Microsoft/Yahoo! Deal Officially Off

With Microsoft officially receding their offer to buy Yahoo! this week, Google is now in a prime position to overtake the enterprise software market within a few years, according to this recent news article at EWeek.

Even though Google is a small player now, the shift in the software business is moving towards “in the clouds” and SAAS. This primes Google to be a front runner within five years of this new, emerging way to operate. Inevitably, Microsoft is now going to have to catch up with Google, and find a way to launch themselves ahead of the already innovation-heavy giant.

With the failure of Vista, Microsoft needs to find a way to move their current profit equation into something that is more low-margin and which is supported by selling a high volume of products. The reason Yahoo! was so appealing was the fact that they had invested and developed cloud computing. Now, Microsoft must find a way to create this internally.

At Search Engine Land Danny Sullivan thinks that Microsoft has spent the past few years chasing after Google in terms of internet search, while Google has been slowly inching in on enterprise software, and now Yahoo is left with running ads of its chief competitor on its website.

So what’s next for both companies? One thing is for sure, Yahoo! is still going to struggle to keep up with Google. And Microsoft needs to find a way to adapt to the oncoming evolution of software in the clouds.