What would Microsoft gain?

Both Microsoft's and Yahoo's acquisitions over the last year and a half have been technological in nature: grafting tools and services onto their arsenals that both companies sorely needed to compete with Google.

"In some respects, Microsoft buying Yahoo removes a potential competitor in the online services and online advertising space," said AR Communications' Carmi Levy. "But at the same time -- and I think more importantly, because otherwise Microsoft wouldn't be bidding this amount [$44.6 billion] for this company -- Microsoft sees this as its only opportunity to leap-frog, or at least play catch up with, Google. If it continues to try to build out a services strategy and a services portfolio on its own, and tries to convert those services into viable long-term advertising based revenue, then it will not be able to do so as effectively or as quickly or as thoroughly."

But Coffin sees the modern Internet looking more fragmented now than it was 18 months ago or five years ago. And the reason for that derives from another big merger, the results of which...are still being debated.

"How much more dominant is the combination of Microsoft and Yahoo going to look to the world than AOL looked half a dozen years ago?" posed Coffin. "And look at [AOL] now, as one of the leading architects of this new, fragmented media marketplace, and how it's equipping itself to grow and prosper in this new media economy. So I think that the Internet is more about fragmentation and niche content than it is ever going to be about portals being a big part of the environment."

"This will make Time Warner / AOL look like putting a small Lego toy together," remarked Carmi Levy. "The ones you get with the Happy Meal.

"Obviously this will likely be the largest and most complex, most risk-fraught integration from both a technological and an organizational perspective, in the history of the technology space," he continued. "Mergers simply don't come bigger and more complex than this."

Which would make Right Media very valuable property...if Microsoft actually cared about it. But there's a good chance it doesn't.

"I think they'll be wrong [for Microsoft] to dismiss what will have gotten in Right Media," Coffin said, "and I suspect they'll find out that they have acquired, along with everything else, the world's most robust ad exchange. It's certainly the biggest.

"I think the ad exchange business, when we look back on it in a few years, will appear to us more to have been a bridge from how we get from an Internet world that was dominated by a handful of portals, to an Internet world that is very fragmented and dominated in the future by branded content networks," he continued. "The connective tissue between the first step off the edge from there to here will have been facilitated, I think we'll agree, by the ad exchanges."

But if Microsoft doesn't pay attention to such prizes as Right Media, it might actually find itself later having acquired a colossal problem: Remnant advertising inventory is most prevalent among portals, and Yahoo's is the biggest. Coupled with MSN -- assuming that's what Microsoft would choose to do -- that problem will only grow much larger. Coffin sees the problem from an ad buyer's perspective. He likens a possible portal-merger to the situation of a new homebuyer who moves into a neighborhood but brings a whole lot of junk with him to store in his attic, and perhaps to overflow his garage, and spill out onto the street. That's how a portal with a surplus of remnant inventory would look to ad buyers...and it's not a pretty picture.

"If they do buy Yahoo, it's going to create many more remnant pages than it's going to create pages suitable for sale at a higher value," said Coffin. "Indeed, that's why these exchanges and these ad networks like BlueLithium and Right Media made so much sense, it seems to me, to large players like Yahoo, because while we're talking about it in terms of squeezing out the last dollar from the last piece of unsold inventory, the reality is, the unsold inventory far exceeds the sold inventory, from a quality standpoint. And the nether reaches of portals and social networks go on for weeks and months, and portals are able to successfully sell at strong prices befitting the value of those places...But you start getting half a dozen pages deep in some of these places, and very quickly, it drops off, and there are many more of those than there are of the ones up front.

"It strikes me that the combination of Yahoo and MSN and all the different parts in-between is just going to compound all the stuff that's in the attic and in the basement and the garage. Just think of all of that stuff! That's a hell of a yard sale!" he proclaimed.

Next: Making the two cultures mesh