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Engineering-wise, it’s interesting. Yahoo’s stuff is almost all written in PHP, and runs on FreeBSD and Red Hat Linux servers. I don’t think Microsoft has ever bought — and maintained — a significant software product that wasn’t written against Microsoft technology. E.g., when they bought Hotmail, the migration from FreeBSD/Apache to Windows 2000 was painful and difficult. Hotmail was just one product (albeit a popular one). Yahoo has hundreds of properties, several of them, I’m guessing, more popular than Hotmail was back in 2000.

So there’s a paradox: technically, I can’t see how Microsoft would migrate all of Yahoo to Windows servers and software. But culturally, it just isn’t in Microsoft’s DNA to accept and maintain all of these PHP/FreeBSD/Linux products. My gut feeling is that Microsoft’s culture is the driving force here. I don’t think they care about any of Yahoo’s technology, with the possible exception of Yahoo Search. What Microsoft sees in Yahoo isn’t software but pageviews and advertisers. So rather than, say, rewriting Yahoo Mail using Windows technology, I expect them to just force Yahoo Mail users over to Windows Live Hotmail.

[..]

In short, while I expect Yahoo to accept the offer, I think it’s the end of Yahoo as we know it. Andy Baio’s analogy seems perfectly apt: “It’s like tying the Titanic to the iceberg. It’d keep you from sinking just long enough to freeze to death.”

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If Yahoo agrees to the deal with Microsoft, it will be a shotgun marriage, but it will be Google holding the shotgun.

If Yahoo’s management says “yes, I do”, it will be an admission that its attempts to turn around the company have failed.

Yahoo shareholders, in turn, will not be able to believe their luck. Microsoft was probably the only company with pockets deep enough to bail them out.

For Microsoft, however, this is the deal that could break it.

Making the offer is an admission that Microsoft’s management has been scared by the success of Google.

The bid is also an acknowledgement that its numerous attempts to become a dominant internet content provider have failed.

But to make it pay, Microsoft will have to demonstrate that the combined company can offer a superior business model.

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Sources at Yahoo tell me that Microsoft made its most recent overtures right after Yahoo announced its earnings Tuesday and then told Yahoo execs they had two days to respond or Microsoft would go public with the offer.

When Yahoo balked at the heavy-handed tactic, guess what? Microsoft went public.

Now Yahoo is scrambling to figure out a response to the overture, but is looking for any other option but Microsoft.

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“I woke up this morning and couldn’t believe that they did it,” said one exec. “They had made a lot of overtures, but this was astonishing. I could not believe Microsoft would be so aggressive.”

Believe it.