MSFT!

So it happened. Microsoft finally took the plunge and made a offer to Yahoo! they couldn't refuse.

Microsoft's reasoning is straightforward - they want to catch up with Google in the search and advertising business, which will require tens of billions of dollars of capital investment in the next few years. Sharing that load is a no-brainer; this is a game where scale wins.

Though Microsoft are focusing on the first two elements of Google's tagline "search, ads and apps" with their acquisition, I find their apps strategy - "Live" far more interesting.

Live has never seemed coherent. There is Microsoft live, Windows Live, and Office live. There is Hotmail Live, not to be confused with Windows Mail Live. All of these products overlap in confusing ways with their traditional client software equivalents. It's an utter mess, and it still seems to be going nowhere, perhaps due to cultural problems - Microsoft still don't seem to get the web.

Similarly, Yahoo's apps seem to have no connections or synergy between them, and they have a serious "peanut butter" prioritisation issue. However, in Yahoo's case, they at least own some incredible assets (Flickr, del.icio.us, Yahoo Mail, Yahoo Music), and some talented people that truly understand the web.

Hopefully the merger will force both companies to list their apps and place them in a simple, overarching framework. For example, a matrix with content types (text, raster images, vector images, audio, video) versus functions (CRUD, publish, collaborate, version, syndicate, search, store). That would even beat Google at their goal of features, not products. Because every month they dither, Google will move even further ahead.