From your earlier Will Microsoft Yell Yahoo? blog:

Google is more of a one-trick pony that is trying to learn more tricks, as the company creates more applications and pushes into new media like TV and mobile. Google's revenue is almost all advertising and the company largely makes money on stuff it doesn't produce.

Yes, but it does produce its own foundation software that drives the entire show. And while it doesn't show up on the market, it cannot be discounted.

By contrast, a Microsoft-Yahoo would have lots more tangible assets, such as software, as a foundation for a greater advertising play.

Again, Microsoft's assets don't really include software as much as they include licensing deals that led to a worldwide desktop monopoly that led to an immense war-chest that in turn can be used to purchase (but I repeat myself) government decisions that permit that monopoly to continue.
Microsoft's software shows up in the retail market, but Google's technology is superior.

Google's search infrastructure doesn't show up on retail shelves nor is it preloaded on personal computers or otherwise for sale. But it exists every bit as much as retail software exists, and it is a very valuable asset nonetheless.

So why would Microsoft and Yahoo fail to pair up? You asked for some reasons, so here are a few:
Because Microsoft's primary asset, its monopoly on the desktop which is helping fuel its chances for a monopoly everywhere else, it more of a liability than an asset as the merger gathers government scrutiny.

Microsoft wasn't really serious anyway, hoping that the engagement announcement might drive up the stock price. This doesn't seem all that outlandish considering the analysis pointed out by Roy at http://biz.yahoo.com/seekingalpha/070503/34354_id.html?.v=1

Steve Balmer is so busy posting comments on your blogs under the name of "Neil" that he dosen't pay enough attention to the company of which he is the CEO.

Brian
As I pointed out the analysis that "Roy Loves SuSE" pointed out, is ONLY an opinion and NO facts were mentioned to back up said statement !!
And you are an idiot !
My name is Neil and I live in Australia ya dummy !
You guys always believe in what you "want" to believe in don't you !

Oh, I dunno. Seems to me, Carl Howe *did* present some interesting facts:
Microsoft reported that it had redeemed about $1.7 billion in unearned revenue from its Technology Guarantee program during this quarter as the result of the Vista and Office launches. Microsoft had deferred that revenue collected from computers shipped in calendar Q4 2006 with Windows XP that would later have to be upgraded to Vista for free.
But if you back out that $1.7 billion from Microsoft's earnings for the quarter ended March 31, you find that it earned $0.31 a share, not $0.50. If you back out the entire change in the balance sheet between the beginning of the year and now, you find that Microsoft earned $0.24 a share. As a point of comparison, during the Christmas quarter before Vista and Office were available to consumers, Microsoft earned $0.26 a share.
Said another way, Microsoft achieved record breaking earnings during the Vista launch quarter by taking money out of its assets, not through amazing sales of Vista and Office.

MSFT's stock price really hasn't moved in 6 months.

Brian, I like your comment about Steve Ballmer posting comments as "Neil." Ballmer *is* something of a whack job. :-)

Steve Ballmer's Monkey Dance

It's easy to prove that Neil is not Steve Balmer. Neil is doing a hell of job defending windows...

Here is my list of why Microsoft did not buy Yahoo. Some are the same or similar to yours Joe. Please note this is not an all together serious list. Although they probably will buy Yahoo down the road. They are just looking for a better price. MS hates being 3rd, and doesn't like being 2nd. But at some point the reality of the situation will set in, and they will realize that this the best they will ever do against Google.

1. Cheap garage sale mentality of Gates and Balmer, which also lost them the sale of Doubleclick. I can just hear it now, Bill to Steve, lets come back next month when they really want to sell it and offer them 30 billion.

2. The man said we are not going to pay more than 40 billion for Yahoo, and the guess is Yahoo wanted appox. 52 billion. That man is not Steve Balmer. It is the guy who has always run MS, and will still as the largest shareholder, even when he steps down from the day to day operations, and lets Ray Ozzie take over. You can be sure, that Bill Gates is not going away. Steve and Ray will not do anything without the consent of Bill.

3. Bill and Steve were doing some heavy drinking and decided that their MSN/Windows Live plan would work in time. Even though it have suffered from continuing market decline after pouring in a lot of money into it, and some of MS best (worse) ideas.

4. As part of the deal, Yahoo owners had to stay around and help run Yahoo for a certain period of time. During this time, all computers at Yahoo would be forced to upgrade and use Vista, including the former owners of Yahoo. Also M$ wanted to change the name of Yahoo, but found that the name “Dogpile” was already taken, so came up with the name “Dogkrap or Dogkrap Live” instead.

5. Yahoo while still increasing volume, has started to lose market percentage to Google. Although its not in near as bad shape as MSN/Windows live. MS would now have more companies if it bought Yahoo, who would be losing share to Google.

6. Bill and Steve really hate to just complete, and want to be a monopoly at all things. Buying Yahoo means that Yahoo + MSN/Windows Live = number 2 Its really Google they wanted to buy.

7. Biil and Steve, Drunk and stoned again. Bill and Steve decided that MSN/Windows Live could be saved and enhanced. They would first fix the buggy and bloated code that made the search feature so slow and replace it with new Vista DRM enhanced code, with added transparent frames on the website. They would also let their friends at the RIAA and MPAA hack into the search engine and deny any searches that they wished to. After all, its working with Vista.

8. More heavy drinking and thinking. Bill and Steve decided that having set the default search engine in IE7 set to MSN/Windows Live in the new Vista, will in time kick Google's butt. To their credit this type of strategy has worked in the past. Google maybe on to their game though, paying Dell to reset the search engine default to Google. Whoops, good plan gone bad. At least till SP1 or the next replacement for Vista comes out.

9. Honor and Trust. MS decided that many Yahoo employees would quite rather than work for MS. Could it be that some people would have problems sleeping at night if they were working for MS? MS decided that many Yahoo custermers would move to Google rather than use a MS Yahoo. It seems some people do not trust MS with their email accounts or search requests. Also people are more aware of the MS lock in tactics being used, M$ has lost the trust of many users these days. You either love them or hate them it seems.

10. Bill and Steve decided they really did not need any more money, as they have enough money to buy several third world countries and still buy off all the governments of the free world. (I know, this one is completely lame, as these guys will not stop until they have every last dollar made) Since they had more money than could be spent in how many lifetimes, it was not necessary to buy Yahoo to make even more money.

After reading your list, it occurred to me how Hotmail went downhill after Microsoft got a hold of it. My kids and their friends continued to use Hotmail for a while, complained about how bad it was getting, and now are all Google Mail users.
So maybe Bill and Steve sobered up and realized that all they would get for their $40B would be to drive more and more people toward Google, and that Yahoo would be better competition to Google on its own.

You guys really are good you know ...you accuse me of being Steve Ballmer and then write some BS posing as me !
You want this site to hear only your views, I am allowed (or anyone else for that matter) to express my views here, Joe Wilcox would be the first to back me even though he and I have had our times.
So I stick up for MS sometimes so what, I (as I have said previously) do not think that MS is right all the time.
But you guys are something else !!!

Neil wrote: "Joe Wilcox would be the first to back me."

You're absolutely right, Neil.

In the interest of free speech, I tolerate some fierce banter here. Some of the commenters are pretty rough on one another, and me, too.

It's one thing to attack Neil. It's another to pretend to be him and demean him in the process. Impersonation of that kind is unacceptable behavior among Microsoft Watch commenters.

Neil, I'll let you choose whether the impersonation comment should be removed. Generally, I only remove spam comment. Everything else stays. But the poster's IP is new to the comments. And the IP is nowhere near where Neil's IP is from.

Please, let's have some good discussions. But be who you are, even if you insist on anonymity. I'm no fan of anonymous comments, even though we allow them here. If your opinion is so important, stand up for it by being identified. You might even find other commenters taking you more seriously.

Joe

Brian, You contribute "Google is more of a one-trick pony." Would you like to make a modest wager?

Joe
Thank you for your response to "my" comment, and yes I would like it removed as I find it deeply personally offensive.
I thank you for your Joe ...thank you !

Brian, You contribute "Google is more of a one-trick pony." Would you like to make a modest wager?

No, I didn't contribute this statement. I only quoted it.

My one point was if Google can be considered a one-trick pony (as, in having only one primary revenue source), then so can Microsoft. While Google's "one-trick pony" revenue source is advertising, Microsoft's "one-trick pony" is its immensely profitable monopoly, And based on the market performance of these two companies, their respective one revenue sources are impressive indeed.

If one builds a company and becomes a billionaire, who cares how many or few revenue models the company is built on?!!!

My other point was that Google's technology shouldn't be discounted just because it's behind the scenes and not on retail shelves. And software isn't Microsoft's asset; rather that would be its licensing deals and resulting monopoly position. Again, not a shabby asset at all. Often shady, but never shabby!

In this case I have got to support Neil completely, since the impersonalisation is unacceptable- I also only hope that Neil learns that a point is backed up by reasons and not with name-calling, mockery or adjectivising.
Now before celebrating the “reconciliation”of Jeff and Neil, I give you me list:
A video of the religious conversion of Yahoo's proprietor was found. It happened days before the possible sale of his company-and in this tape he regrets his sins and offers to end “the evil.” Nobody understands why Ms stopped the deal after this.

A banking organization offers Bill Gates a loan without interests for the purchase of Yahoo. When Bill recovers of the enormous happiness he feels, he begins to suspect something's up when he discovered that the guarantor was Google.

The fear to see Ballmer dance again.

Microsoft offering to pay Yahoo in Vista cds.

A note, threatening of the collective suicide of Yahoo's workers.

On the Internet, one proposal has appeared to denominate the date of the purchase “Hackers' Day.”

For the first time ever, someone in Ms has an “original” idea and proposes to use the 40 billions in paying people to use Hotmail-but there are rumours that people will only pretend to use it.

The universe enters in chaos and spiritual messengers warn of a lack of balance between yin and yang due to excessive diminution of evil. Bill Gates is required to diminish his charities (by the way, he had to do so anyway because Ms' shares were falling.)

er...impersonation..sorry.

I have just looked at the "Monkey Dance" video, and I just can't get over it !
The guy was just trying to "pump up" his audience (and himself) and seemed to do a great job of it.
I say "good on ya Steve" ... why? .... because he loves the company he works for !
I run my own business (nothing to do with computers/software) as well (in Australia) and I wish I had the "guts" to do what Steve Ballmer did, and I am passionate about my work/business as he is. Good on him !
He is not crazy ...just passionate ... and what's wrong with that !

Brian, sorry about the mis-attribution. Microsoft's problem has always been that they never really got out of the stand-alone desktop computer paradigm and although speaking as someone who has had an internet email account since the early eighties, in my estimation, they have layered onto it they *never* got what the network was about just as Novell never did and they have been been playing catch-up at a game they really do not understand despite what they say and guess what Google *does* get it. It is IMO humorous that a non-techie in Steve Ballmer is at the tiller now.

Neil,I do have respect for your point(and think that it is very gentle) but in my opinion, whether we like or not, Ballmer is a leader of opinion, and because of that, he is also exposed to criticism, therefore he knows the risk of having a lack of control over himself, if he was on his twenties, thin, with long hair , and was a rocker, his “dance” (very possibly) would be enjoyed, but clearly he's not any of these- and dancing and howling fall into the "ridicule" category (he took the risk and... got his dues-although he doesn't seem shamed at all- is he without sense of ridicule, perhaps?)

Claiming Microsoft is a "one-trick pony" because their only source of revenue is the desktop monopoly is a whole lot like claiming Daimler-Chrysler is a "one-trick pony" because they only sell cars.

Microsoft's primary source of revenue *IS* their desktop software (e.g. Windows and Office) and yes, they do enjoy a sizable (but shrinking) monopoly on the desktop, but Windows and Office are not their only source of revenue by any means. Their 2006 Annual report shows $3 billion in income from Servers and Tools and another $10.6 billion from their business unit (i.e. consulting services). Claiming that those business units are driven entirely by the desktop monopoly is an easy-to-believe fallacy--it's a nice conspiracy theory, but it doesn't hold water.

Microsoft is a highly profitable company because they build great software, do a great job advertising and know how to play the game. I don't always agree with their business approach and have at time found issue with their ethics (and lack thereof), but they are a highly competative, very profitable company with highly competent leadership. They're aren't going to go away over night.