Ballmer: It's time to strike a deal with Yahoo

If there has to be made a deal between Microsoft and Yahoo, now is the time according to Steve Ballmer. The Microsoft CEO who recently visited and commented on this blog sat down for a talk with the Financial Times yesterday to put the pressure back on the MicroHoo soap which started nearly a year ago.

Both companies are in a management transition phase these days. Microsoft hired Qi Lu, a former top gun at Yahoo to reposition their online business, whereas Yahoo is on the lookout for a new CEO after Jerry Yang stepped down. Ballmer said:

"If a search deal is to be made, it's probably to be made in the interim period for new leaders in both places."

The MicroHoo soap started last year with Microsoft placing a full take over bid. After that was dropped, a Search deal was worked out, but once more it failed. Now Steve Ballmer is putting the pressure back on. After the last deal fell through, Jerry Yang's position at Yahoo was severely compromised as Wall Street analysts have estimated that a deal could add more than $12bn to Yahoo's value. In hiring Qi Lu, Microsoft made a tactical move to pave the way for a new deal.

I've never regarded Microsoft to be tactical, but they're getting smarter. Ballmer's timing this week is impeccable as well. Yahoo is said to be closing in on a replacement for Jerry Yang, but closing in on them while Yahoo is without a strong leader and the current credit crunch sentiments is once again a smart move.

They have to get smarter, because Microsoft is no longer the leader of the pack. They've been moved into the underdog position against Google and Microsoft needs to make the online transition in order to survive. The internet is the frontier as more and more activity is done webbased. Everything is moving from home computing to cloud computing. In the near future, hardly any application will be run from a pc, nor will any file be stored on a pc. It will be webservers that run the show. In this outlook, Microsoft is losing a business case in Operating Systems. It needs to step up their online activity. Microsoft and Yahoo will both loose the online war to Google if they remain independent.

You know what. Probably a year ago I would have written a very negative story on Microsoft. We still have a tendency to hate that money making machine to a certain extend, and we've all been cheering time and again as the European Committee fined Microsoft for gaining undisered monopoly positions on the market. That sentiment is slowly changing. Very slowly. More and more Google is crawling into that dominant position, although this dragon doesn't have a head to slay as Microsoft once had in the days of Bill Gates.