robin Bloor, one of my business partners who writes a very popular blog, plans to write extensively about this new development. We have had some fun discussions about the technology infrastructure that will differentiate these two industry giants. So, Robin, Let's hear what you have to say!