While some critics may chide Microsoft for losing focus over its desire to play in many markets, from desktop software to game consoles to mobile devices, the company's top guy says it's a necessary move to stay relevant in the market.
Speaking at Microsoft's MIX 2008 Web developer conference, CEO Steve Ballmer took questions from former Apple evangelist Guy Kawasaki, who is now managing director of Garage Technology Ventures.
Kawasaki kicked off the discussion by asking Ballmer: "Why do you want to buy Yahoo? What's the deal with that?"
The Microsoft chief reiterated what he and other company executives have often highlighted as the reason behind its bid for Yahoo -- to gain a stronger position in the online services market.
Ballmer said: "I think we have worked really hard to make it clear that we have real commitment, real aspiration and real tenacity about being a very serious player in the world of search and advertising.
"Advertising on the Internet is a big thing and will be the next superbig thing [and] search, in some sense, is the killer application for online advertising [and] we need to have a strong position in online search to be a serious player in the online advertising game," he added.
"Despite the fact that we are not where we like to be, in that we probably could have gotten into it sooner -- particularly on search and search related advertising -- we are very committed. We have a long way to go, and Yahoo seems to be a way to accelerate that."
Ballmer also revealed some possible integration plans, should a merger deal be reached with the Yahoo folks, which could see services from either side of the fence get thrown out if there are overlaps.
And it is likely that PHP (hypertext preprocessor), the open source scripting language for Web development widely used by Yahoo, will remain in the picture.
"We shouldn't have two of everything. It wouldn't make sense to have two search services, to advertising services, two mail services... We would have to sort some of that through," Ballmer said. "Some of that technology will undoubtedly come from the Microsoft side, some will come from the Yahoo side."
"Whatever technology comes, it also comes with an infrastructure that runs it. So I'm quite sure, when all's said and done, the question will be what we're going to do with PHP applications. I'm sure a lot of them will be running for a long time to come," he said.
He noted that there is still ongoing innovation in the core development infrastructure that goes beyond what is available on Windows, ASP .Net, Linux and PHP today. Over time, he said, most of the big Web applications will wind up being rebuilt and redone anyway, whether it runs Microsoft, Yahoo or other competing platforms.
"For the foreseeable future [at least], we will be a PHP shop if we own Yahoo, as well as an ASP .Net shop," he said.
On not being a one-trick pony
Kawasaki then asked if Microsoft risked losing focus from its desire to compete in a wide range of markets, spanning its flagship desktop software, the game market with Xbox, the mobile market with Windows Mobile, and the online advertising and search market.
Ballmer countered that to ensure continuing success, companies have to acquire multiple skill sets in order to stay relevant in the industry.
"Great companies either move forward or they become less relevant. I don't think there's an option of doing one thing, doing the same thing for 100 years, and never broadening your footprint," he said. "You have to constantly be moving forward and pushing."
He noted that Microsoft has already established two different skill sets in desktop and enterprise market segments. The question now is whether the company will succeed in building two new ones in devices and the online space, he said.
"Most companies only really build one skill set even if they have multiple products. [For example], Apple's skill set is really in consumer devices, they don't really do much of the rest of the stuff," Ballmer said, as he took a jibe at Kawasaki's former employer. "We've built two different capabilities. Will we build the third and fourth? We'll see. We have to push ourselves everyday because in this business, if you don't continuously improve what you're doing, you do become less relevant."
According to Bola Rotibi, principal analyst at Ovum, Ballmer clearly has his sights on positioning Microsoft as the platform on which people want to develop next-generation Web applications.
Rotibi told ZDNet.com.au sister site ZDNet Asia that the four skill sets the CEO outlined ensure Microsoft's technologies will touch all aspects of online user interaction and provide the seamless Web experience that the company has been championing throughout this week's conference.
Rotibi said: "[Microsoft's browser plug-in] Silverlight will give the cross-platform story and that it will support a heterogeneous environment, and WPF (Windows Presentation Foundation) gives the Microsoft platform."
First launched at last year's MIX conference, Silverlight currently clocks at 1.5 million downloads a day, according to Ballmer.
Rotibi said Microsoft will now need to evangelise its strategy and explain to the community of Web designers and developers how its technology fits into the bigger picture.
"The MIX conference has shown that Microsoft has focus [in pushing its online strategy], but they need to now make sure all the pieces meld and integrate well," she said. "It's about making sure people recognise what they need to do with the technology, how to make use of it and apply it to their jobs. Microsoft needs to not only help people with the technology, but also to understand how it relates to their role and their organisation."
Eileen Yu of ZDNet Asia reported from the Microsoft MIX 2008 Web developer conference in Las Vegas.