Microsoft still says it doesn't need Yahoo... but it adds, it might like to have Yahoo

Everyone knows the drama of Microsoft and Yahoo.  Or at least, most know the most recent developments, as the series' beginning at the end of January has been so long-running and drawn out that many have put the early developments out of mind. 

When DailyTech last reported on the ongoing drama, billionaire Icahn was preparing his board ouster with the help of potential future board member and vocal billionaire blogger Mark Cuban.  Microsoft said that it didn't want Yahoo, when Yahoo expressed fresh interest, but it softened a bit and applied for FTC approval of buying a portion of Yahoo stock to help Icahn, a pro-merger enthusiast, succeed in his takeover bid.

Now Microsoft's Ray Ozzie, the company's chief software architect is going on record and saying that Microsoft's interest is very alive and well.  Ozzie in an interview with eWeek discussed both Microsoft's current feelings for Yahoo and its online strategy in general.

Ozzie stated that Yahoo would speed up Microsoft's online vision -- the reason for its continued pursuit -- but that Yahoo did not define Microsoft online vision.  He mused, "Yahoo was not a strategy onto itself.  Yahoo is an accelerator. We'd love to still discuss possibilities with Yahoo."

These are significant words coming from the man billed as Bill Gates’ replacement as software visionary for the software giant.  Ozzie refused to spill the beans on the possible ongoing dialog between Microsoft and Yahoo.  Microsoft has mentioned in recent weeks that it is investigating interest in a potentially smaller deal that would stop short of a full merger.  A source knowledgeable about the talks says that Microsoft wants to snatch up Yahoo's search business and take a stake in the rest of the company.  In order for this to happen, Yahoo would sell of its sizeable Asian assets.

Bernstein Research analyst Charles Di Bona questioned Ozzie on Microsoft take on its rival Google.  Ozzie responded that Google was undoubtedly formidable, but that it was a familiar reoccurring face.   Said Ozzie, "Microsoft by necessity had to build up a culture of crisis.  Ever since the early, early days, Microsoft has always faced some amazing competitor that looked like it was going to be some roadblock to success."

He likes to compare the Google-Microsoft rivalry with the Lotus-Microsoft rivalry in the office software market in the 90s.  Ozzie says this competition is essential.  He says competition with Sony birthed the Xbox Live and Xbox 360 platforms.  And he says that competition has driven Microsoft to open parts of its software to its rivals to keep up with open source software.

He says that Microsoft is watching Google like a hawk and that Microsoft is going to make big changes based on the increased success of Google's "cloud computing" initiative.  Cloud computing is the trend towards multiple computers sharing resources and software through a centralized location, routed over the web.  Ozzie says that pure cloud computing like Google’s approach will ultimately lose to a hybrid approach.  He says that by halfway adopting cloud computing and half way sticking to traditional software, he feels Microsoft will have the edge.

"Software plus services is an industry trend, not just a Microsoft trend," he points out.  Ozzie points to Google and's efforts to develop offline applications.

While Ozzie's dialog provided little in the way of finalized details, it offered an interesting look at Microsoft current stance on Yahoo and where it sees itself in terms of competing with Google.

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