Shares of Microsoft rose since last weekend when it announced that it was not interested in pursuing Yahoo in an acquisition bid that was expected to go down till the wire. Analysts are hailing the move as great since there were always the integration hurdles, both cultural and market related that would have eaten costly time.
So what are the alternatives that Microsoft will think about next?
One is that even though they have written off Yahoo for the time being, there is some certainty that down the line another bid will be made. The reason being that Yahoo is the only firm that can give Microsoft some firepower against Google.
Second, Microsoft may want to consider a partnership with other web firms to expand its reach. Time Warner is not all that happy with AOL and News Corp could also consider suitor for MySpace. With Social Networks gearing to be the hubs of user activity online, a major move in the social networking space cannot be ruled out.
Third, Microsoft could consider a major deal with FaceBook since among the web start-ups this is the only firm that seems to provide some agony to Google. Many of Google’s employees have made a shift over to FaceBook and in the social apps space OpenSocial has still a long way to go before it becomes significant.
Then there are the options of acquiring properties outside US, such as Baidu or even considering folding its advertising focussed operations for now and pump the dollars into make subscriptions based services work.
Of all these, the first seems the most probable thing. There is some real pressure on Jerry Yang now to get Yahoo on the highway of growth. Even mild indicators of slowing down or headway to Google would really jitter the investors who may have already been disappointed with Microsoft walking away. Perhaps the deal with Google could help turn around profits but it would be a major victory to Google in the long run. And this is something Microsoft cannot afford.
What other moves do you think will make Microsoft really compete with Google?