What's Microsoft's Plan B?

My ZDNet blogging colleague Larry Dignan asks what Yahoo's Plan B will be, now that it reportedly is turning down Microsoft's $44 billion bid because it is too low. But I'm wondering about the flip-side of this equation: What is Microsoft's Plan B if it fails to snag Yahoo?

My ZDNet blogging colleague Larry Dignan asks what Yahoo's Plan B will be, now that it reportedly is turning down Microsoft's $44 acquisition billion bid because it is too low.

(Update: The leakers were right. Yahoo did reject Microsoft's offer, claiming it was too low. And now Yahoo is supposedly talking merger with AOL.  AOL??? Like that is supposed to scare Microsoft enough to up its offer?)

Meanwhile I am wondering about the flip-side of this equation: What is Microsoft's Plan B if it fails to snag Yahoo?

For my part, I think being thwarted in its bid to buy Yahoo might end up being the best thing that could happen to Microsoft. Does Microsoft really need 14,000 more employees and a number of properties that are redundant with what it already offers? CEO Steve Ballmer & Co. seem to believe so. But couldn't Microsoft just buy a bunch of point products, instead of a big, flailing Web 2.0 company? It would be a lot easier to digest a bunch of smaller companies and independent, standalone services than a big honking entity like Yahoo....

I'm sure Microsoft was expecting Yahoo to try to up the asking price. But given that Yahoo seems to have few alternatives to accepting Microsoft's offer, I wonder how much higher the Softies will be willing to go...

What do you think Microsoft should do, now that the Yahoo ball is back in its own court? Should Microsoft raise its offer? Call Yahoo's bluff? Let Google come charging in as the "hero" -- as well as the canary in the antitrust coal mine? Or start snapping up a bunch of point products that would give Microsoft the inventory it needs to attract more online publishers who are interested in ABG (Anything But Google)?

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