When, I first heard about Microsoft's $40+ billion (1/2 cash + 1/2 stock) offer to buy Yahoo, my first reaction what similar to Mini Microsoft's. To put that figure into perspective, that's enough to buy over 2,000 Trulias (at $20 million each) or 500 Zillows (at $80 million each). That number is like visiting the Boeing factory in Everett, after seeing it; you just walk away with a sense of awe.

Put another way, it will drain Microsoft of its cash reserves and put the company into debt for the first time in its history. Fortunately, Microsoft earned about nearly $17 billion last year in income, so I suspect Microsoft has an excellent credit rating w/ the banks. Perhaps, the low interest rates and the upcoming recession also factored into Microsoft's decision.

However, during the past week or so, I've come to the conclusion that desperate times call for desperate measures, and great rewards sometimes only come with great risks and regardless of how it turns out, it'll be a great story to be taught in business schools for generations to come… Perhaps, the idea isn't as crazy as it sounds…

Wall Street knows Google is only human – After Google's last quarterly earnings report, the share price plunged by $40 / share. Granted, Microsoft's chart for the past 3 months doesn't look much better. But the fact that Google has shown a marked deceleration in paid click growth and difficulties with moving social network inventory, shows it is still a one trick pony (albeit one with a $150 billion market cap). Furthermore, Google still doesn't have any enterprise street credibility and I'm not the only one who thinks so.

Microsoft knows Google is only human – For years Microsoft has invested heavily in search, and technology wise I think Microsoft is finally starting to catch up. Note: catching up technologically is NOT the same is catching up in market share, traffic, and perception (that takes much longer). For the past year, I've found MS Live & Google to be roughly equivalent, or Google to be slightly better. However, to beat entrenched competitors, you need to deliver superior products, not just equivalents.

Earlier this week, I finally ran into a situation in which the search results Live returned were not only better than Google, but significantly so. I was looking for more information on Content Delivery Networks (CDN as us web geeks call them), and Google gave me a bunch irrelevant information on the Canadian Champions League, and random Canadian food/drug related topics (Canadian Viagra anyone?). Google earned a perfect 0 out of 10 on relevance. Microsoft's results weren't perfect, but 7 of the top 10 results were related to the topic I was interested in and the unrelated topics were less random. I was shocked Google would screw up this badly. Google should know that 1) I'm a software geek 2) 90% of my searches are on geek related topics, and 3) it should have a bias toward geek related things, all things being equal, because Google is at its heart, a company run by software geeks.

BTW – My search on Yahoo, included information on CDs (Compact Discs) & CDNs (Content Delivery Networks) and allowed to me filter my back to my original query. The filtered results were roughly equivalent in relevance to Microsoft's, so I'd give Yahoo a good grade as well. Granted, this was just one obscure search out of billions possible, but the fact Google fumbled something so badly, that usually it nails was a bit, how should I say it, encouraging for those of us who don't want to see Google own the internet.

Google knows Microsoft + Yahoo could beat them (or more likely, force them to start playing defense) – I didn't say Microsoft + Yahoo will beat them. Heck, the Yahoo + Microsoft merger is probably the best thing to happen Larry Ellison in the past 5 years. It might end up being the best thing that ever happened to Google too. One thing is certain, separately, Microsoft & Yahoo will not catch up to Google. Google has a critical mass that Microsoft & Yahoo separately do not.

But if Darth Brin finds the takeover unnerving and Google's head lawyer is publically whining about the deal, perhaps the Microsofties in Redmond & the Yahoos Sunnyvale, should be a little more optimistic about their chances and open minded about the possibilities. Granted, I completely agree with the skeptics that Google is going play the anti-trust poker game to the best of its ability, integrating Yahoo's alien technology w/ Microsoft's is going to be huge challenge, and finding a way to keep Yahoo's best brands and talent (while simultaneously, not destroying Microsoft's) is a marketing & HR nightmare.

Will Google lose? Probably not, but to paraphrase the wise Steve Jobs "Google doesn't have to lose in order for Microsoft to win." I'll put it another way, I'd take the Giants and the points because they are much better team than some people give them credit for. I believe Microsoft (w/ Yahoo's help) can put Google on the defensive, for the first time, and keep them honest. And if this doesn't work, at least Microsoft can go into the locker room knowing they left it all on the field and gave it their best shot.

At any rate, get'cha your popcorn ready. It's going to be one hell of a show, just like SuperBowl XLII was.