FireFox 3.0 in the Oven

For the second time in the past four weeks, Mozilla has announced a "code freeze" as it prepares another public release of the open-source browser.

Mozilla Freezes Firefox 3.0 Beta 4


For the second time in the past four weeks, Mozilla Corp. has announced a "code freeze" for a beta version of Firefox 3.0 -- this time, Beta 4 -- as it prepares another public release of the open-source browser.

The freeze was announced late Tuesday. Earlier in the day, the company's chief engineer hinted that the number of outstanding bugs at that point -- 66 that could block the release of Firefox 3.0 -- meant a fifth beta will likely be needed.

"We reviewed the remaining number of P1 [Priority 1] and P2 [Priority 2] blockers on our lists and decided that we would go ahead with tonight's Firefox 3 Beta 4 code freeze and then bake nightly builds for a few days before handing off the code to the build and quality assurance teams," said Mike Beltzner, Mozilla's interface designer, in a message posted to the company's developer center.

Between now and Friday, Beltzner continued, developers will be looking over the blocking bugs to decide which, if any, require another beta release and which would prevent the final release of Firefox 3.0 if they went unfixed.

Meanwhile, Mike Schroepfer, the company's vice president of engineering, said he is leaning toward a fifth beta to give developers a chance to quash potential blockers. "As of this writing, there are 66 P1 bugs, which implies we either will not meet code freeze tonight or will need to add another milestone," he said hours before Mozilla held its weekly status meeting on Firefox 3.0. "Given the number of improvements between Beta 3 and today's nightly, I'd strong prefer we meet the freeze and talk about doing an additional Beta."

However, Schroepfer also pushed for releasing Firefox 3.0 soon. "Given the amazing positive feedback and the fact that we have [500,000] daily active users of Firefox 3 (with basically hockey-stick growth of usage) I think we should push to final as fast as possible," he wrote in a message posted to the mozilla.dev planning newsgroup early yesterday.

Previously, Schroepfer had refused to specify a release date for the final version of Firefox 3.0, although he had pointed to early March as the goal for Beta 4. Another beta would push out final delivery of a finished Firefox by approximately four weeks, based on the last interval between previews.

Mozilla froze Firefox 3.0 at Beta 3 on Jan. 29, and released that build two weeks later, on Feb. 12.

Firefox currently accounts for about 17% of the browser usage share, according to Net Applications Inc., an Aliso Viejo, Calif.-based Web measurement company. The most recent data available, for January, pegged Firefox 3.0's part of the browser market at just 0.1%, in comparison with Firefox 2.0's 16.02%.

For more enterprise computing news, visit Computerworld. Story copyright © 2007 Computerworld Inc. All rights reserved

Microsoft to Google: You Owe Us

Google has succeeded partly because Microsoft built up the business, an exec says.

Microsoft to Google: You Owe Us

Microsoft's Chief Research and Strategy Officer Craig Mundie said Tuesday that competitor Google owes its business in part to Microsoft, and that his company is not concerned about losing its position as an innovator in the technology market to the search and advertising leader.

"If we didn't succeed at the PC, they wouldn't have a business," Mundie said of Google, in comments made via Webcast at the Goldman Sachs Technology Investment Symposium in Las Vegas on Tuesday.

He said Google was able to grow so quickly because it introduced a new business model for the Web at just the right time. "It wasn't that many years ago that Google didn't exist," Mundie said. But now that the industry and competitors like Microsoft are catching up to Google's online advertising strategy, "I don't think they can do anything we can't do," he said.

In fact, Microsoft's longevity versus its relatively new competitor gives it a substantial advantage long term over Google, Mundie said. "I'd like to think we're strategically open-minded, we've made adjustments [to our business model]," Mundie said. "I'd like to see Google and someone else come up with something that really threatens our business model."

Part of that business model is to combine forces with Yahoo to compete with Google in the advertising market. Microsoft is currently in the middle of what could end up becoming a hostile takeover of Yahoo, after the company rejected the software giant's US$44.6 billion cash and stock offer. Microsoft is now rumored to be mounting a proxy fight for Yahoo.

While Mundie acknowledged that he couldn't discuss much about the ongoing Yahoo proceedings publicly, he did concede that Microsoft is eager to acquire the company and move ahead on the Web. "Right now we'd just like to close the Yahoo deal," he said.

Even if the deal does not go through, however, he said Microsoft is confident its own Web strategy, fueled by a combination of software and services rather than an entirely Web-based portfolio, will eventually help the company catch up to Google -- barring a "major screw-up" on Microsoft's part.

Moreover, Microsoft has a multiyear lead on Google in providing software in mobile phones, another area where the Internet company aims to compete. "They're sort of late to the cell-phone thing," Mundie said, noting Microsoft's success with its Windows Mobile OS, which powers millions of smart phones worldwide

Apple's Mailing List Blunder

Emails from the Apple's Weekly-kbase-changes flooded my inbox, containing not the updates I was used to receiving, but confused emails from Apple subscribers.


Re: Confirm Emails

I was surprised today, seeing that I got about 30 emails in my mailbox. Curious who emailed all of these, I checked it out.

As it turns out, they were a collection of messages, all with the same subject: "Re: Confirm." They were all from people on Apple's Weekly-kbase-changes mailing list, to which I have a subscription.

Apple's weekly-kbase-changes emails contain some of the recent changes in, well, their knowledge base changes. At the bottom of each email from Apple, it states that "Do not post admin request to the list. They will be ignored." Apparently, someone ignored the request and did reply. This led to further replies, and somehow, was sent to everyone in the Apple's mailing list.

By the end of the day, I wasn't receiving any of those email, but like I said, I received about 30 of them. Here's some of the lines in the email:

“What is with all these confirm emails?” John

“I was wondering the same thing.” Robert

“I am curious as well.” Richard

“Beats me, Apple mail list got hacked I guess.” Kerry

“I echo the same question. I think it has something to do with KBase updates … or lack thereof.” Steve

“I have received two such messages, and am at a loss to know why.” Adair

“Hmm. I think that I didn’t realize this was a public list, that anyone could post to, and a couple of folks were trying to confirm subscriptions, perhaps. My bad? I guess so. Didn’t mean to set off a storm, haha.” John

“SPAM. All on this list - PLEASE DO NOT SEND ANY REPLIES TO THE GROUP.” Scott

“Gentlemen: I got a notice regarding the weekly kbase changes. I assume that I am being sent this email to see if I wish to continue. The answer is yes I enjoy the articles very much.” Jim

“Please make the changes to prevent this from happening!!!” Greg

“Be interesting to know how many thousands around the world are receiving these emails.” Tim

“Confirm what? Please advise.” Liu

“JUST STOP REPLYING!!!” David

“Sorry guys, I do not have a clue what is going on…it feels like a Microsoft-Gates thing.” Robert

“Will you please all stop replying. Let the situation get resolved and leave it alone. Thank you.” Shane, Mac Genius

Not a big deal. I just thought that you might want to know.

P.S. Please do not confirm.

Microsoft Merger: Assures Jobs

A merger would still leave plenty of jobs to go around, a Microsoft exec reassures staffers of both firms.

Microsoft Pledges Job Security for Yahoo Workers

SEATTLE (Reuters) - Microsoft Corp suggested on Friday that it had no plans to make major lay-offs if it succeeded in buying Yahoo Inc, saying there were plenty of employee opportunities throughout the company.

Kevin Johnson, president of Microsoft's platforms and services division, said in an e-mail to employees in his unit that the company would dedicate "significant rewards and compensation" to retain Yahoo and Microsoft employees.

"While some overlap is expected in any combination of this size, we should remember that Microsoft ... has hired over 20,000 people since 2005, and we would look to place talented employees throughout the company as a whole," Johnson wrote in the e-mail that was posted on Microsoft's Web site.

"We have no shortage of business and technical opportunities, and we need great people to focus on them."

The e-mail sought to ease some of the concerns expressed by Microsoft and Yahoo employees about a potential merger.

Yahoo said earlier this week that it had put in place generous severance benefits that would be given to all employees who might be laid off if the company was sold. Analysts said it was common for a company in play to provide "golden parachutes" to take care of employees.
The companies are at a stand-off in Microsoft's $41.2 billion unsolicited bid to acquire Yahoo. Microsoft has offered to buy Yahoo for $31 a share in cash and stock, which Yahoo's board rejected, saying it undervalued the company.

Separately, two pension funds sued Yahoo Inc and its board for rejecting Microsoft's offer. The suit said Yahoo was pursuing other deals that were not as beneficial to its shareholders.
Lawsuits by Yahoo shareholders have multiplied in the wake of Yahoo's February 11 refusal to entertain the offer, which represented a 62 percent premium over Yahoo's share price at the time.

Johnson, whose division would ultimately absorb most of Yahoo, said the company would be "pragmatic" in how to address Yahoo's computer systems since they are not Windows-based.
In some acquisitions, Microsoft has prioritized continuity, according to Johnson, and the company has worked to make sure the acquired company's existing systems worked with Microsoft's own technology infrastructure.

He also downplayed the cultural differences between the two companies, seen as a hurdle to a smooth integration, saying some aspects of the two cultures will merge quickly, while others will remain unique.

Yahoo would bring a Web-centric view, media expertise and advertising talent to Microsoft, according to Johnson, who said Microsoft plans to maintain Yahoo's presence in Silicon Valley if a deal goes through.


(Reporting by Daisuke Wakabayashi; additional reporting by Gina Keating in Los Angeles. Editing by Braden Reddall, Leslie Gevirtz).

The New Silverlight 2

A Microsoft official's blog sheds new light on the company's Silverlight 2 browser plug-in technology.

Microsoft Readies Silverlight 2 Beta


Shedding new light on the company's Silverlight 2 browser plug-in technology, a Microsoft official wrote a blog post today that emphasized RIA (rich Internet application) development capabilities planned for an upcoming beta release.

Microsoft's Scott Guthrie, general manager in the Microsoft Developer Division, provided a list of features planned for Silverlight 2 and the beta in his blog. A Microsoft representative subsequently described the blog as the most detail provided to date on Silverlight 2.

With the Silverlight platform, Microsoft is expected to tackle Adobe and its popular Flash technology in the RIA space. Microsoft's Mix08 conference in Las Vegas in two weeks seems like the obvious place to introduce the beta as Silverlight was the star attraction at the Mix07 conference last year. The Microsoft representative would not comment on whether this would actually be the case but did acknowledge plans to ship the beta during the first quarter of this year.

Featured in version 2 is a cross-platform, cross-browser version of the .Net Framework, Guthrie said. Developers can write Silverlight applications using a .Net language, such as Visual Basic, C#, JavaScript, IronPython, or IronRuby. Microsoft plans to ship support for developer/designer workflow and integration for Silverlight in its Visual Studio 2008 and Expression Studio tools.
The introduction of Silverlight 2, which had previously been named Silverlight 1.1, is critical to Microsoft as it battles Adobe, an analyst stressed.

"That's the one that uses the .Net Framework for programming so it can leverage all of Microsoft's developer tools," said analyst Rob Helm of Directions on Microsoft, an independent research firm. "Developer tools could become Microsoft's secret weapon," since many developers already are familiar with Visual Studio and .Net Framework, he said.

The 1.0 version of Silverlight has been more geared to video, while Silverlight 2 adds .Net development and transactional capabilities. To bolster RIA development, the Beta 1 release will include a Windows Presentation Foundation UI framework for building rich Web applications. It offers a "powerful" graphics and animation engine plus support for higher-level capabilities, such as controls, layout management, data-binding, and template skinning, Guthrie said.

The Beta 1 release is 4.3 MB in size.

"Once Silverlight 2 is installed, you can browse the Web and automatically run rich Silverlight applications within your browser of choice," Guthrie said. This includes such browsers as Internet Explorer, Firefox, Safari, and others.

Rich controls in the Silverlight 2 beta include core form controls, such as TextBox and RadioButton. Built-in layout management panels, such as Grid and Panel, are offered as well. Functionality controls like Calender and DatePicker as well as data manipulation controls also are part of the beta. "The built-in controls support a rich control templating model, which enables developers and designers to collaborate together to build highly polished solutions," Guthrie said.

For networking, Silverlight 2 backs REST (Representational State Transfer), WS-*, and SOAP as well RSS, POX, and HTTP services. Cross-domain network access in Silverlight 2 enables Silverlight clients to directly access resources and data from resources on the Web. Built-in sockets networking also is included in the beta release.

Silverlight 2 features a rich .Net base class library of functionality, such as collections, generics threading, globalization, XML, and local storage. Rich APIs in the product enable HTML DOM/JavaScript integration with .Net code

Also featured is Microsoft's LINQ (Language Integrated Query) technology, which provides native query syntax for C# and Visual Basic, and LINQ to XML library support. This enables easy transformation and querying of data, Guthrie said. Local data caching and storage support are highlighted as well in Silverlight 2.

Net APIs in Silverlight "are a compatible subset of the full .Net Framework," Guthrie said.
"Silverlight 2 does not require the .Net Framework to be installed on a computer in order to run. The Silverlight setup download includes everything necessary to enable all the above features (and more we'll be talking about shortly) on a vanilla Mac OSX or Windows machine," Guthrie said.

Silverlight 2 applications can be migrated to become a desktop application using Windows Presentation Foundation and the full .Net framework.



For more IT analysis and commentary on emerging technologies, visit InfoWorld.com. Story copyright © 2007 InfoWorld Media Group. All rights reserved.

Firefox Increasingly Popular

The 500 millionth download of the Firefox browser happened last night, evidence of the immense popularity of the little browser that could.

Firefox: On Its Way to Web Domination?

According to the folks at Mozilla, the 500 millionth download of the Firefox browser happened last night. That doesn't, of course, represent a half billion people--I've probably downloaded various versions of the browser thirty times myself, for one computer or another--but it's still a whole lotta downloads, and evidence of the immense popularity of the little browser that could.

I like to do periodic reports of usage of Firefox on PCWorld.com, and these numbers too show Firefox getting more and more popular. The trend for Firefox usage is still trending upwards over time. In fact, January 2008 was the first month during which a third of site visitors--34.36 percent, to be overly exact--used Firefox.

Internet Explorer remains the most-used broser at PCWorld.com, but total usage for IE 7, IE 6, and the dregs of previous versions has fallen below sixty percent. (Back in September 2004, when Firefox was still an obscure beta, just one percent of visitors used it--and around 90 percent of visitors used IE.)

PCWorld.com users are a lot more likely than garden-variety Internet types to use Firefox--here's a report that has overall usage at around 17 percent. (Such data tends to vary a lot from source to source, though--here's another site saying that Firefox usage is around 25 percent.)

I hesitate to make any predictions here, but given that Firefox is no longer an unknown newcomer and its share is still creeping upward, and Microsoft seems to have lost the will to radically upgrade IE, here's a scenario that no longer seems wholly implausible: Firefox may eventually hit 51 percent usage, making it the Web's dominant browser by any definition.
If it happens...well, in that case I'll just pretend I predicted it rather than saying it could happen.

Firefox and Opera Tells More

An intruder could manipulate a flaw in how the browsers handle image files to see where the user has been surfing.

Opera, Firefox Bug Could Reveal Web Travels

Jeremy Kirk, IDG News Service

A flaw in the way the Firefox and Opera browsers handle an image file could allow an attacker to see what Web sites a person has visited.

The problem concerns how the two browsers handle a ".BMP," or bitmap, image file, according to an advisory written by Gynvael Coldwind of Vexillium.org, who posted a video illustrating the problem.

A malicious bitmap file can be created that pulls other information from the browsers' memory. Some of the information that can be captured is random, but at other times could be valuable, the advisory said.

"The harvested data contains various information including parts of other Web sites, users' favorites and history and other information," Vexillium.org said.

Using the "canvas" HTML (Hypertext Markup Language) tag supported by the browsers, an attacker can capture the data. Then, using JavaScript, the information can be sent to a remote server.

The flaw could also crash Firefox. The vulnerability affects Firefox 2.0.0.11 and previous versions of that browser as well as the beta version of Opera 9.50.

source: www.pcworld.com

Yahoo Explains the Rejection

CEO Jerry Yang explains to shareholders why Yahoo rejected Microsoft's acquisition bid.


Yahoo Sends Letter to Shareholders Over Microsoft Bid

Yahoo CEO Jerry Yang cited the growing online advertising market and his company's position to take advantage of that growth as reasons for shareholders to reject Microsoft's acquisition bid, he said in a letter to shareholders Wednesday.

The letter, the contents of which Yahoo made public Wednesday, stated that Microsoft's February 1, US$44.5 billion [b] unsolicited takeover offer was too low. Yang said that Yahoo is the most visited site in the United States, held the top position in online display advertising, and counted almost one out of two of the world's Internet users as its members. He also said Yahoo is the top mobile destination in the U.S.

Yang did not cite sources for most of his claims. However, comScore Networks research from November 2007 confirmed Yahoo's online display advertising leadership, with almost 19 percent of the market.

The online ad market is expected to grow from $45 billion last year to $75 billion in 2010, Yang said, and that Yahoo wanted "to take advantage of what we see as a unique window of time in the growth -- and evolution -- of this market to build market share and to create value for stockholders."

The company plans to grow visits to its properties "by 15 percent per year over the next several years," although did not specify how. He also said that Yahoo's own search marketing system, Panama, along with two 2007 acquisitions -- Right Media and Blue Lithium -- would "complement and enhance Yahoo!'s existing capabilities and will make it easier for advertisers and online publishers to buy and sell advertising online."

Both Yahoo and Microsoft have struggled to compete with Google's success in online advertising, specifically its paid search and Adwords programs. Based on the same comScore data, Microsoft captured only 6.7 percent of online display ads. That poor performance is seen as the main impetus behind its move for Yahoo.

The letter made no mention of talks with News Corp. for some sort of share swap, intended either to offset Microsoft's interest or force the software company to boost its bid for Yahoo, as reported late Wednesday in The Wall Street Journal.

Storm Worm Reappears this Valentine

Security vendor McAfee warns of a Valentine come-on that downloads a virus instead of a greeting.

Storm Worm Reappears as Malicious Valentine

Carrie-Ann Skinner, PC Advisor

A Valentine's themed outbreak of the Storm worm has been detected.

Around the world, malicious e-mail messages are being received that contain a link that directs users to a website where they can supposedly download a Valentine's card, but in fact are infected with the Storm bug. The virus mirrors the fake Christmas and New Year messages seen in previous months.

According to Greg Day, security analyst at McAfee, the virus will try to steal personal information from your PC, bring down its security defenses and use your PC to send out millions of junk emails.

"There are about 10 million PCs worldwide infected with the Storm worm. These threats have suddenly spiked from 0 percent of all spam emails to 1.5 percent and they are continuing to rise as we draw closer to Valentine's Day and more people are fooled into downloading the malicious file," he commented.

"With all the hype that surrounds Valentine's Day, it was only to be expected that they (the people behind Storm) would use a similar tactic and exploit people's eagerness to receive Valentine's cards," added Diego d'Ambra of email-security company SoftScan.

source: PCWorld

Microsoft Releases Patches

Eleven security updates are released today that fix a number of critical flaws in Microsoft products, including Windows, Office, and Internet Explorer.

Microsoft Releases Massive Set of Security Updates

Robert McMillan, IDG News Service

Microsoft released 11 security updates today that fix critical flaws in its products, including a publicly known ActiveX bug that affects users of the Visual FoxPro database.

In total, 17 individual software flaws were patched in the updates. Microsoft rates six updates as critical, meaning they should be installed as soon as possible, while the remaining five updates are considered "important." Last month was an easier month on IT administrators, when Microsoft released just two updates.

Microsoft surprised some by releasing one less update than expected. Last Thursday the software vendor had said that it was readying a fix for critical VBScript and JScript flaws in Windows 2000, XP, and Windows Server 2003. That update wasn't included in this week's patches, but Microsoft today wouldn't confirm that it had actually dropped the update because "this could put customers at risk," according a spokeswoman for the company's public relations agency.

Security experts said Tuesday that the MS08-010 update, which fixes four bugs in Internet Explorer, should take top priority this week. "There are four vulnerabilities within that particular patch and all of them are remote-code executable," said Jonathan Bitle, director of technical account management with Qualys.

"The way we're looking at it, our prioritization would put MS08-010 at the top followed by MS08-007," said Don Leatham, director of solutions and strategy with Lumension Security.
MS08-010 fixes a publicly disclosed ActiveX bug that affects Visual FoxPro users. Although hackers have already posted code showing how to exploit this vulnerability, the buggy ActiveX control is not included in Internet Explorer 7's default list of controls, so the flaw should not affect most users.

The MS08-007 update fixes a critical flaw in the Windows XP and Vista WebDAV redirector software. WebDAV is a Web-based document sharing protocol. The flaw is rated important for Windows Server 2003 users.

Microsoft's Office products are also a major source of patches this month.
Tuesday's updates include critical fixes for Microsoft Word, Office Publisher and in Office itself.
There is also a critical update for Windows' Object Linking and Embedding (OLE) Automation software.

The remaining updates, rated important, are for Active Directory, the Vista TCP/IP stack, the Microsoft Works file converter and two bugs in the Internet Information Services (IIS) Web server.

The Patch Tuesday updates show that client-side bugs continue to be a much higher risk than server-side vulnerabilities, said Andrew Storms, director of security operations with nCircle. "One would have assumed that the IIS and Active Directory vulnerabilities would have been the most serious because they stand at the core of an enterprise and provide more critical services" he said via instant message. "But with this month's patches, the hacker's best bet is to take advantage of the client-side attacks."

source: PCWorld

What's Behind Yahoo's Rejection of Microsoft Bid

Experts see the bid rejection as a negotiating strategy to elicit a higher offer and not as an attempt to resist a deal at all costs.


What's Behind Yahoo's Rejection of Microsoft Bid?

Yahoo's rejection of Microsoft's acquisition bid is likely a negotiating strategy to elicit a higher offer and shouldn't be seen as an attempt to resist a deal at all costs, according to analysts.

Neither Microsoft nor Yahoo has many options to improve their position in online services and advertising, and combining forces is their best bet against common rival Google, analysts said.

"It's part of a larger negotiation that's occurring. Clearly, Yahoo should be and is seeking a higher bid, and this is part of that process," said Clayton Moran, a financial analyst with Stanford Group.

Yahoo is unlikely to find a company willing to bid as much as Microsoft for it, while Microsoft will not be able to attain its Internet goals by acquiring a company other than Yahoo. "While they need to negotiate and go through the process, at the end of the day this deal will happen," Moran said.

Yahoo today rejected Microsoft's bid, saying it undervalues the company. Microsoft offered to pay $31 per share for half of Yahoo's outstanding shares and 0.9509 of a Microsoft share for the other half.

At the time of the offer, Microsoft's stock stood at $32.60 and the bid was valued at $44.6 billion, a 62 percent premium over Yahoo's stock price at the time. However, the bid's value has dropped with Microsoft's sliding stock price, which at press time was $28.10. At the same time, Yahoo's stock price has risen from a close of $19.18 on the day before the bid to $29.75 at press time.

Moran predicted that Microsoft will adjust its offer so that it ends up at $35 per share, probably increasing the fixed cash portion and reducing the variable stock portion so that value is less vulnerable to Microsoft stock fluctuations. A $35-per-share offer would be a midpoint between the original bid and the $40 per share Yahoo is reportedly seeking.

"We continue to view a Yahoo sale to Microsoft as the most likely outcome," Citigroup financial analysts wrote in a note published Sunday after press reports over the weekend that Yahoo would reject the Microsoft bid. The rejection isn't surprising, but rather consistent with Yahoo's board job to "extract maximum value" for shareholders, the Citigroup analysts wrote.

Yahoo has reportedly held talks with Google and AOL to explore alternatives to a Microsoft acquisition. One scenario being floated would be for Yahoo to outsource its search advertising business to Google, while another, reported Monday by The Times of London, has Yahoo and Time Warner's AOL discussing a possible merger.

However, neither option would match the potential benefits of an acquisition by Microsoft, Moran said. "A combined Yahoo-AOL wouldn't be particularly strong, and Yahoo's stock wouldn't react favorably to that deal," Moran said. A search partnership with Google would boost Yahoo's revenue but it wouldn't address larger problems within the company, he said.

For Moran, if Yahoo has approached AOL, it has done so probably to send a message to Microsoft that it has other options and that Microsoft has to sweeten its offer. Meanwhile, Google's intervention is probably directed at complicating and lengthening the negotiation process between Microsoft and Yahoo, and thus delaying the formation of a stronger rival, Moran said.

While merging with AOL is unlikely to give Yahoo the boost it needs, such a deal would probably be more palatable to Yahoo's management, because Yahoo would be the strongest party in the fusion, according to industry analyst Greg Sterling of Sterling Market Intelligence.

"Yahoo sees its own demise in a Microsoft acquisition. My sense is that Yahoo's management believes that Yahoo's soul wouldn't survive as part of Microsoft," Sterling said.

At this point, the situation is very complicated for both Microsoft and Yahoo. If Yahoo is intent on fending off Microsoft's advances at all costs, Microsoft could opt to walk away empty-handed and face a public embarrassment, or attempt a hostile takeover, which could alienate and scare away Yahoo employees it would want to retain, Sterling said.

At the same time, Yahoo can't simply wave away a generous Microsoft offer if it doesn't have an alternative to it, Sterling said. "There is a great deal at stake for both sides, and it's very complicated," he said.

Microsoft declined to comment about Yahoo's rejection. AOL didn't immediately reply to a request for comment about its reported merger talks with Yahoo.

Microsoft Tries Absorbs Yahoo

Analysis: The pairing gives Microsoft a needed outlet, but the outcome could quash Yahoo.


Would Merger Demote Yahoo to a Microsoft Front End
Elizabeth Montalbano, IDG News Service

While dealing logistically and technically with their overlapping online offerings will certainly prove troublesome if its bid to purchase Yahoo succeeds, Microsoft will at least have an immediate outlet for bringing more of its traditional desktop portfolio to the Web and to a broader customer base.

Microsoft has been trying for more than two years to find a critical mass to adopt new online services beyond search, e-mail and instant messaging under the Windows Live brand -- with little success. Its early MSN e-mail and IM offerings are popular enough with Web users; however, users of Google and Yahoo online services have been loathe to adopt the revamped Windows Live offerings in favor of the ones they're already using.

Not only could that change if the company purchases Yahoo, but Microsoft also will have a ready-made Web front end for rolling out more of its desktop applications as services, said Paul Fox, CIO of Guy Carpenter, a New York-based reinsurance company.

"The Yahoo platform is really what they're buying," he said. "With Yahoo they're tapping into the base culture of the Internet online community that's matured over the last 10 years. It's going to make it easier for people to take a look at and try their services, whereas before it had to be a more conscious effort."

Aside from the usual raft of consumer applications like search, e-mail, maps and the like, Microsoft already has brought some of its many business desktop applications -- such as Office and CRM -- online in hosted, though often scaled-down, versions.

Access to Yahoo's estimated 500 million visitors per month will give it a new channel to deliver what the company now calls its "software plus services" strategy, as well as buy the company time to bring more competitive versions of applications that were originally coded for the desktop to the Web.

Indeed, in the conference call discussing the Yahoo bid Friday, Microsoft CEO Steve Ballmer made a pointed reference to efforts to shed its desktop legacy and move even aspects of its Windows OS to the Web, a trend the company started with some features in the latest version, Windows Vista.

"The Windows user wants to be live, the Windows experience needs to increasingly embrace the Internet," he said. "There will be a Windows Live, there will be an Office Live, as we continue to bring out innovations in which Office transforms and is transformed by the Internet."

Ballmer also likely had the rising popularity of Web-hosted productivity software such as Google Apps, Zoho and Yahoo's Zimbra in mind when considering how to Web-enable Microsoft's desktop software. So far, Microsoft's Office Live has been more of a way for small businesses to get up and running with a Web site and basic hosted business applications like accounting and CRM; however, bringing a full productivity suite to the Web has been Microsoft's plan for some time.

Microsoft also can leverage its own strength among business customers to bundle and technically link applications so customers buy an all-in-one package rather than individual products. For instance, Microsoft has created tight links between a new unified communications product, Office Communications Server, and its Office and SharePoint collaboration software so customers must buy them all together to create comprehensive infrastructure. Microsoft can make similar attachments between online versions of its applications -- or just bundle them together in creative ways -- and market them to a broader audience.

"If Microsoft does something well, it's bundling products and services," said Ned May, director and lead analyst of marketing research firm Outsell. He joked that if Microsoft purchases Yahoo, there might come a day when you start up Windows and "up pops Yahoo and it takes you three days to remove that functionality."

"Yahoo provides a platform in many regards -- an audience of 500 million people to which you can bundle products and new offerings," May said.

Doing quick math, May figured that at "500 million a month for about $44 billion" it will cost Microsoft about $86 a head for acquiring each member of its new audience of Web users. "Not a bad deal," he said.

source: www.pcworld.com