It’s quite simple. The Search Industry needs Microsoft as almost all other challengers have fallen to Google for the battle of supremacy. Everyday that passes by, Google gets stronger, and quite honesty lack of competition can only hurt consumers. Nobody is claiming that Microsoft is going to revolutionize the industry by acquiring Yahoo. In fact, Microsoft has been a lousy leader in every industry it has entered in. But now at this point in time, Google needs a true challenger and Yahoo! and Microsoft aren’t it. In fact there is no guarantee that MSNYahoo will challenge Google, but it certainly has a better chance of competing with Google. Yahoo! has been a true superstar in the Internet era, but the time has come for its CEO and his buddy to pack their bags and leave Yahoo! with a company that is hungry enough to challenge Google. Microsoft might not be the best option but is the only viable option at this point (that is until someone else steps up to challenge Google).

In my mother culture, brides are warned about saying Yes to a proposal the very first time. I know it sounds stupid, but you have to actually wait 3 times before saying yes the last time. Of course, you don’t say no the other two times, but what happens if the guy doesn’t ask you the second time. Well, Yahoo! has said no for the first time to Microsoft’s marriage proposal today. But I am almost certain that Microsoft will not be accepting a no from Yahoo! that easily. Microsoft has got to have Yahoo! and that would include going to the the bride’s relatives to force the marriage. That’s what Microsoft’s strategy seems to be. Of course, at the end I believe $37-$40 per share would be enough for MS to buy Yahoo! but that is a fairly significant improvement over the original $31 per share offer. In the end, just like many expect MS to get the bride.

So much for Yahoo! being desperate to accept Microsoft’s friendly bid. Reports are now coming out that Microsoft will have to increase its bid to make the Yahoo board accept a deal with Microsoft. I am sure somewhere in Redmond Steve is furious with Yahoo! and is planning to move ahead with plan B. So what is plan B for Microsoft? Bypassing the board and going to shareholders. Microsoft is banking on the fact that investors are not satisfied with Yahoo’s performance. It’s true that many Yahoo! investors are almost ready to cash out and cut their losses, but Yahoo’s shares have gained some value after Microsoft’s bid, and Microsoft won’t be able to get Yahoo! for cheap. I do believe that a deal with go through, though not as early as we all think, but for Microsoft to come out of all this empty-handed is simply unthinkable.

It sure seems like it. The software giant has the ability to handle a big fish such as Yahoo!, but they rather use some leverage now with this acquisition. This shows Microsoft’s determination to be the best in a industry that is longing for a viable challenger to Google. I am sure Yahoo! will be reluctant to sell for the initial price offered by Microsoft, but I doubt Microsoft will go over $35/share to acquire Yahoo! Who would’ve thought a few years ago that we’d be looking at the end of the road for Yahoo! in a matter of just few years. How things change quickly?