My two cents worth: Yahoo should acquire AllTop.com along with Guy Kawasaki.

Why? Besides getting one of the new darling websites AllTop, Yahoo would gain the company of one of the top tech evangelists–Guy Kawasaki. Imagine what he could do to revitalize Yahoo’s image.

What an exciting challenge that would be.

What are the things he might do? Well, I guess it would depend on what arrangements Yahoo might make with him. Might they encourage him to keep going with his investments? Not a bad idea. Maybe Yahoo could even throw in a percentage in exchange for a stake.

What might Guy do to advocate Yahoo advertising content? Can’t you see him twittering and talking with site owners making the case to run Yahoo ads? Imagine the value of the feedback he could gain and give back to the engineering teams.

And can’t you envision him helping to showcase flickr to a larger audience or communicate via TV interviews and the like the value of Yahoo mail or Yahoo news or Yahoo Finance? He’d be a natural–because he is a natural.

The synergy is obvious to me.

Of course, the odds are that Guy would say no, but then again maybe if Yahoo throws in an ice rink and a couple autographed hockey shirts from his favorite teams….hmmm

Update: A couple people have messaged me saying they don’t get it. I guess the hockey shirt idea isn’t obvious enough :-).

Well, forget the shirts, let’s just focus on the web sites. Currently, with AllTop, Guy and the Nononina venture are all about listing top blogs and sites on the Net. Like any directory (which by the way is part of the DNA of Yahoo), the directory is a destination in itself as well as a service that drives traffic to each of these sites. The site owners can see the results. They see that traffic is coming from AllTop, which means they already have a relationship with AllTop and indirectly Guy. I mention Guy specifically, because since AllTop was launched you can see him on Twitter interacting with people, looking for good sites, advocating the AllTop site itself. You can see him building relationships. OK. So Guy has what looks to me like the foundation for a good relationship with these top sites. Now, what’s often as important to these sites as the traffic AllTop can help them get? Ad revenue. And this is where the tie in with Yahoo might come in.

It’s not just AllTop sites where this type of approach could be used. There are many others. I’ll leave it to you to make your own mental suggestions.

And finally, what’s in it for AllTop? Joining Yahoo would help AllTop grow far beyond where it is now both in traffic and in terms of a business model. Again, makes sense to me.

Kara Swisher puts her nightmare-vision glasses on and predicts that a series of Google acquisitions would be a terrible thing for Microsoft. She suggests that if Google were to acquire “Digg, moves onto, say, Spot Runner and others (Meebo, FriendFeed, iLike and even Slide?), focused especially in the online ad, messaging, online apps and mobile spaces” it would be a terrible thing for Microsoft.

I don’t buy the premise at all. Digg is no YouTube. Facebook isn’t even YouTube material if you ask me. So if Google wants to buy up all these companies, fine by me. It’s kind of like a major TV network buying up the top shows and moving them to their network to better leverage advertising. But like all good TV shows or restaurants, eventually they become the same old same old and fall out of favor. Digg is already on that downward spiral. Outside of the student market, Facebook is shows signs up banging its head against the wall too. Even eBay is looking mighty tired–outside of being a stained virtual-brick built online mall for small businesses.

I don’t think it would be a big deal if Google purchased all of these companies. Now it might help Microsoft short term I guess if Microsoft were the acquirer. But my guess is for whatever it would cost for Microsoft to buy them it wouldn’t be worth it.

To me, a much worse nightmare would be the trifecta of Apple, Adobe, and Yahoo joining forces. These three companies merged into one would rival Microsoft and Google.

First, it would solidify Yahoo’s foothold as #2 in search and very well might push it up to Google levels at least on the stock side as Disney comes into the mix. Yahoo wouldn’t just become mail.yahoo.com and a so-so content platform, it would bring in online content–much from Disney–like few others could deliver. Tied in with Apple’s platforms, you could imagine some rich experiences that few could leverage. Apple TV and Apple WiFi phones and Apple Chat and on and on could explode in popularity in a relatively short time.

Second, on the developer side, Adobe’s current developer strategy which is doing pretty well with Flash, Flex, and Air, but combined with Apple’s well-tuned platforms, it could become an even more compelling story. Just compare Google’s Android-home-run-aspirations or Microsoft’s psuedo-crossplatform efforts with .NET and Silverlight to this three way merger. Mix in Flickr APIs and similar possible online efforts in Yahoo and I think you have what could be a standing eight count for Microsoft and a couple years upset stomach for Google.

And third, an Apple-Adobe-Yahoo merger would help to solidify Apple not just as a consumer force to be reckoned with, but would help propel enterprise sales, in part because of possible tie ins with Adobe’s PDF/Acrobat strong holds. If Adobe can continue to leverage Flash and keep pushing Flex and Air in the enterprise and Apple’s hardware sales can go along for the ride, this could really challenge any of the Dell or HP packages at least in the US.

So yes, Kara, one could argue that Microsoft should try to swallow up every company it can before Google does so–and yeah, this might not be a bad thing short term–but this is by no means the worst nightmare for Microsoft. Of course, an Apple-Adobe-Yahoo merger is highly unlikely given all of the personalities. Kara’s prediction is more likely. But since we’re talking about nightmares….

After TechCruch’s comments the other day about how terrific the new natural language aware PowerSet.com search would be I was eager to check it out. I was going to sign up for the beta and then I decided to wait for the launch. I didn’t have to wait long. It’s up now. Check it out.

I admit I am quite skeptical about the Powerset venture. The “core” of the product may be from Xerox Parc, but I’ve seen lots of people try to throw technology at search and see it come up short. My skepticism was telling me that this was to be another case.

Powerset is trying to leverage natural language processing to improve the quality of search. Rather than go for indexing tons of web pages they decided to focus on the semantics and what they could glean from Wikipedia (in one case). Half of this makes sense. The focusing on Wikipedia part. I’m completely guessing about the NLP side and from this part I’m guessing they focused too much on the NL and not enough on flat out the semantics regardless of any technique.

Anyway, so now that Powerset has launched I decided to do a 20 second test and I think many people will be surprised at the results, but not in the way you might think.

Here’s what I did. I searched for the difference between Tablet PCs and UMPCs:

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The results were much like I expected. It’s hard to tell if any of the results targetted the query I gave.

Of course, I was being a bit unfair with my question. So I split it up into two parts. First, I asked what a Tablet PC is:

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And then “What is a UMPC?”:

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It’s just my opinion, but neither sets of results are that good. And what’s with the semantic summary at the top of the query results? What does it mean for UMPC features to be “system and low.” And worse, what does it mean for UMPC to “takes” “flight.” I can guess, knowing what I know about the market, but why am I guessing? I am performing the query supposedly because I don’t know the answer.

I’m not surprised by the poor quality of these results though, because Wikipedia has a small draw and being community driven it’s going to have a disproportionate voice that doesn’t “get” Microsoft’s efforts. And as a complete guess I wasn’t surprised to see the UMPC and Tablet PC to fall into this category.

So unimpressed with my 20-second Powerset search I decided to try Google. I asked it “What is the difference between a Tablet PC and a UMPC?” Not too bad. From what I see the third link is to an article entitled “How to buy a UMPC or Tablet PC”. Hmmm. That might give me a pretty good description of the differences I presume.

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Not completely satisfied though, I decided to try Live. For the same query, here’s it’s results:

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My. My. Look at this. The first link is to a forum post that is titled: “What is the difference between Convertable and Hybrid tablets.” Kind of close in terms of it being a comparison, but actually the link is of mediocre quality and a bit off target. I’m looking for a comparison between Tablet PCs and UMPCs.

The second link is a another so-so match. It’s titled “So what’s the difference between the Samsung Q1 and Q1B?” Both of these are UMPCs. Not qiute right.

Link 3 is getting warmer though–at least the title is more suggestive: “Define the Ultra-Mobile PC.” However, if you follow the link to Gottabemobile, it’s more about what UMPCs are and their differences with low-cost PCs, such as the Eee PC.

Scanning down the page though, you’ll see several articles with titles including the phrase “what is the difference between…”. Although none of them are exact matches, this does suggest that Live Search is placing greater sorted emphasis on content that also contains mention of at least UMPC or Tablet PC. Not bad. In fact the bottom two links on the page are “Difference between a MID vs UMPC” and “What is a UMPC.” If you read through this article, sure enough it compares in bits and pieces UMPCs to Tablet PCs. To me, although the artile is biased towards talking about a UMPC, it’s hands down a winner.

(Note: The Live query results aren’t very good if plural keywords are used, such as Tablet PCs and UMPCs. So the stemming logic in Live isn’t so hot. Not terrible. Just not as good as it could be.)

Yahoo search with the same query gives a valient effort too by strongly matching against the phrase “What is the difference between…” However I dont’ see articles that are strong matches, although I do see mentions of Tablet PCs and UMPCs which lead me to believe that with a little digging I might figure it out.

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I also tried Ask.com, but the results weren’t that good though there is a sidebar in which you supposedly could narrow the search by clicking on “Definition of a Tablet PC” and “What is the Tablet PC used for.” Of course, the narrowing list doesn’t mention anything about UMPCs. So I left this out.

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So, my conclusion after a couple of 20-second queries is this: I’ll stick with Google and Live with Yahoo in third place. Powerset? Well, maybe if I just want to search Wikipedia.

Was this a fair test? No. I really need to do more tests. However, it is in a domain I know something about and I’d expect any search engine to handle well. It’s not that obtuse a topic. Now, maybe I’m using the Powerset search engine “wrong” and another form of queries would do well. I’ll be watching out for the experiences of other bloggers.

An aside: Michael Arrington gives kudos to Powerset for returning good results for the query “when did earthquakes hit tokyo” and suggests that people try Google to see how good Powerset is. Well, he’s right. The results from Powerset return the first hit with “The special wards of Tokyo are as follows: ….Tokyo was hit by powerful earthquakes in 1703, 1782, 1812, 1855, and 1923.” A very good match for earthquakes in the last few hundred years. The results from Goole aren’t that spectacular. However, if you search for “wikipedia when did earthquakes hit tokyo,” you’ll be surprised. The third hit to “Dogpile” has the phrase…”Tokyo was hit by powerful earthquakes in 1703, 1782, 1812, 1855 and 1923. The 1923 earthquake , with an estimated.” This is the exact same phrase Powerset returned.

Yes, Google could tweak their results to take into account language more. You can see that in how Live and Yahoo appeared to have good results with my earlier queries. But is this a tweak to Google or a $100M business?

Update: Danny Sullivan does a much better job of explaining the potential value of Powerset. I don’t agree with him about the value of the semantic summaries (their value applies when you already know the meaning behind the sparse words) and in terms of the outline I think he’s right, it looks like there’s potential there. However, this means that the content will have to be contained within Powerset. That may work under Wikipedia’s license, but not other content. So I’m confused how far this is going to go. Now if Powerset wants to leave it at being a better host for Wikipedia content, that’s one thing. But a general search engine? That’s another.

Despite all the chatter about how hurt Yahoo is at this time, the panic doesn’t impress me. In fact, I don’t believe it. I don’t think Yahoo is that irrevocably harmed–or was that harmed to begin with even before all this Microsoft-Yahoo talk.

In fact, I kind of see Yahoo being in an interesting, good position. It has lots of users. It has a good reputation among its users. And it has experience on the web. Don’t forget, it’s also the number 2 guy in search behind Google.

There’s been lots of talk over this past year about how Yahoo was going down hill. Much of it came from the Bay Area. Doesn’t surprise me one bit, because there’s so much competition for startup talent in the Bay Area. Yahoo became fertile recruiting grounds–that is if you couldn’t get anyone from Google. However, lots of people have been leaving just about everywhere over the last year or so. It doesn’t mean one thing or another–other than a handful of first generation people peaked in the organizations there were in and took the opportunity to “cash out” and a bunch of others started seeing greener grass.

I still think though that Yahoo is in a great position to ramp up. Here’s why: Google may be the darling right now but they’ve become lathargically uninspiring as of late. The slide started about two years back or so when gobs of Bay Area people started complaining about Google releasing stuff too fast and needed better processes. I cringed at the time, hoping that Google wasn’t paying attention. Unfortunately, it looks like they were. The problem? Much of the comments came from third-party management experts–not the kind of mindset that created Google in the first place. Like all companies, Google was entering a new phase, but the lesson they should have learned was not all about how to slow things down so that they could manage things better. It was to learn how to manage what they were capable of doing.

Anyway, the result has given a big opportunity to Microsoft and Yahoo. In fact, before all of this merger talk got started I was going to blog about how of GYM, Yahoo would be at least for me the most interesting of the three to work at. Why? Because I love a challenge and I could see how Yahoo has the capacity to touch a lot of lives. Yes, Google and Microsoft can too, however, it seemed to me that of the three Yahoo potentially might be the most entrepreneurially open. I could be flat wrong on this, but from the outside it seemed so.

So what I was seeing was that while Google was spending time filling holes that Microsoft was leaving behind, and Microsoft was doing whatever Microsoft was doing, Yahoo could continue doing things that ultimately meant something to people. Like what? I’d like to see Yahoo build out its archiving of reference material. Books. Encyclopedias. Dictionaries. Movies. TV. You name it. If I want to find something–something correct–I’d go to Yahoo. If I wanted to really understand something, I’d go to Yahoo. Now maybe that would give Google huge revenues from NextTag and eBay and so on from all the searches of Britney Spears, but in the long term I’m confident long term will win out.

I’d like to see Yahoo services for looking up words. For looking up medicines or treatment options. For looking up well-known people. For facts. For doing your homework. For figuring out how to fix something.

Isn’t this what Google or any other regular Internet search does? Kind of. But two things. First, Yahoo’s DNA was as a directory–somewhat like a library model. So at its core DNA it understands how to be a reference–an archive–and how to help people get access to the information. The next step would be to not just provide web pages to these look up services, but to allow access to the core services themselves and to facilitate the growth of context accessible information. For example, why can’t apps call a Yahoo service to do a dictionary lookup? Why can’t they use Yahoo to archive every step you’ve taken in every program so you can play back what you’ve done? Yes, these can all be done with offline services too. But the point is, who might be best positioned to provide them online in an always connected world? Yahoo would seem like a good match.

Now does Yahoo have to create all of the content itself? Absolutely not. But it could enable content creators–big or super small–sharing revenue along the way to publish good reference content. With the right mindset Yahoo could enable a fresh, context driven version of the web. Wikipedia is kind of doing this already in the traditional web model. But notice, it’s not in the service model. It’s not computer friendly content.

It’s not just about working with content providers that want to type in a bunch of freshly authored content. It’s about working with cellphones that have sensors that can be leveraged to automatically tag content. It’s about doing the same for smart cameras as I’ve blogged about earlier.

The money people will argue that there’s no money in this or that it’s already been done. They might be right in the short term. But then again, if someone does it, would I use it over some other “search engine?” You bet. And more importantly my programs would use it too. So slowly Yahoo would become inextricably interwoven with a large network of apps. Now once we get all of these computers talking with one another, now can you imagine how valuable and significant a systemic change that would be? I can.

I’ve blogged several times about the over-the-top thinking going on with the TechMeme Leaderboard crowd when it comes to the proposed Microsoft-Yahoo merger. The sensationalism might have encouraged traffic, but much of it sure was borderline business advice. Now that the deal is undone, maybe we can all get back to talking about tech.

Of all the posts I’ve run across, Danny Sullivan gives some of the best perspective on the proposed deal and where things go from here.

I would say that in terms of where I’d like Microsoft to go from here is where I’ve wanted it to go all along. The first step I’d suggest for them is to work with its many MVPs and build an ad system they’d like to use. Start there. It’s simple enough and small enough to keep nimble. I realize that an approach like this doesn’t have the charm that the top 15%, but hey, that’s exactly the thinking that’s gotten Microsoft this far–so it’s time for a change.

I won’t repeat myself yet again why and how this would all work, but it seems so obvious to me.

I’d also recommend to Microsoft to think less in terms of search in the classic Google way, because I don’t even think Google is doing it anymore. There’s more to search than search. Microsoft should think in terms of helping people get to the information that they want to get to and to use it they way they want. I think this suggests more services than just search. Why can’t someone programmatically get to the definition of a word in Live Search? Why can’t they get acceptable hyphenation via a service call? Or just the source code sample on MSDN that use a particular function–again via a call? This type of approach would get a developer like me to use Live “Search.” Is Google really the best at providing reference material? I don’t think so. That’s why Wikipedia had an opening. Microsoft has the same opportunity here, especially if they provide easily reusable components and services, which is something Microsoft is good at.

Virtual Earth is a fairly good example of this. It’s not quite right though if you ask me. Would I point any of my GPS-enabled programmer/bicycling friends to it? No. Why? Because it doesn’t do what they want and to make it do what they want is too much work.

And what about something like math? There’s a reason why my Silverlight-based Math Tip points to Google and not Live Search for getting math results. Microsoft misses the boat here again and makes it too hard to try to even kludge something up. It’s possible, but why bother. Just use Google.

Live Mesh or not, there are tons of these little services that are ideal for Microsoft or Google or Yahoo to do. Maybe some day.

These kinds of articles from the New York Times and Wired about the proposed Microsoft-Yahoo acquisition really get to me. Why? They’re premise is all wrong. When it comes to whether Microsoft will acquire Yahoo, it’s not about winning and losing the deal. No matter what happens, the next day will come, and the next, and the next. And it’s what Microsoft does with these days that’s really at issue–whether with Yahoo or not.

The trouble signal is not whether Microsoft tries and fails, but whether they are hungry enough to do anything at all. Lack of hunger is the killer of most every tech enterprise I’ve been around. The engineers have to be hungry. The sales staff has to be hungry. The executives have to be hungry. You have to have the drive to try. You have to have the capacity to keep going despite all odds. Tomorrow’s success will quiet the fiercest fortunetelling naysayer.

What I see that’s so promising about all of this is that Yahoo is expressing their hunger right now as it tries to position itself better and Microsoft is expressing their hunger as they try to find the sweet spot on the web. I see losers in neither of them.

This weekend I don’t know how many times I was asked by friends and neighbors whether I thought the Micorosoft acquisition of Yahoo was going to go through. In particular, I was surprised at how many non-technical people are following the possible deal. The reality is though, I don’t have a clue what’s going to happen. No one does.

Like Mary Jo Foley, the Wall Street Journal and others I have heard rumblings about the proposed deal. Most tech people I know are against it. I’m not, but then again I’m often wrong, so I’m probably on the wrong side of this one. I accept it.

Why do I think a Microsoft-Yahoo mindmelt would be a good idea? It would give Yahoo market leverage and it would give Microsoft new blood–new thinking. The tricky part for both is that Microsoft needs to be careful not to go too overboard in its acquisition so that once if does go through, if ever, that it has the financial strength to leverage it. Likewise, it’s got to be careful not to discourage the Yahoo employees that it very well could benefit from. Same goes for Microsoft’s employees. I also nonsensically like the idea of Microsoft expanding its Bay Area focus. What can I say? I love California–Seattle, not so much.

No matter what happens though, I doubt it’ll have much impact on what I or many of the people I know use or do.

I remember when Microsoft purchased Hotmail. This was one acquisition I was against. The reputation for Hotmail email was terrible. Now, it’s not, even if the name is kind of 1995ish. It just goes to show how things adapt and change.

Michael Arrignton is getting concerned over the twists and turns in the proposed Microsoft-Yahoo acquisition. Fred Wilson is getting uneasy too. Both are getting quite a bit of attention on Techmeme. Funny thing is that Michael and Fred are concerned for exactly the opposite reasons.

Fred is concerned about companies after an acquisition. Is their value really preserved or maximized in the acquiring company. If not, maybe it’s time to look elsewhere. Michael is going the opposite direction and churning over whether it’s a wise move to hold out for more money when a company has made a bid to acquire it–particularly if the predicted path to increased value involves splitting up current products or services. What happens if it’s a bad decision?

What do I think? They are both right and wrong; you simply can’t predict the future.

One thing is for sure. If anyone–Yahoo included–follows their advice, there will blog posts that make it to the top of TechMeme that say how unsmart Yahoo is being. And if Yahoo doesn’t follow community advice, likewise there will be top TechMeme posts arguing that Yahoo should take this or that move as they’ve suggested all along.

The Yahoo layoffs yesterday have me wondering: Is this really a good thing for Microsoft’s proposed acquisition? I don’t think so–especially if Google becomes the talent beneficiary.

This isn’t exactly going the way of Borland–where the talent slowly migrated to Microsoft. There’s no doubt Microsoft has picked up some amazing people over the years, but there’s quite a bit of Bay Area magic too and acquiring Yahoo was one way of bringing these people on board. However, if the acquisition gets more contentious, it may not turn out as beneficial to Microsoft as they once planned.

I wonder, for instance, what Jerry Yang might bring to Live. With Ray Ozzie navigating the enterprise direction and Jerry Yang overseeing the “consumer” side, this could be very interesting.

But the talent has to reach down to all levels and with a vigorous battle over an extended period of time, Yang is probably out and key talent will simply forgo the drama and go elsewhere–aka Google or some startup. Microsoft should hope people choose the latter–because that way they are essentially still in the market–a much less expensive one at that.

Aren’t negotiations fun?

I’m checking out Yahoo’s new live video service: http://live.yahoo.com. It’s a product of Yahoo’s Advanced Products team which according to their blog is a “small incubation team at Yahoo! – our mission is to build stuff and launch it quickly, and respond to market feedback. Y! Live is a limited capacity release, so bear with us as and we may reach our limits in periods of high traffic.”

Right now the video is only live. No recording. No video on demand.

For now these two missing features are quite unfortunate–at least for how I like using video services, such as UStream.tv and Mogulus.

There is an API and developer center than I’l lahve to take a look at. There might be something interesting here in terms of creating online, group, video events. Still looking and learning.

It’s been long rumored and now it’s finally happened. Microsoft has made a public, unsolicited bid for Yahoo, which you can read in this Microsoft press release. This press release by Yahoo states that the company’s “Board of Directors will evaluate this proposal carefully and promptly in the context of Yahoo!’s strategic plans and pursue the best course of action to maximize long-term value for shareholders.” Of course they have to consider it; they have a fiduciary responsibility to consider offers like this.

This is a smart move, however, for both companies and employees and customers. And, yes, shareholders. But right now, I’m most interested in the customers, because that’s what’s going to benefit both companies in the long run.

In Microsoft’s press release, I think Steve Ballmer has it right, “We have great respect for Yahoo!, and together we can offer an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market,” said Steve Ballmer, chief executive officer of Microsoft. “We believe our combination will deliver superior value to our respective shareholders and better choice and innovation to our customers and industry partners.”

It may sound like corporate PR talk, but this time around I think this positive positioning is correct. Here’s how I see it:

Microsoft needs some help in the web world. Try as they might, the company hasn’t been able to get its act together on par with what it can do and what customers would like to see and what its developers would like to see. It keeps getting biased by Windows and Office–which makes complete sense. They are, after all, hugely successful for Microsoft. But that’s not where the market opportunities end. And that’s where Yahoo comes in. Yahoo has for a long time been a fairly successful player in the online game. They have run into a rough spot and hence their stock has been going down and layoffs are on the way, but fundamentally they have some great web assets–Flickr being one of my most favorite. Microsoft can leverage its complementary assets–developer community, advertisers and the like to bring greater value to everyone.

Online, there’s money to be made with more and better ads. Yes, more money. But customers will benefit because properties, such as the Flickr image sharing service can expand to integrate into other offerings–particularly from Microsoft’s pool of products. And this model, which has worked for Yahoo can work in other areas two…if only Yahoo could invest more R&D. That’s where Microsoft comes in. It has the money chest to make new efforts happen. And with Yahoo it hopefully can share some of its bay area engineering magic.

Now there are some caveats here. With Yahoo’s slump I’m guessing some of the key engineering talent and know how has left. That may or may not be an issue. Yahoo also has a culture that’s more open cube-like than Microsoft’s “everyone gets a door” model. Structurally this may sound insignificant, but it’s turf like this that ruffles people’s feathers when change is on the way. Again, I hope in a Microsoft-Yahoo acquisition, that it won’t scare away the people you really want to see work together.

I hope also this could mean we’d see more ink in the web. Wouldn’t it be cool if Flickr supported ink directly for annotation? And if Yahoo could leverage Microsoft’s developer model and ecosystem there’s huge opportunity here. It’s things like this that have me excited as a developer and as a user.

Who knows if this kind of mega-acquisition will be OKed by the regulators. If it isn’t, maybe Yahaoo can get back on its feet, but then again I see clouds of Lycos on the horizon. Fingers crossed that the winds will keep them at bay.

Now if Microsoft would just buy twitter and integrate ink and media content there too I’d really be impressed.

There’s a bunch of coverage and commentary on this offer over at TechMeme. Well worth the read.

Techmeme is exploding once again with rumors that Microsoft is considering an acquisiting of Yahoo in order to compete better against Google. Should Microsoft buy Yahoo? Well, it is one company that Google is unlikely to be able to outbid Microsoft on, considering the anti-trust implications. It also might give Microsoft’s MSN division a much needed boost and both companies an opportunity to trim duplicate costs.

The huge downside here is the expense. We’re talking real money here, if the speculation is correct that it’s in the $50 billion range. Sure pales in comparison the many acquisition prices in the past that people considered too big. Think of how many TechMeme/Twitter/Federated Media-like companies that money could buy. “Small is good,” I’d keep repeating.

In fact, Microsoft has done reasonably well in the past with small deals–at least that’s the way I think of the company. It’s just that it’s been sitting on the sidelines waiting too long to decide and has lost out on several opportunities. Is the solution to buy big? I’m not so convinced, but I’m sure there are some creative Google-AOL like possibilities.

However in terms of advertising, I’ve said it before, I’ll say it again: Microsoft has a huge opportunity to improve online advertising–particularly for many of its most vocal “partners”–the many bloggers, community run sites, and news sites that cover Microsoft-related technologies. Google ads are too broad, have too much off-topic, spam-like content for these sites. Not only does this reduce ad revenue for everyone, off-topic ads degrade the quality of the publication. In many respects, an ad system similar to those available pre-Google AdWords/AdSense is needed. Badly. It’s been unfortunate that up to this point Microsoft’s adCenter has created an ad system that carries over these same weaknesses. Maybe it was needed as a foundation. Could be. But I think a much better approach would have been to set off on a slightly different course at the core. There’s still a huge opportunity here for Microsoft, though.

At the same time, I agree with Don Dodge that another great advertising platform that needs attention is with respect to mobile devices. The up side here is that mobile searching is still early. Come to think of it, that may be the drawback too for such a large company as Microsoft. Nonetheless, I see and read that Microsoft is making progess in this area. Microsoft would need to work with its hardware partners even more to pull this off even better than Google. Might WinHec give a hint as to whether Microsoft is going this direction? To me, MEDC didn’t and Mix07 was ambiguous.

On Friday I made a terrible mistake. I allowed the latest update of Yahoo Messenger 8.1 to install. Ugh.

I should have known better. I recall from the past that Yahoo Messenger makes changes to IE without asking. I just clicked through the install dialog though and picked the default installation. What a mistake. Yahoo changed my home page. Installed a toolbar. Changed my default email settings. And who knows what.

Sorry Yahoo I don’t get this. What a rude thing to do.

CNet has an article about this obtrusive Yahoo install here.

I realize I should have selected the customize button when doing the install in order to prevent these default changes. However, hiding all of these changes behind a custom option is impolite.

After Google’s announced purchase of YouTube last week, several people starting asking about who might aquire Facebook. Not me. I began to wonder more about who might acquire Yahoo. As Google grows, Yahoo falls to a more distant second in my Internet dominance book, so it may be time for Yahoo to consider how to gain strength by joining forces with someone else.

VC Fred Wilson is banking on Microsoft stepping up to the Yahoo plate. I can see how the Yahoo brand could help resurrect MSN (Flickr would be a huge gain for Microsoft/MSN), however, I could just as easily foresee Microsoft saying No Thanks and trying to build up by joining with a good quality, lesser brand. Besides, is MSN where Microsoft’s action is going to be?

What about Time Warner/AOL or News Corp or some other large media corporation? Again, all would seem like strong possibilities, however, I’m guessing it’s just as likely that Yahoo would want to remain Bay area independent. If Yahoo slides down in ranking though, I imagine another group of acquisition partners begins to emerge–many international.

I’m not going to hold my breath waiting for anything to happen anytime soon though.