In an interview with the Financial Times Microsoft CEO Steve Ballmer says that the company will try to get hold of Yahoo’s search business. Microsoft is no longer interested in the whole company. Pandia believes this a strategy that will help neither Microsoft nor Yahoo!

Ballmer clearly believes that Yahoo getting a new CEO will make a deal more likely. He says:

“We now have someone in place running our online business [Qi Lu, Yahoo's former search chief], and Yahoo’s out looking for a new CEO. If a search deal is to be made, it’s probably to be made in the interim period for new leaders in both places.”

What really makes this odd is the fact that Ballmer is only looking for the search part of Yahoo! and not the whole media company.

Keep in mind that Yahoo! is very good at creating content and services and remains — for that very reason — the most visited web site on the Web. Yes, that’s right, it is bigger than Google, and has a very strong brand.

As search goes, however, it is not doing so well. It failed to merge its three search engines (Inktomi/AlltheWeb/AltaVista) into a Google killer when it had the chance.

It bought pay-per-click text ad pioneer Overture (formerly known as GoTo), but did not manage to turn that into a worthy competitor to Google’s AdWords.

Microsoft has not been any better in this arena, but Live Search is not an inferior search engine compared to Yahoo’s.

So why does Ballmer want Yahoo’s search engine? It just does not make any sense!

Getting the brainpower

As far as we can see, there are only a few possible explanations.

Qu Li, formerly Yahoo Search, is now heading Microsoft’s search operations. It could be that he desperately wants his old colleagues to join his Live Search team. In other words: This is an issue of brain power.

Still, there must be cheaper ways of getting more Yahooligans to jump ship, especially in these troubled times.

Getting the brand

The most reasonable explanation would be for Microsoft to get access to the Yahoo! brand.

Microsoft has totally messed up it search engine branding. its search engine started out as MSN Search. That was not an inspiring name, but it made sense and was recognizable.

Since then it has been confusingly called Windows Live Search and Live Search. None of these names communicate well with the public.

The name Yahoo! does communicate, though. Not only is it more creative and less corporate (which is necessary when you are competing with an alternative culture like Google’s), it is also an old and well-known brand that predates Google.

If Microsoft were able to acquire the Yahoo! brand and brand it’s search services Yahoo! that would make a big difference.

Why should Yahoo! give up its brand?

Still, we can see no reason for Yahoo! to let go of its brand. After all, Yahoo! is the name used on nearly all its sub-sites and services, including news, mail, groups and entertainment (flickr is the main exception).

There are examples of companies sharing the same brand (Volvo Cars and Volvo Trucks come to mind), but in this case we find it hard to believe that Yahoo entertainment and online services portal would be willing to share the name with Microsoft, a company that also deliver news, mail etc. through MSN.

Finally: Yahoo! started out as a search company. Even if it were to keep its old web directory and sell the search engine, it would send a strange signal to the market to abandon one of its core competences.

Moreover, the Yahoo! portal would still need a web search engine. It could subcontract that function to Microsoft (or, as in the old times, to Google). Given the huge costs of running a global search engine, that could make sense economically, but strategically? No.

The Internet community need an independent Yahoo! search engine

We hope this half baked deal does not go through. It would be a huge loss for the Internet community to be left with only two (and a half, i we include Ask) big search engines. This industry needs strong competition to stay innovative.

Yahoo! needs its search engine, and Microsoft should be able to make much better use of the human and technological capital it already has.