Yahoo Deal Is Big, but Is It the Next Big Thing?

In moving to buy Yahoo, Microsoft may be firing the final shot of yesterday’s war.That one was over Internet search advertising, a booming category in which both Microsoft and Yahoo were humble and distant also-rans behind Google.Microsoft may see Yahoo as its last best chance to catch up. But for all its size and ambition, the bid has not been greeted with enthusiasm. That may be because Silicon Valley favors bottom-up innovation instead of growth by acquisition. The region’s investment money and brain power are tuned to start-ups that can anticipate the next big thing rather than chase the last one.

Now Microsoft is trying to make up ground by buying what it has not been able to build. To many technologists and entrepreneurs here, the deal does not indicate any imminent threat to the Valley’s start-up culture or suggest that the region might go the way of Detroit; it underscores the health of the heartland that has produced waves of ever-more powerful technologies for more than half a century.

If Microsoft acquires Yahoo, some executives said, the question is whether it will shake its obsession with catching Google and instead look to the next generation of the Internet, even if it threatens Microsoft’s dominant position in PC software.
http://www.nytimes.com/2008/02/03/technology/03valley.html

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