Microhoo, working with some good RDBMS [Relational Database Management System] and OLAP [Online Analytical Processing] DNA from the Microsoft side, might stand a good chance of tackling this problem. At a minimum, they could elevate user thinking about what search is really all about and, in my opinion, run circles around Google in the process.
Microhoo could also fix the perception of mediocrity that is currently dogging office-productivity-in-the-cloud solutions, foremost among them Googles offerings. Office, Sharepoint, Exchange Server, Biztalk and the like are real business applications and services that Microsoft is already hosting in the cloud.
Having them be available from Yahoo will help Microsoft get its cloud computing story out to the masses. Having real business software from Microsoft in the cloud should scare the bejeezus out of the kids at Google who are currently in over their heads trying to build out competitive offerings.
Finally, I think Microhoo could really drive the creation of an on-demand marketplace of services that would make Google shudder and Salesforce.com green with envy (and red as in red ink.)
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Microsoft has an ISV and developer community that is unparalleled, and its plans for cloud computing are very much focused on unleashing those developers to build and deploy apps that can be in the cloud or on the desktop pretty much interchangeably. The idea that these developers could offer on demand versions of their applications in the cloud with a pay-as-you-go model and no software downloads or IT cost needed could open up a marketplace, running, of course, on Yahoo, that will redefine on-demand and cloud computing once and for all.
So as long as I stifle my disinterest in business models based on media and advertising, I see Microhoo as an opportunity to leapfrog Google. Theres a lot more to making that happen including overcoming the institutional inertia that often dooms large mergers.
But by and large I think that if I were the gang at Google, Id be worrying about what Microsoft could do with Yahoo to execute an end run around my dead-end search business and my dead-on-arrival office productivity business. And then Id look at my quaintly quirky business ways and wonder what it will all mean three years from now, when Microhoo rises from the ashes of the current recession and starts making Google look like yesterdays lunch. Sometimes being a wunderkind means you never actually get to grow up. Until its too late.