Microsoft CEO Steve Ballmer has rapped analysts over the knuckles for their subdued reaction to the Microsoft/Yahoo! search deal announced this week. He says that, although nothing was bought or sold in the deal, it still creates enormous value that the market seems to have overlooked.

Speaking at an analysts' meeting yesterday, Ballmer says that "nobody gets it", in terms of the way the partnership offers a win-win for both companies.
"Together Yahoo! and Microsoft can bring more choice, better value, and more innovation to the search market," he says. "Together we can create economic value, an economic value that's going to benefit Yahoo! shareholders and Microsoft shareholders."
He explains that Yahoo! brings scale to the deal, which is a tool for product improvement.
"The more queries you see, the more you can tune your product. The more you scale you have, the more advertisers advertise on your system and the more relevant they make their ads for your users. It is not about money. It is actually about relevance because the advertising is part of the actual user experience.
"Product improvement is the key to market share – market share for Bing, market share for Bing as presented on Yahoo.com. For Yahoo! the deal is also about really focusing in on its leadership in online media," he says.
"Yahoo! is the leading online media company in the world, and they really want to invest technologically behind that. And this is a chance for strategic focus, and is one of the key benefits."
He adds that the economics of the deal also seem to have confused the market.
"What happened? Nothing got bought. Nothing got sold. People expected something to get bought. Nothing got sold, and nothing got bought," he says. "But the partnership in and of itself creates economic value. And not just on the future promise, not just on the future promise of improved product, improved share, and improved revenue, it creates an immediate opportunity, essentially, for synergy."
Because scale will create more advertising opportunities, Ballmer says both Microsoft and Yahoo! should see benefits in increased revenues.
"It is a win-win strategic partnership and it is a win-win deal from my perspective. And I'm excited about it, and I'm excited about working with the Yahoo! management team starting with Carol [Bartz, CEO of Yahoo!]."