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When the Web burns with news about Microsoft and Google dueling for Yahoo! I’d like to present a different scenario.

Yahoo.com is the most visited website in the world – at least according to Alexa. However, its position on the market is even more powerful than we realize at the first glance. We are not talking here only about Yahoo.com.

When Microsoft buys Yahoo! everything owned by this company will be under Microsoft’s authority. When I say everything, I mean everything: your email@yahoo.com, your flickr account, your MyBlogLog account, your Yahoo! Groups and GeoCities, your del.icio.us bookmarks and much more - Hotjobs, Inktomi, Overture to name just a few.

Microsoft has nothing, literally nothing, of such great potential. Yet Yahoo! is in decline?

The online marketing expert already knows what happening here: Yahoo! is the victim of its own strategic mistakes. The Internet is not a billboard display – but Yahoo!’s marketing team ignored this aspect, and the company gave away too many freebies on top of that. On one hand this is a positive aspect – it increased the value of the Yahoo! brand, while on the other hand Yahoo! spent too much money on acquiring these services.

The idea was to provide these for free and to make money from ad revenue, but what works for Google doesn’t necessarily work for all online ventures. Of course this is only one piece of the puzzle – there are many reasons behind Yahoo!’s decline and I’ll let the analysts have a go at explaining how stupid Yahoo’s strategy has been.

Although the value of the Yahoo! shares is in decline, the value of the brand is still strong.

Yahoo! is a name in the industry and don’t forget that it has the second most popular search engine in the world. It’s amazing and sad to see such a company at the mercy of Microsoft and Google. Yahoo! is popular because it is very user centric. Personally I’ve never heard of someone wanting to create the next “Yahoo! killer” – probably because a vast majority of people have always seen Yahoo! as the second best after Google - and a comparison between the two is almost unfair.

The ordinary user thinks of Google and Yahoo in terms of “search engines.” The investors see the search applications of the two as a small part of the whole, and this is probably what we should do too.

Microsoft is not trying to buy a search engine because they already have one. Microsoft is trying to buy the reach Yahoo! achieved in more than 10 years of existence, which is more vast than Microsoft can ever achieve. What Microsoft has now is a fantastic opportunity and amazingly they are about to blow it because instead of making a fair offer Microsoft undervalues Yahoo! A rejection was imminent.

Given that Yahoo! rejected Microsoft’s offer we can only expect Microsoft to come back with a higher bid. What I think though is that Yahoo! has fair chances on its own and instead of surrendering to Microsoft it could remain independent, change its marketing strategy and eventually acquire some new ventures to cover what’s missing from its portfolio.

• For example, Yahoo! could acquire Veoh to compete on the video sharing field with its counterpart Google.
• Yahoo could acquire Zoho to compete against Google Docs.
• Yahoo! could acquire StumbleUpon thus stepping ahead of Google in the social networking field.

To make a long story short, instead of accepting any other bids from Microsoft, Yahoo! could try enforcing its online position through some smart, unexpected investments. The company needs a change of vision, meaning also a change of personnel. Even with its current reach Yahoo! still has enough power to put down Microsoft.

A small fish (a motivated one) can eat a big fish -it’s just a matter of strategy and determination.