Rumors are swirling that Microsoft and AOL are in talks to merge select parts of their operations (or possibly all of their operations) in a bid to take on Yahoo and Google. The talks are still in their early stages, and sources close to the story are refusing to be named for fear of recrimination.
If a merger were to take place what we would see is two established Internet players (Microsoft and AOL) abandoning a decade-long rivalry in order to compete with their younger, cash-heavy competitors (Google and Yahoo).
There’s a good quote in this story in Newsday from American Technology Research analyst Rob Sanderson:
“In relevance, they’re [Microsoft & AOL] third and fourth behind Yahoo and Google. So putting together the No. 3 and No. 4 to make a more relevant entity makes a lot of sense.”
So what piece would merge with which? Which email client would win out? Which messaging service would be left by the wayside? As Forrester analyst Charlene Li says in her blog,
“… it makes a lot of sense to combine the two operations, especially on the back end. But merging the two actual portal consumer experiences into a unified site will be a nightmare… Consumers would rebel at any effort to combine the two together.”
Richard McManus of ZDNet has some great commentary, including a few alternate perspectives that Google, and not Microsoft, may be the most likely candidate to buy AOL.
