FAQ: What does Microsoft's Yahoo purchase mean?

Microsoft and Yahoo have some serious technology overlap but online advertising and challenging Google are the goals

Is there technology overlap here?

Yes, major overlap on the most strategic technology. Microsoft and Yahoo both have their own search platforms and advertising platforms. Merging those two will take some engineering muscle. Microsoft says one ad platform and one search platform will provide operational savings but also allows engineering teams more time to innovate. The company says the result will be more efficiencies and better value for advertisers and content publishers.

What about other technologies?

There are some synergies and some collisions that will have to be smoothed out. This deal is decidedly about the consumer, but also includes hopes that consumer-based services will some day cross over into the corporate world [think instant messaging]. The issue for Microsoft is not to alienate users of Yahoo services by closing services down or stomping on them. Users can easily defect to Google given the fact most of the services they are using are free and require no more infrastructure than a personal computer. "The assets here are the users, Microsoft has to balance that really carefully," says Mike Gotta, an analyst with the Burton Group.

Microsoft is putting a lot of effort into online services, how does Yahoo help?

In addition to a huge install base, Yahoo would bring Flickr, arguably the most popular photo sharing site, and del.icio.us, for sharing Web site tags. Yahoo also has Pipes, a tool to aggregate and manipulate mashup content, and Mash, a way to connect a user's profile with other people. In addition, Yahoo owns Zimbra, a next generation collaboration suite that has some eye-popping AJAX-based technology. "Behind the firewall, Microsoft may look at del.icio.us because there is no tagging capability in SharePoint right now. And on the Zimbra side, the architecture and user experience is the most modernized collaboration application out there right now. The Exchange team would like to talk to the Zimbra team," Gotta says. "The user experience around Zimbra is so good that the Office and SharePoint teams would benefit from such insight."

What about enterprise search tools?

Microsoft introduced a whole new lineup of enterprise search tools late last year and early this year bought Fast Search And Transfer. Yahoo has time-tested search technology that likely will yield more than a few nuggets to support future R&D on enterprise search, but Microsoft's battle with Google in this market is nowhere near the lopsided contest it is on the consumer and online advertising side.

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John Fontana

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