Results

As the market for e-commerce and online business transactions continues to row, businesses are finding ways to ensure that web customers are having the same experience as those who visit brick-and-mortar locations. For example, a retail store like Best Buy wants to ensure that online shoppers can navigate to their video game section and find the product they came for just as easily as one could in the store. While Forrester research shows that 91% of companies surveyed say that internet customer experience is very important to them, it’s hard to know exactly what that means. How will businesses evaluate the satisfaction of online customers, and how will they make adjustments based on their findings?

When shopping online, it’s all too easy to find a competitor with the same product. If shoppers become frustrated by complicated interfaces or annoying advertising, they are far more likely to find an alternative than brick-and-mortar shoppers, who would presumably have to walk back to the car, navigate a crowded parking lot, and drive some minutes to another store. For this reason, online customer retention is a challenge facing many web retailers, and advanced measurement tools are helping them keep finicky customers.

One traditional software option was developed by TeaLeaf Technology, an offshoot of enterprise giant SAP. As the name suggests, TeaLeaf’s aim is to help businesses read the signs that their customers are having a hard time, and then find the solutions to help them retain their users. One high profile client who has successfully retained customers using TeaLeaf is U.S. Airways. They found that many customers were looking up flight schedules and prices on their website, but failing to purchase tickets. As reported by the Wall Street Journal, “The software revealed that many customers were typing in their frequent-flier numbers incorrectly…When the Web site couldn’t process an order, it notified customers they had inserted an error without being more specific.” TeaLeaf’s tool identified this error, and U.S. Airways saw their online ticket sales success rate jump to almost 100%.

Another tool which can help companies identify customer experience issues is Coremetrics, which follows the Software as a Service (SaaS) model. Their tool helped sporting goods giant Bass Pro Shops better focus email marketing materials. With so many different products for different sports enthusiasts, Bass has a uniquely large customer base. While many customers gave their email addresses as part of an online purchase, Bass Pro wanted to avoid “harassing” casual shoppers with unwanted emails while still sending special deals and promotions to targeted groups. Coremetrics platform allowed them to look at which items shoppers looked at and purchased, and they were able to target emails to user’s interests, causing a 10% increase in email-instigated sales.

While many businesses use some sort of website monitoring software, it takes a certain amount of expertise to interpret the data and find solutions to known problems. New tools like those provided by Coremetrics and TeaLeaf allow large and small companies alike to gather and understand web metrics that directly impact online customer experience. With more businesses realizing the potential value in reducing clicks and confusing interfaces, us avid consumers will hopefully find our web shopping experiences a lot more pleasant.

We’ve all been through a major software upgrade at work, and we’ve all experienced the training hiccups and usability headaches that follow. Traditional enterprise software is complicated, clunky, and difficult to learn. At my last job, an upgrade of our inventory database and customer service software paralyzed the company for weeks because the new system was so hard to use. Training was time-consuming and complex, and even the IT department was confused about how to perform our usual tasks. However, the days of impossible enterprise software are nearly behind us, as new offerings are mimicking the ease-of-use of our favorite websites. By incorporating web usability standards and familiar interfaces, new business software tools are edging out the clunky competition.

One such innovator is SuccessFactors, a San Mateo, California-based SaaS company which provides employee performance monitoring tools to businesses all over the globe. Their on-demand platform allows employees to create personalized profiles and set goals, monitor projects, and fill out evaluations. One of SuccessFactors clients, Belkin International, told the Wall Street Journal, “Most people just went in and used it [the program], no problem.” SuccessFactors purposefully used a familiar interface for their product to eliminate the need for ongoing training and tutorials, which can cost companies thousands of dollars and man hours.

CEO Lars Dalgaard says the system is “very much like an enterprise Facebook,” and the profile page was built on a social networking model. Employees can connect through personalized profiles, which display information such as work history, education, professional training/certifications, and a personal photo. Belkin uses this feature so that employees in different offices can get to know each other, despite having never met. By mimicking the look, feel, and ease-of-use of popular sites like Facebook, SuccessFactors can cut down the time it takes for employees to begin using their tools.

Another good example of this is Salesforce.com’s on-demand enterprise software. With over 1.1 million subscribers, Salesforce’s sales management service is one of the most successful tools in the SaaS industry. CEO Marc Benoiff told the Wall Street Journal that his visions, “was basically a replica of the Amazon.com user interface.” Training offered for the program is minimal, since many employees who use the internet on a regular basis are already comfortable with sites like Amazon, Ebay, or Facebook.

Some of the traditional website features that have sneaked into business software include “progress trackers”, which tell employees their “profile is 25% complete” or their goals are “65% completed”. Other packages have used a color-coded system to indicate progress on projects or documents, which gives employees immediate access to the information they need most. Many have incorporated search functions based on web algorithms, and sharing tools that automatically send emails to collaborators when changes have been made to a product or document. RSS feeds, like those used to stay up on favorite blogs and websites, are sneaking into enterprise systems so employees can follow the progress of a project or goal.

Both Salesforce and SuccessFactors are web-based, so it was only natural to apply web usability standards to their products. This trend, however, is likely to expand to traditional software companies who are daily losing market share to SaaS products. Both Oracle and SAP posted below-expected earnings for the quarter, and they are struggling to compete with innovative interlopers like Salesforce and SuccessFactors. Poor usability not only frustrates businesses, but also costs them money in training, man hours, and ultimately customer service. Perhaps user experience and usability should take on a greater role in their development process, as it clearly matters to businesses who use their products.

The wires are buzzing this week as Microsoft is reportedly experimenting with subscription-based versions of their productivity and security software packages. The new pricing plan, code-named “Albany”, is currently in private beta, and no announcement has yet been made as to when a wide release is scheduled. Albany will combine many of the tools that Microsoft users access on a daily basis, and the subscription will ensure that they always have the latest version without going through the headache of installing and updating software.

Albany will include Microsoft Office Home and Student 2007 (a combo of Word, Excel, Powerpoint, and OneNote), Windows Live OneCare (an anti-virus tool), Live Mail, Messenger, and Photo Gallery. It will also automatically install a shortcut to Office Live Workspace in users toolbars, which give access to on-demand versions of the Office tools. This combination is meant to appeal to users who aren’t satisfied with licensing agreements, which are not only expensive but also force users who want new versions to buy new licenses.

A Microsoft press release explains how the idea for Albany came about: “We asked consumers what they needed and wanted most on their PC, and the overwhelming response was that they primarily want productivity and security software. Consumers also expressed frustration at having to spend time and effort installing different types of software, keeping current on new versions and getting their computers set up.” The subscription plan eliminates this frustration by providing automatically updating software for a regular fee. Albany customers will always get the new software releases as they’re launched without paying more - it’s included as part of their subscription.

Reviews and reaction to Albany, as is customary for all Microsoft products, is mixed. One CNET blogger writes, “Seriously, this is pointless junk. The only real value is to Microsoft who get to see usage patterns and understand how on-demand software is consumed.” A bit harsh, but it is likely a perk of the venture that was not lost on Microsoft executives. A ReadWriteWeb article is considerably more forgiving: “Even though Albany won’t be a true web office offering, it is a likely low-cost alternative to Google Docs that lives on a user’s PC — something that is still more comfortable and familiar to many mainstream users.” Microsoft is clearly testing the SaaS waters before committing to any big move, and it seems this may hurt their chances in the eyes of some while helping hold on to more traditional customers.

While the plan for Albany falls short of a true Software as a Service model, it resembles the pricing and updating philosophies of companies like Salesforce.com and Google, both of whom are edging into Microsoft’s productivity software market. Salesforce.com tends to target businesses with customer relationship management (CRM) tools, while Google has been directly threatening Office with their online document, spreadsheet, and presentation applications. Microsoft’s Office Life is a nod to the SaaS trend, though it has yet to catch on with core customers in the business sector. As Albany moves towards a firm launch date, Microsoft’s competitors will be watching closely to see how users react to the packaged subscription model.

A new trend in SaaS applications has emerged in the online storage realm. Everyone from USAToday to CNN Money is recommending that everyday internet users engage in some form of off site document backup. One promising player in the on demand storage market is Mozy, which caters to businesses and individual users alike. Founded in 2005 in Utah’s burgeoning high tech market, they are owned by information storage company EMC. Mozy offers an enormous amount of online storage space for reasonable prices, charging as little as $4.95 a month for home users and different pricing structures for businesses. They even offer a free version with a 2 GB limit.

Mozy’s storage philosophy is composed of three tenets:

• You shouldn’t have to think about backup.

Backup should be set up once, and then work automatically

• Your files should be encrypted.

Your backup files should be encrypted and stored in a secure, remote location that’s only accessible to you — from anywhere.

• Your backups should be smart.

Your backup system should be smart enough to only back up data that’s not already been backed up, only back up parts of a file that have changed, and be able to back up open and locked files.

Mozy runs on a hybrid system, with backup done automatically using an installed software. Their website is quick to ensure users of the safety of their documents, offering layers of encryption and automatic backup for locked/open files and even Outlook folders. MozyPro and Mozy Enterprise, as the business versions are called, are even marketed to the health care industry, assuring HIPPA compliance with record storage by meeting encryption, security, and transfer requirements set by law.

Mozy’s success is partially due to their hands-off approach to backup. People want storage and backup to be automatic, like virus protection software. No one wants to spend hours figuring out which documents or files have changed, which need to be unlocked then relocked for backup, and how to use a complicated software tool. This service takes these tasks out of the hands of the user, and their software automatically locates and backs up files that have changed. Their testimonials from customers all point to the “lazy” factor, with one Jörn from Germany writing, “Mozy is great for lazy guys like me. My important files are updated, and I don’t do anything.” Their website also humorously points out alternatives to online storage, suggesting that the uninterested “Burn a new CD or DVD every Sunday night and store it at your brother-in-law’s office” or “Buy a $200 external hard drive and hope your office doesn’t burn down.”

Industry experts expect to see a growth in the popularity of online and on demand storage solutions. Both business users and home users are seeing the value of off-site storage for disaster recovery, and the prices for services like Mozy are competitive.

On-demand software has taken firm hold in the enterprise market. Businesses are turning to web-based applications for everyday activities, particularly when it comes to customer relationship management (CRM) tools. However, most businesses still rely on traditional software suites for document creation, collaboration, and sharing. While Google Apps and Adobe’s Buzzword are plenty functional for many small businesses, those with more complex needs are looking for enterprise-specific applications. Both SpringCM and Xythos offer unique SAAS document platforms designed with business needs in mind.

SpringCM offers a tool which is aimed at collaborative teams who want to create and share documents in an organized workflow. As their website puts it, “SpringCM makes document handling, workflow and collaboration, and business process management as painless as possible.” They’ve made frequent updates to the platform since its inception, now offering SpringCM 4.2. Some of the features they’ve introduced for business use include:

• Unique email address for each user (documents sent to the address are automatically added to the repository)
• Functionality for saving and reading documents within MS Office applications
• WebDAV folders for drag-and-drop access
• Multiple workflow function
• Diverse delivery options (email, PDF, fax, etc.)
• Advanced search capabilities
• Strong security parameters
• Customizable user interface

SpringCM’s offering has received accolades from industry experts, and it’s business-specific functions give it a leg-up in on-demand document creation. One especially useful feature is the ability to incorporate existing workflows into the application. For example, if an editorial team at a publishing company needed to review one document in specific phases (Editorial Director first, Editorial Assistant second, etc.), SpringCM would support the multiple steps in the project. It also allows any document to be saved as a template for future use. SpringCM offers free trial periods for exploration, and pricing is based on optional features and the number of users.

Another promising SAAS document application is offered by Xythos, which has developed an on-demand version of its popular Enterprise Document Management Suite. Xythos on Demand boasts a number of Web 2.0 features designed around business needs. They also offer potential customers a free trial period, with pricing based on number of users and storage needed. The application allows users to build WIKIs, manage workflow, access and collaborate on documents anywhere, share files securely, and subscribe to updates.

In an eWeek review, the last feature was especially impressive to testers: “All folders and content within Xythos on Demand can be subscribed to through an RSS feed…giving users notifications of changes to document repositories using the same feed-reading tools that they use for get updates from blogs and news sites.” This is a function I haven’t seen in any other web-based document app, and it makes perfect sense in a business setting. While many of us use RSS feeds to stay up-to-date on our friend’s blogs, the latest news, and industry publications, RSS feeds are beginning to make the jump into the enterprise world. Now, instead of walking into the proverbial bullpen to see how everyone is coming along, a team leader using Xythos can simply check his feed for a status update. This functionality has the potential to catch in in many different web-based applications.

Xythos’s offerings are geared towards an enterprise audience, and their website tries to assuage some of the common fears about outsourcing document hosting. They assure their clients, “All of your data in Xythos on Demand - your files, the metadata you put on the files, your user accounts - are only available to your organization. No one outside your organization has access to these.” This is in sharp contrast to Google Docs, where the Terms of Service pose a privacy concern for many companies. For example, Term 11.2 states, “You agree that this licence includes a right for Google to make such Content available to other companies, organizations or individuals with whom Google has relationships for the provision of syndicated services, and to use such Content in connection with the provision of those services.”

Now that on-demand services are becoming accepted in businesses around the world, companies such as SpringCM and Xythos are stepping up to the plate to create tools specifically for enterprise use. Both offer a unique platform users with unique needs, and both are on the cutting edge of the SAAS movement.

A new document creation service has hit the web, and it’s inspiring individuals and businesses to change the way they collaborate on documentation. LUNARR, founded in 2006 by entrepreneurs Toru Takasuka and Hideshi Hamaguchi, creates a virtual “back page” which includes all of the email communications, informal notes, and discussions that go in to perfecting any given document. This not only provides a real-time look at all the ideas surrounding a document, but also solves the versioning problems that so often plague offline documents. Takasuka and Hamaguchi are hoping to change the way teams collaborate with their unique interface and web-based service. LUNARR is well-positioned to join the ranks of SAAS companies making an impact not only on businesses, but on individual users as well.

Toru Takasuka is a well-known entrepreneur in Japan, having started a company called Cybozu which develops collaborative groupware for enterprise use. Cybozu was a resounding success, and it is still the top groupware company in Japan, surpassing IBM and Microsoft. Takasuka, however, was looking for a new challenge in a more dynamic and daring atmosphere, so he left his position at Cybozu in the spring of 2005.

Hideshi Hamaguchi is also a respected expert in his field, and his work concentrates on creative concept and strategy development. When Takasuka, his former colleague from Panasonic, told him he was venturing out from Cybozu on April Fool’s Day, Hamaguchi assumed it was a prank. “I asked Toru if he had a concept for his new company, and he said no. He just knew that the market was ready for something big and new, so we sat down and developed the concept together.” Their brainstorm produced the front page/back page strategy that became LUNARR, which was named for the two faces of the moon.

LUNARR’s founders drew inspiration from Japanese business philosophy and aesthetics. As Hamaguchi explains, “Japanese people rely on intuition for many business decisions, but Americans use logic for making decisions. The mixture of intuition and logic is totally different in the two cultures.” The back page concept reflects this mixed mode of decision-making, allowing teams to explore not only intuitive changes and whims, but also collect and analyze all the information about a project. The user interface is the essence of simplicity, which Hamaguchi compares to a traditional Japanese stone garden. “The general idea in web applications is ‘more is better’, but in Japanese culture, less is better…we kept subtracting features and design elements to reflect this minimalism.” Hamaguchi compares LUNARR’s clean interface, which is essentially a document with a dog-eared corner that flips to your back page, to Google’s miniamlist landing page. It’s the essence function without any distractions.

Takasuka and Hamaguchi hope to influence the very idea of document creation, though their goal is not to replace current technologies. “We want the dynamic and agile work styles seen with whiteboard note-taking, emails, and web conferences to continue, but we want people to slow down and change their work styles. You take your time and organize the front page, but then you’re able to flip and see the chaos, the additions, and your initial impressions,” says Hamaguchi. “LUNARR provides that relaxed mode of collaboration.” Because of their ambition to change the way people use documents, they are not using the beta launch to gather specific feedback about features for future releases. Takasuka and Hamaguchi see iterative methods as a means by which to improve an existing product, not a tool for innovation. “People do not know what they need from innovative companies. It’s our job to tell them.”

This confident, devil-may-care philosophy is also reflected in Takasuka’s marketing strategy for LUNARR. With Cybozu, he was on the cutting edge of web advertising, but he’s exploring what Hamaguchi describes as a “crazy approach” for this new venture. Since the internet market in the U.S. is saturated with conventional ads, LUNARR has rented an old-school billboard for a year off San Francisco’s Highway 101 near Oracle headquarters. The messages, handwritten and striking, will change every month. The area’s high concentration of tech workers has created a human network that Takasuka is confident will spread the word about his product.

LUNARR is one of the most promising SAAS applications which enables collaboration and vibrancy for any creative team. The service is in a free beta at the moment, though plans are in the works to develop a enterprise version and corresponding pricing structure. As Hamaguchi puts it, “We hope people will see their documents differently, not just a depository, but a work-in-progress, a living thing.”

With the recent proliferation of Software As A Service companies pushing out new applications, “traditional” software companies are trying to match their pace. Adobe Systems is no exception, and they’ve pleased Photoshop fans the world over with the announcement of Photoshop Express public beta, a free application for editing and storing up to 2 gigabytes of photos. An Adobe press release explains, “As the newest addition to the Photoshop family line, Photoshop Express has taken much of Adobe’s best image editing technology and made it simple and accessible to a new online audience.” In return, the new online audience will provide feedback on Photoshop Express features, which Adobe promises will have increased functionality over time.

Photoshop Express will have only a small fraction of the features that the full version boasts, as it’s meant mostly for small fixes for casual photographers. It includes options such as cropping, auto retouching, hue and saturation filters, red eye removal, white balancing, and sharpness, but it won’t be powerful for professional use. It’s based on Flex technology, and closely resembles other recent Adobe SAAS product Buzzword, which offers users an attractive and flexible online word processor. In the brief time I spent tweaking and distorting a photo in Photoshop Express, the heavy use of Flash was evident, as the application seemed sluggish on my machine.

For a software company, Adobe is making big leaps in the SAAS world. As mentioned above, Adobe acquired Virtual Ubiquity and released Buzzword, which Talkibie featured in a previous article. Buzzword is a sleek, flexible word processor with significantly more features aimed at Adobe’s core base of designers. The user interface, which is very accessible, closely resembling that of Photoshop Express. Both apps are aimed at a wider audience than Adobe products normally encompass, and both attempt to bring web functionality and accessibility to high-end software.

In addition to Buzzword and Photoshop Express, Adobe has also released a version of their video editing product, Premier Express, for web-based use. It is currently in place on partner websites Remix MTV and Photobucket, so users can augment and destroy the latest offerings from their favorite artists. The Premier Express website promises on-demand video editing: “Mix and mash clips right in your browser for instant remixes, anytime.” Adobe is also working on a storage service called Share, which went live in beta just last week. Share gives user the ability to convert 5 documents to PDF, access your documents and collaborate online, post document links to wikis and blogs, and embed a Flash preview of documents on any website. This, coupled with Buzzword, could be a very powerful tool for enterprises and individual users alike. Share is currently free, but will likely include a pricing plan as it’s adopted by businesses.

As a recent article on ReadWriteWeb asks, “So the question that comes to mind is will these tools be meshed together as one single online suite accessible via a single sign on?” According to an Adobe official who spoke with ReadWriteWeb, it’s a highly likely possibility. Tying these online applications together in one suite could make them more attractive and convenient for enterprise use, a market where Adobe has always excelled. The combination of photo and video editing, storage, and documentation could be a powerful mix for creative groups, marketing teams, publishing houses, and a myriad of other business users. Adobe has carefully engineered the interface to reach audiences of all experience levels, making for a very accessible product group. Many experts and business minds will be carefully watching the development of these Adobe SAAS offerings as they expand features and gain new users.

Project management is one aspect of business communication that has not changed much with the advent of Web 2.0 technology. Collaborative teams still set firm deadlines, use email to communicate requirements and send documents, and if they’re lucky, use some form of project management software such as Microsoft Project. With the continued growth and popularity of Software As A Service (SAAS) tools, it was only a matter of time before innovative companies emerged with web-based models for collaboration. Two of these tools were recently profiled in eWeek, and they aim to attract users by modeling the way in which projects are actually completed.

LiquidPlanner was launched in a beta form in February, and the creative team behind this tool is led by two former Expedia.com managers. Their project management application is designed to respond to the uncertainty and flexibility that most business projects require. As eWeek points out, “Everything [in project management] has a due date, and, when a team doesn’t meet that date, members feel as if they failed…The funny thing is, almost nothing else in the world works that way.” Due dates are great for goal setting and retaining customers, but they don’t take into account the unexpected speed bumps that every team will encounter.

LiquidPlanner attempts to build this flexibility into their application by allowing users to set a range of projected due dates for each task. Users can easily switch between viewing the project in a timeline or by function. It also helps teams stay on track by providing vivid visuals that alert teams to upcoming requirements. It also features a collaborative space which is modeled on WIKI technology to facilitate clear communication and document sharing without versioning issues. And, as any good Web 2.0 application does, LiquidPlanner features a customizable dashboard which allows users to approach their projects on their own terms.

The other new tool which eWeek profiled is called Lunarr, and it acts as a virtual brainstorming scratch pad. The idea is simple: allow teams to collaborate not only on official documentation (like meeting handouts or presentations), but also on informal notes and ideas (like the notes you write on the back of meeting handouts or presentations). Lunarr calls this space a “back page”, and ideally it includes all forms of documentation for a given project, including emails, discussions, notes, and official documents. Their web-based tool gives teams a way to access all of this intelligence in one location.

eWeek has high praise for Lunarr’s potential: “Lunarr makes it possible to collaborate on pretty much anything, and, whether the service itself proves successful, points to true next-generation Web applications, where deeper functionality such as collaboration can be layered onto any other Web application.” The functionality resembles a rich WIKI page, and it allows users to access templates for ease of reading a variety of document types. Each team member can choose to keep their “back page” private or shared, while the front page reflects changes and keeps the latest version fresh. The application is current in free, invite-only beta, and pricing structures are yet to be decided for future releases.

The unique thing about these two Web 2.0 tools is how they attempt to reflect, instead of influence, the reality of project management. Their features are designed to compliment the changing nature of business projects, and help teams to make the most of organization applications.

Many small businesses share a common problem: they need to hide just how small they are from their big customers. One of the easiest ways to conceal your small operation is to use a professional phone service, but between hardware installation and monthly fees, a good phone system can cost thousands of dollars. Internet-based phone systems are coming to the rescue of small and medium-sized businesses, giving them a low-cost alternative to traditional systems.

One service comes from Redwood City, CA based RingCentral, which was started with venture capital investments. The features they offer include dial by name, toll-free numbers for phone and fax, voice mail, online call logs, cell phone routing, hold music/marketing messages, and dial by number for different departments. This allows a business with only two or three employees to seem like a larger operation; even if you don’t have a receptionist, clients will be greeted in a professional manner. They have plans starting as low as $9.99 a month, a price almost any business owner could afford to pay. The difference between RingCentral and a traditional phone system is that all the services are delivered through an internet connection, not through expensive hardware that must be maintained. This also means that you can track call times, contacts, and phone activity through a desktop widget.

Another popular internet phone service is 8×8 Inc., based in Santa Clara, CA, which has a product called Packet8 Virtual Office. Their service is priced similarly to that of RingCentral, and they also offer unlimited, outbound calling plans using special phones which can route calls through an internet connection. Virtual Office, like competitors, is scalable for the size of the business, with different pricing options for different office needs. This can also be applied to businesses with more than one location As a customer testimonial says, “We have several regional offices and could not justify the expense of separate phone systems for each site. Virtual Office allows us to have a single solution for all of our sites and makes it easier for our customers to reach us.”

M5 Networks links their service directly to the Software As A Service market. They have marketed their product as “Voice As A Serivce,” even using Salesforce.com’s “on demand” language in their website messaging. This is a valid comparison, and a smart one, since SAAS companies are seeing huge growth. The old traditional phone hardware is a good comparison to boxed software; both are expensive for smaller businesses and both require constant attention from IT teams for maintenance and upgrades. When it comes to phone service, businesses do not want to have to think about it. Internet-based phone services not only help the little guys seem more professional, but they also help the big guys free up their IT workers for more important projects.

As 8×8’s vice president for marketing and sales Huw Rees told the Wall Street Journal, “I think the world is moving away from buying boxes of anything.” Indeed, small businesses are leading the way in this software-free (and eventually hardware-free) world, and it’s only natural for phone service providers to follow the lead of innovators like Salesforce. Professional phone service is now in the realm of possibility for small business owners, and they are leveling the playing field one call at a time.

Many industry experts, journalists, and bloggers have expressed their displeasure with Microsoft’s possible takeover of Yahoo!. Though the executives at Yahoo! have so far rejected the $41.7 billion offer, many expect a deal will be reached at a higher price, much to the dismay of the lion’s share of writers on the subject. As Jerry Yang, Yahoo!’s CEO, fends off the strong arm tactics of Steve Ballmer at Microsoft, we find ourselves rooting for him without knowing exactly why. Is it because we like the underdog? Or just because we hate Microsoft? Is there anything positive that could come out of this deal for consumers?

Yahoo! has been spiraling downward for quite awhile, and they haven’t been able to compete with search engine giant Google. Google has inked deal after deal with rival companies, perhaps the most important being the acquisition of DoubleClick, an internet advertising broker, which gives Google even more control over how ads reach internet users. The DoubleClick deal was cleared by the FCC after months of hearings, but is still awaiting approval by European courts. Yahoo! has lost ground to Google consistently when it comes to search technology and advertising, though Microsoft’s offer clearly intends to buck this trend.

Almost every news source covering the deal mentions that Microsoft wants a piece of the internet advertising industry. Perhaps together Yahoo! and Microsoft can present a viable alternative to Google for both search users and advertisers. The key to developing solid, targeted ad technology is collecting user behavior data, which is one thing at which Yahoo! has always excelled. As the Seattle Times reports, “Yahoo assembles a profile of a person’s behavior based on searches within Yahoo, videos watched, ads clicked and visits to Yahoo sites and partner sites such as eBay. The profile that emerges could have details such as a person’s basic salary, health concerns, cars, number of children, gender, age, ZIP code, industry and work.” Yahoo! is able to collect these detailed profiles in a way that Microsoft is not, and the information could lead to a vast improvement in Microsoft’s presence and success online.

Aside from the expected boost in Microsoft’s online ad chops, industry experts are speculating about the company’s possible plans to expand online software efforts. As the Wall Street Journal reported last week, “the company’s products face pressure to evolve as the rise of online services changes how people use technology.” Microsoft is being outmatched by the Software As A Service (SAAS) industry right now, and they rely almost exclusively on traditional software licensing for their revenue. Their competition comes from SAAS vendors who provide value to business users by hosting applications on proprietary servers, freeing businesses from expensive data centers and draconian licensing fees.

The Yahoo! deal could help Microsoft transition into the online software arena. As British insurance company Aviva PLC told the Wall Street Journal, “[the company] hopes Microsoft will combine Yahoo’s online software and knowledge of how the Internet works with Microsoft’s understanding of how a business operates to develop innovative corporate software.” If the deal goes through, Microsoft should be making plans to harness not only Yahoo!’s potential for ad revenue but also their expertise in web applications.

This dual strategy would push them towards the ultimate goal of competing with Google, which has an early lead in providing office tools through web applications. Google Apps, which includes word processor, spreadsheet, and presentation programs is becoming more and more popular with businesses of all sizes. Microsoft has made some moves to allow online access to its Office Suite, and perhaps with help from Yahoo!’s experts they will bring their software to the next generation of delivery.

Speculation is still all over the board, and it will likely be quite awhile until a deal is reached. One has to wonder, due to the recent fine imposed by the EU against Microsoft for a record $1.4 billion, if a merger of the two will be approved by government anti-trust groups. While I definitely sympathize with the folks at Yahoo! and hope against hope that they will be able to fight off the acquisition, there just might be some benefits for users in the long run. Most of us are stuck with Microsoft our software provider whether we like it or not, and a deal with Yahoo! just may give them the innovative approach they need to please us.