I didn’t see this coming, well at least not this soon. It goes to show how MS is worried about Google (Ads and Apps), and how they are having little success with Windows live. If they were able to lump Windows Live with Yahoo, they could give Google a serious run for their money.
The full letter can be found here.
Steve Ballmer list the synergies of this combination fall into four areas:
Scale economics: This combination enables synergies related to scale economics of the advertising platform where today there is only one competitor at scale. This includes synergies across both search and non-search related advertising that will strengthen the value proposition to both advertisers and publishers. Additionally, the combination allows us to consolidate capital spending.
Expanded R&D capacity: The combined talent of our engineering resources can be focused on R&D priorities such as a single search index and single advertising platform. Together we can unleash new levels of innovation, delivering enhanced user experiences, breakthroughs in search, and new advertising platform capabilities. Many of these breakthroughs are a function of an engineering scale that today neither of our companies has on its own.
Operational efficiencies: Eliminating redundant infrastructure and duplicative operating costs will improve the financial performance of the combined entity.
Emerging user experiences: Our combined ability to focus engineering resources that drive innovation in emerging scenarios such as video, mobile services, online commerce, social media, and social platforms is greatly enhanced.
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With the combined resources, experience, and talent, I believe they would be a very capable competitor. How they choose to execute their strategy in the event of a merger is ultimately up to them.