Hoping to close the market share gap, Microsoft announced it will let Zune users legally share portions of their song libraries with other users.

From WSJ:

Microsoft Corp., trailing Apple Inc. badly in the market for portable music and video players, is introducing a new technology that will let users of its Zune portable devices legally share portions of their song libraries with other Zune users.

The Redmond, Wash., company on Tuesday also plans to announce it has started selling downloads of television shows that will play on Zunes, including "South Park" and "Heroes," through relationships with Comedy Central, NBC, MTV and other broadcasters. The company says it will have about 800 episodes available for purchase at $1.99 each on its Zune online store, compared with thousands of episodes from 600 different shows on Apple's iTunes Store.

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I've gotten a number of questions in the last few weeks about Linux desktops and OpenOffice.   These have come from enterprise users, the press and venture capitalists.  It's interesting, because this seems to be a meme that is revived every few years.   I was really enthused about the possibility of an Open Source desktop rival to Microsoft's offering several years ago, but there never seemed to be much traction.   Clients of mine that seriously looked at Open Source rivals to MS Office did so to negotiate better pricing from MSFT as much as anything else, no one actually migrated to it.   Oh, sure there were some high profile attempts (like the city of Munich) and at least one Army command migrated to OpenOffice, but it did not really catch on as I expected.

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Steve Balmer said there will be no deal and no takeover after talks with Yahoo fell apart on Saturday. Yahoo's next act is a tough one. Meanwhile, Google is rubbing its hands.

From CNet:

Microsoft is withdrawing its offer for Yahoo after talks between the two companies broke down on Saturday, a source told CNET News.com.




Microsoft hiked its offer to $33 a share, but Yahoo was holding out for $37 a share, the source said. The two sides met face to face again Saturday, but remained far apart.




Although price was a key issue, Microsoft also had strategic concerns and saw it as unlikely to achieve a friendly integration process. According to a source close to Microsoft, Yahoo founder and CEO Jerry Yang had "unrealistic expectations."




Read more.

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Yahoo is getting close to carrying Google ads, as Microsoft prepares to either drop its bid or get hostile.  Google could never get away with this under other circumstances. They're loving it.

From WSJ:

Yahoo May Be Set to Unveil Plan to Carry Google Ads

Yahoo Inc. could announce an agreement to carry search advertisements from Google Inc. within a week as it braces for Microsoft Corp. to abandon its unsolicited acquisition offer or go hostile, say people familiar with the matter.

Yahoo was waiting for Microsoft to announce its approach this week after the two sides failed to reach a negotiated deal, amid a divide on price. But Yahoo has also been pursuing a broad agreement to carry search ads from Google, which it views as a way to boost its cash flow and bolster its claim to shareholders that it's worth more than Microsoft has offered.

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. . .  LinkedIn and Myspace for growth . . . and, I'll bet more Twitterers have Facebook than LinkedIn and more Facebook than a MySpace (or at least they talk about Facebook more).

(corrected)

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News Corp. has joined forces with Microsoft to forge a three-way deal for Yahoo. Meanwhile AOL is closing in on a deal to fold itself into Yahoo. The spectacle is clogging the blogosphere.

From WSJ:

Yahoo Inc. and Time Warner Inc.'s AOL are closing in on a deal to combine their Internet operations, a move aimed at thwarting Microsoft Corp.'s effort to acquire Yahoo, people familiar with the matter said Wednesday.




But Microsoft is recrafting its assault plan by talking with Rupert Murdoch's

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Kara Swisher moderated a panel yesterday at Venture Summit East entitled "Is There Still Upside in the Internet?" One of the best moderators in tech, she has a way of needling folks and asking the questions they don't want to answer. Her own take on the panel is here.

One of her staple questions for VCs: what is the most overhyped sector? (the consensus was social networks) and underhyped--this time around it's mobile. Check out her interviews with some of the panelists below.

The panel included: David Kidder, CEO, Clickable; Waikit Lau, Co-Founder, ScanScout; Bob Davis, General Partner, Highland Capital Partners; David Beisel, VP, Venrock; and, one of my personal favorite VCs and charmingest Yahoo board member, Eric Hippeau, Managing Director, Softbank Capital

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Microsoft appears set on getting into the social space, whether by owning it or facilitating it. It's kind of like "let someone else build it and if they come we'll go get them and invite them over." Now it appears they are going for the Mall approach, rather than the franchise or leveraged buyout approach. Or at least, so it seems.

In a prior post, we noted Google's opening the cross-platform communications mode with OpenSocial, and the many developers working on an aggregator for users. Could this latest venture serve as an aggregator not just for individual profiles, but also one for groups? We are still looking for a mobile solution, too . . ....More

As Apple eats away at Microsoft's market share on the consumer side of PCs and mobile devices, and Google chips at Microsoft Office's share in business, Microsoft is caught in the middle and facing a two-front war. The giant in Redmond is already weak in the knees in the enterprise world, where the largest companies on the planet are virtualizing their systems and transitioning to services-oriented architectures. There is very little innovation going on in packaged applications -- the new focus is online (with some offline capabilities). This fundamental shift to a service model, which has been going on for quite some time, will get seriously businesslike this year and change the business world over the next few years, putting Microsoft at a disadvantage.

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