Microsoft to buy Yahoo for $44.6bn? Why?

Yes, Microsoft has offered to buy Yahoo for $44.6 Billion.

This is not a news anymore. Every living soul on this planet would know it by now. But why are they interested in Yahoo? And this is after Microsoft valued Facebook at $15 bn.

Few immediate thoughts
1. Race to own the Internet and eventually the world.
It is not hidden from anyone that Microsoft is not the best when it comes to Internet. They are third when it comes to search engines, social networking has never been their forte (LIVE failed miserably and probably the sole reason for Facebook stake), Google Adsense is the most widely used advertisment platform, Yahoo mail is used more than any other free email service,

2. Online advertising is too lucrative a business to let go.
Obvisouly, with Google taking bulk of search traffic, there were only two options. Come up with a better, faster and easier search engine than Google (which is becoming increasingly dificult - even mahalos and wikias of the world are finding it difficult to do) OR d something drastic. Trying to buyover Yahoo is nothing less than drastic.

3. Time is a factor.
With every passing day it was becoming too difficult for Microsoft to complete with Google. With Google infringing upon the software arena, the core business of Microsoft was in danger. Every passing day they were loosing ground to Google. Microsoft needed to take on Google. And fast.

What remains to be seen is if Microsoft can actually buy Yahoo. And if there are any counter bids from Google (hehe) or any PE firms. Frakly, PE firms dont really have a lot of money right now due to fears of recession and all. Only person who can take on Microsoft as far as Yahoo goes is Warren Buffet (obvisouly, he is not keen on technology companies - just wanted to throw his name).

On serious note, even if the merger goes ahead, a lot of things would have to sorted out including the identity crisis, culture mix, gaps and above all business.

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