Microsoft and Yahoo: Will Your Favorite Service Disappear?

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While the marriage of Microsoft and Yahoo may make sense for the online advertising fortunes of both companies, what's to become of all the services the two companies have in common?

If you've gotten used to Yahoo Mail, Yahoo Finance, or Yahoo Groups, you have to be wondering if those would go away or become MSN services with a Microsoft acquisition. Will Yahoo's Messenger instant messaging, for instance, vanish and become part of MSN Messenger IM?

There  are many more examples of Yahoo services that overlap with Microsoft services, including Yahoo News, Mail, Maps, Mobile, Shopping, IM,  and Travel. Some of Yahoo's acquired properties may be considered overlaps, too--sites like the Flickr photo site and the MusicMatch site. The list of services goes on and on--both companies have nurtured massive internet portals with tons of separate services.

(What Yahoo services would you miss if Microsoft takes over? Go to PC World's Microsoft/Yahoo coverage page to read more and comment on this major technology event.)

IDC analyst Karsten Weide, an analyst with IDC, says Microsoft should think twice before shutting down or slapping an MSN label on the Yahoo services. "In general, I think Microsoft would be well advised to keep the Yahoo brand, and merge their media properties--i.e., MSN and the Windows Live services--into Yahoo." "That's because Yahoo is a stronger brand in the media world, and also their services are, for the most part, bigger than Microsoft's," Weide explains.

History's Guide

The truth is, nobody really knows what Microsoft would do with all the Yahoo services if an acquisition takes place.

But history gives some hints. In the past, Microsoft has been far more likely to buy technology, user bases, and traffic, but not brands. In other words, Microsoft likes to promote its own homegrown brands , like Microsoft Office or Windows Live, not brands that it has acquired.

Microsoft is likely to take that same approach to at least some of the Yahoo services, that is, subsume the people and technology behind the Yahoo services into its own MSN services. Microsoft says it can gain $1 billion in "synergies" from the deal. By that the software giant means the resources that can be saved as the two companies remove the redundancies from the combined business.

IDC's Weide says Microsoft should resist clinging to its own MSN-branded services,  if the acquisition takes place. "Microsoft would have a hard time doing that, because they are not a media company, they are an engineering company," IDC's Weide says. "Meanwhile, Yahoo has a lot of experience in media."

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