Microsoft’s withdrawal of its Yahoo acquisition proposal may just be a negotiating tactic.  Or it could in earnest.  Time will tell.  And many shall opine.  But what is the significance of the move?

I have heard a few people express relief that the deal won’t be happening.  I can understand this, to a point.  Almost exactly one year ago, I told Liz Montalbano of ComputerWorld that I thought Microsoft’s heart wasn’t in it when it came to acquiring a Web advertising firm.  And when MS bought AQuantive for 3x what Google paid for DoubleClick, I was worried that the deal made no sense and was just a big waste of money.

But when MS announced their intent to acquire Yahoo, things started to make sense.  Effectively, Microsoft has decided that being on the Web, and being a major player in Web advertising, is crucial to the evolution (and survival) of the company.  They’ve also decided that the combination of tactical acquisitions and organic development of MSN/Live ain’t cuttin’ it.  By bringing in Yahoo, Microsoft could thrust forward in this game, and bring in developers and executives who understood the space.  Furthermore, they could begin to derive real value from the AQuantive deal, since AQuantive’s ad serving platform and Razor Fish’s agency savvy could combine really well with the reach that Yahoo’s network of sites would provide.  Add Silverlight to the equation, with its rich media capabilities, and things get really exciting (and Yahoo’s presence on the Web could easily get Silverlight over the adoption hump it now faces).

Sure, Microsoft + Yahoo looks like a difficult cultural combination, and a difficult technological combination too, given Yahoo’s prolific use of Open Source software.  So what?  Let Yahoo operate largely separately, but let its executive and senior technical ranks collaborate closely with AQuantive and Microsoft “proper” on the necessary ad serving and ad network technology.  Let Microsoft re-invigorate Yahoo’s once exemplary developer program; after all, that’s what Microsoft does best.  And let the coalescing among the ranks take place gradually and naturally.  The people on most Microsoft product teams are bright, good-natured, and enthusiastic about their jobs.  Executive-level bickering aside, I strongly believe that technologists at both companies would get along really well, once all the animosity stopped being newsworthy and people got down to work.  Does that sound naive?  I stand by it.  Cast aside the stereotypes; the techies at Microsoft are talented and welcoming and I can’t believe the Yahoo guys wouldn’t reciprocate.  Some would leave right away, but the rest would really start to like coming to work.

I don’t think Microsoft should have paid $37 a share; I think $33 was already very generous.  So, from that point of view, walking was the right thing to do.  But if Yahoo doesn’t come back to the table with more reasonable demands, what will Microsoft do?  They need this deal, despite Steve Ballmer’s protestations to the contrary, and despite the prevailing wisdom that the merger would be unsuccessful.  And they’ve showed their hand, so the market knows they need the deal too.  I don’t see a good alternative acquisition.  And I’m considering AOL when I say that.  If Microsoft fails here, and continues to mis-handle its damage control around Vista, then the company will be in a bad place.  The setback won’t be irreparable, but it will be significant.

We’ll have to wait and see.  But watch carefully.  The next few months are crucial to the world’s largest software company.

Two big Microsoft announcements surfaced this week:

1. Tibco is developing a TIBCO EMS transport channel for WCF.  This will allow .NET WCF services to communicate over Tibco’s Enterprise Message Service bus.  For high-perf, real-time messaging, Tibco is the gold standard.  Now the Microsoft stack can play in that territory.  Very nice.  Oh, and for a nice added extra, Tibco will standardize on Silverlight for its RIA (Rich Internet Application) needs.
2. Microsoft is acquiring Covast’s EDI technology for BizTalk and will make the technology available to BizTalk licensees with Software Assurance.  Building on top of the EDI advances in BizTalk Server 2006 R2, this brings BizTalk into an industry leading position on the EDI messaging front.  It also further enhances the value of the BizTalk license, which now includes a variety of adapters and accessories that once imposed significant additional third party costs.

It is worth considering the idea that one of these initiatives hedges the other: the Tibco alliance could be seen as a snub to BizTalk, as the two products compete.  Arguably, however, BizTalk does not compete with Tibco (at least not successfully) in high-volume, real-time message processing.  Conversely Tibco does not compete with BizTalk on price, and focuses somewhat less on the slower-paced B2B supply chain scenarios where BizTalk continues to make a name for itself. 

Furthermore, .NET and WCF can now work with both messaging servers, and that’s a win for the whole Microsoft platform.  So the two moves together are, I think, sensible, shrewd, and even brave.  The tacit admission of Tibco’s dominance in certain spheres of SOA message bus implementations shows good market insight on Microsoft’s part.  The investment in BizTalk’s EDI capabilities consolidates Microsoft’s position in another class of SOA implementation where BizTalk competes very well. 

Check.  Check.

Florent is closing.  I could have predicted it.  I still find it sad.  The place that transformed the Meat Packing District from no-go zone to hip, fun precinct is now, apparently, seeing its monthly rent rise from $5K a month to $60K.  No, that’s not a typo.  The irony, of course, is that the landlords wouldn’t even be able to get their current rent were it not for this pioneer. 

I’ve been going there since it opened in the 80s.  It was a place filled with beautiful people, and yet friendly and devoid of ’tude.  A combination that is increasingly rare now.  One of my best friends took his wife there on their first date.  I’ve taken 20+ years of friends and girlfriends, not to mention my wife

The growing list of disappearing, important Manhattan fixtures is becoming too large to maintain.  My childhood and young adulthood memories are being plundered.

Florent is going out in style though. For details, see The Gothamist.

Bye, bye LogMeIn.  Live Mesh includes a version of Remote Desktop, that works a lot like LogMeIn: it’s peer-to-peer, runs over HTTP and can (but doesn’t have to) run in the browser.  Management also feels simpler.  Plus you get the ability to copy files between local and remote machines via the clipboard (which LogMeIn’s free edition won’t do) and you can throw up a “curtain” on the host machine so that your remote session is not visible to people in front of the machine’s monitor.  And it’s all free.  As it should be, thank you!

Only issue is that syncing the local and remote machines’ resolution does not seem to be supported in the current preview.

Recent articles like this one have been speculating on the possibility that a potential flaw in IIS might be responsible for a rash of malicious iFrame attacks that have plagued the Web recently.

It would appear that IIS, ASP[.NET, and SQL Server are not the culprits.  A response to me and others, direct from Microsoft follows.

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We have been investigating these reports today and just posted two blog posts about them:

http://blogs.technet.com/msrc/archive/2008/04/25/questions-about-web-server-attacks.aspx

http://blogs.iis.net/bills/archive/2008/04/25/sql-injection-attacks-on-iis-web-servers.aspx

The high-level summary is:

These *are not* a result of any known security issue with IIS, SQL, ASP or ASP.NET (or any other Microsoft product)

These are instead the result of SQL injection issues within the web pages/applications hosted on these sites

 The above blog posts provide more details on the attacks and have pointers on how to make sure your site doesn’t have SQL injection issues.