AOL-Google: What It Means For Microsoft

Microsoft a) showed restraint, b) lost a boost in search advertising, c) missed the chance to harm one competitor and partner with another one, d) all of the above. The answer: d and then some. Just how much losing out on AOL hurts isn’t easily calculated; in fact, it’s possible Microsoft may have missed at least one other opportunity in the process. The AOL-Google deal includes enabling communication between their instant messangers for Google Talk users who sign up for an AOL screen name, which could keep Microsoft from an AOL interoperability agreement of its own. Some observations via AP:

Marianne Wolk, research analyst, Susquehanna Financial Group: “It slows their progress. It doesn’t eliminate their progress.”

Rob Enderle, analyst: “It clearly would’ve given them bragging rights and it would have done Google a lot of damage. … For Microsoft it was kind of a nice to have. For Google it was a must have.”

David Garrity, director of research, Investec’s U.S. operations: “I do think from a cultural standpoint that Microsoft is not yet quite thinking in the way that they need to competitively.”

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