It's not a big shocker and yet, we're all shocked anyway. I'm referring, of course, to the big announcement on Friday about Microsoft's self-invited bid to takeover Yahoo! ("embrace and enhance" is baaaack!).

So when two megaliths like Microsoft and Yahoo! make headlines on the mergers and acquistions page, what does it mean to smaller companies?

In the short term, it means absolutely nothing. Let's see if it happens first and then let's see how long it takes for it to actually happen.

Then again, think about all the small to midsize businesses that use both or either company. Here's a great chart listing just some of the services of both companies and where they overlap.

Google, of course, is having a hissy fit crying foul already and speculating anti-trust issues of biblical proportions (all the mirrors must be broken on their campus).

What would it mean to end users like you and me?

Pollyanna Scenario - Maybe Microsoft will use Yahoo! as a launch pad to become more of a Web 2.0 company, instead of a Web 1.0 company scrambling to put out some token Web 2.0 offerings. I have a long memory. Microsoft was pretty thick about the arrival of Web 1.0 back in the mid-90's. Remember: Microsoft at it's heart is a software company. Yahoo! could be very good for them, if they allow it. A big physical prescence in Silicon Valley might be good for their corporate culture, as well.

The Sky is Falling Scenario - - Microsoft beats all the fun and innovation out of Yahoo!. The two cultures couldn't be more different. Microsoft is the alpha cat. Do the math.


- Microsoft combines all those hotmail users and yahoo mail users and out-Google's Google positioning itself to become the turnkey web-based solution for small businesses to outsource their email. Microsoft manages, stores, encrypts all of your email.

- Yahoo! toolbars built into Internet Explorer, of course. This is really bad for Google. By far, their stickiest feature is still search. If their search engine gets severely winged, they get severely winged.

- Yahoo! mobile and Microsoft Mobile. Microsoft's elegant mobile operating system combined with Yahoo's mobile optimized search engine. Bad news for iPhone and the mythical Google phone. Remember: the emerging mobile web is the next big battlefield and Microsoft knows it.

- Vista is the Edsel of Windows operating systems. Next time around, not so. The next version of Windows will have much cooler bling from Yahoo! (better widgets, personalization pages, user generated content, features and mashups) and hopefully keep it simple and less bloated. But by that time, how many Windows users will have already jumped ship for good moving to Apple's' highly-touted Leopard or a Linux O/S?

- Web-based Office on Yahoo! There will be a stripped down free version just a step above Google Docs & Spreadsheets. The days of EULA-based Microsoft Office will be numbered, replaced by a subscription-based model with various levels of packages. It's heading there anyway.

I'll stop there for now. It's enough to make your head spin, isn't it? Bottomline: I think it'll be a good thing for us all, because it slows down the Google juggernaut. I think it'll be a bad thing, because it will slow down the move towards more open source.