Link: blog.pmarca.com: Silicon Valley after a Microsoft/Yahoo merger: a contrarian view. I agree with Marc, this deal if it happens just sets the stage for the next wave of innovation. We have had consistent consolidation in the software space for quite some time, this is nothing new. As Marc suggests, this will put pressure on other companies (i.e. media) to get in the game--eat lunch or be lunch. But they are feeling this pressure anyway. There is nothing that will save them unless they get in the game and start innovating.
This deal is much to do about nothing, other than signaling that this part of the game is over and clearing the way for the next wave. If history is our teacher that next wave will come from "nowhere" and completely catch us by surprise. This deal, and others that will follow, are simply "mop-up" exercises--big fish doing what big fish do.
The real innovation is going to come from companies that USE technology to transform their respective industries in curious and novel ways. The next wave, IMHO, is going to be a killer wave, and it won't come from the valley. I will come from left field and from entrepreneurs who figure out how to take the "primordial ooze" that the valley has provided and redefine the game in their respective industries.
