Modeblue

If you live under a rock, and you havent heard yet, yesterday Microsoft sent Yahoo an offer of $44.2bn. The ‘offer’ values the shares at more that twice the previous days share value, is set to become the largest hostile takeover in technology history.

Microsoft chose the same week that Yahoo! cut 1000 (23%) jobs to notify them of the offer – timing that probably took a lot of patience since the 2006 talks but will certainly add weight to the takeover.

The obvious reason for this mammoth merger, is to try to take on Google in the search and advertising space. Google currenly has around 55% of the search market, Yahoo around 25% and Microsoft around 10% (figures fluctuate by upto 10% each depending on which report you read). Its pretty clear that 55% vs 35% would make for a fairer fight.

A huge problem that Microsoft will have is the culture shock Yahoo! employees will feel going from a service based open-source company to a product based close-source company. I think the right strategy to take is to spin off a new company containing the best search minds the two companies have, looking to develop the new features (mobile search, local search, classified ads, relevance etc) that both companies have in the pipeline.

Can Mahoo finally give Gooliath a run for its money?